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Boomandbust, Dotcom, start up, Valuations, venture capital

Another tech bubble in the offing?

Dotcom Valuations - source - The guardian tech blog

Here it is. I’ve been saying this for a while.

The guardian tech blog published a report about the typical tell-tale signs of yet another impending tech boom and bust cycle. http://bit.ly/hwL4Oe . Check out the nice infographic.

Having worked on a couple of projects and spoken with Angel investors, VCs and Bankers, I’m getting the feeling this is turning into another rat race of overblown valuations based on completely hypothetical business models. Everyone is talking about revenue multiples, there are tonnes of digital strategists in the market. Goldman Sachs never will come up with their reasons for valuing Facebook at $60 billion – it’s much simpler to spread the news and drive a bunch of analysts to reverse engineer this figure through their business models – isnt it? I have a degree in computer engineering and business – and I can only at certain times claim to understand a start up’s playbook/competitiveness and I’m meeting young guns and upstarts everyday who want to get into the business.

So, what will make it work this time around?

The last time I saw this happen, I was just fresh out of school and getting into college, back in India. Truth be told, I did not understand what the big fuss was about, but I was seeing the landscape changing rapidly, enterprise class technologies making rapid acquisitions (Oracle’s takeover of PeopleSoft) – which led to a 60 strong taskforce reduced to 6 in my office- based on speculations that oracle made a $10 Billion acquisition to dissolve Peoplesoft eventually. All unfounded of course – PeopleSoft continues to be strong product, albeit under the Oracle roof, although they have been easing out support.

This time round the picture has been far more interesting and I have a better understanding about the support system that creates and destroys technology.

I think European start ups typically have a longer incubation period – which probably makes them a little more stable. Investors are also a little more conservative in their estimates. I guess it’s also because of the fact that one cannot usually pull of fiendishly large number for growth/platform adoption (as opposed to the US) because of cultural/language/local competition factors.

I’m a fan of Vivek Wadhwa. Although he’s very much the all-knowing-academic-so-full-of-himself in most of his writings and talks – I think he does comes up with a fair number of relevant points when writing about entrepreneurs.

one interesting post – http://bit.ly/himFZM

So – What is it going to be? You’re looking to make your millions and a quick cash out? Or stay away from things you dont fully understand? Either way, comments are welcome.

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About Surya

MBA. Technologist. Problem solver. Futurist. Collaborative interventionist. Back-of-the-envelope calculator, sketchbook artist, musician, animator, deconstructionist. Working with @transferwise

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