Are we in a new "dot-com boom"?

[Ankesh]

Thanks Dien.

1. I think Zynga and Groupon both are solid businesses based on their revenue. They don't have ballooned valuations as far as I can see. Twitter - I have my doubts. Can it create an advertising program that would earn them that much revenue? I have my doubts. But they certainly do have traction.

2. Unlike the first dotcom boom and bust, this time we're not seeing IPOs. Not even facebook has come up with an IPO yet. We're mainly seeing private money. And mergers and aquisitions by bigger companies before a company goes public. (Intuit buying Mint. All the companies salesforce has bought.) So unlike last time, we won't see the masses lose a lot of money within days.

3. Saying that, the number of startups being funded is insane. I know 1 incubator called something like the startup fund - invests in 500 startups a year! Ycombinator - one of the more popular incubator invests in about 80 startups a year. Overall, we're seeing north of a 800-1000 companies who are receiving seed money to start off - every year - and this only from North America. Obviously a majority of them will fail. So in that sense, yes there is a boom/bust situation going on. When investors fund a 1000 new companies, you know that many of them will be full of fluff. But these failures have low monetary risks for the angels and vc's who invest in the startups (most of them receiving only about $20,000). So we won't see the widespread bust as we saw before.