‘The second bubble started with Twitter and Facebook,’ and other comments of the week

It’s been another action-packed week here at GeekWire as we continue to scour the tech landscape for interesting, offbeat and original nuggets of information. My favorite story was a digital intervention of Todd Bishop’s email inbox by a psychologist from the A&E TV show “Hoarders.” (I swear, I never knew he had a problem). But we had some serious stories as well, and as always we appreciate everyone for tuning in. Here’s our look back at some of the top comments of the past week. Enjoy!!


Sixty five percent of readers answering our poll question this past week thought that the Internet industry is in the midst of another bubble. One reader wrote:

“Yes. The second boom started with Google’s IPO in 2004. The second bubble started with Twitter and Facebook being considered titans of industry, where ‘industry’ means ‘posting pithy statements on the web.’ Read “The Snowball” about Warren Buffett. It details a prophetic speech Buffett gave at Sun Valley in 1999 saying that the rules of value investing haven’t changed. Buffett was labeled an old fuddy-duddy for sitting out the ’90s tech bubble, but his company is stronger now than ever. Investing right now in a company like Groupon, LivingSocial, Facebook, or Twitter is a desperation move to appear “hip” at best, and suicide at worst.”

Full story: “Poll: Are we experiencing another tech bubble?”


What was the motivation behind Expedia deciding to spin off TripAdvisor, the online review site which attracts 50 million visitors per month? Chip Treverton offered one interesting theory:

“I am sure HomeAway and valuations of comparable companies also had something to do with this decision; I am sure TripAdvisor’s value is being discounted being part of (Expedia) and this will give them more flexibility and a currency to expand.”

Full story: “Expedia to split into two companies, separating out TripAdvisor”


TeachStreet founder Dave Schappell sparked a lively discussion with his guest post about what he encountered at the 500 Startups event, including a remark about whether passion is the key ingredient that separates the Bay Area from other tech hot spots:  Daryn responded:

“Agree that there are more passionate and more plentiful resources, that was my point, but I don’t think the quality of the entrepreneur or their passion for their own product is any different in the bay area than here or in Wichita.”

Full story: “Two Days in Silicon Valley: An inside look at 23 startups from Dave McClure’s Demo Days”


Some readers questioned Apple’s decision to reject the latest iPhone app from PopCap Games, a mobile game in which animated horses get obliterated in meat grinders. Ryan Ray pointed out what he perceived as an inconsistency in Apple’s policy:

“It’s ok to order a dead cow from an app but cartoon meat grinders are not ok. Hmmm…”

Full story: “Apple finds PopCap game ‘Unpleasant Horse’ just a little too unpleasant”


Some readers were steadfast in their opinions that Microsoft doesn’t have a chance to surpass Apple in the smartphone battle. But Stephen felt those readers were making snap judgments without giving Windows Phones a chance:

“Dear haters of Windows phone. Please try it. I’ll let the phone speak for itself. Enough said.”

Full story: Will Windows Phone surpass the iPhone by 2015? Gartner thinks so

John Cook is co-founder of GeekWire. Follow on Twitter: @geekwirenews and Facebook.

  • http://www.facebook.com/davidtyleryork Tyler York

    I don’t think we are experiencing another tech bubble. I explained why in my blog post, but my primary point is that many of these small companies that are getting seed funding will become profitable, even if they aren’t $100M exits, and that the companies that do have massive exits are all financially sound and built for continued growth and profitability.

    http://davidtyleryork.tumblr.com/post/4420599941/there-is-no-bubble

  • Marston_gould

    I completely agree with the premise of this article and contrary to the commenter below, cash flow is necessary for solid valuations, but its by no means everything. A more important question to ask is: are the valuations that these new dot.coms creating sustainable? Can they reasonably maintain the value they bring and the business model they create for a period of time to allow shareholders to invest and extract returns.

    I don’t think so. Facebook is really nothing more than a well executed utilitarian evolution of AOL. From You Got Mail to Status Updates, from Go pages to Fan Pages. Major forms of monetization – ad networks and games.

    Facebook is not an Apple. I don’t believe they have it in their culture to really be as destructively innovative as Jobs, willing to put the entire existing cash flow on the line to reinvent themselves every 5-10 years.

    Facebook suffers from the same problems that all its predecessors faced. UGC is contributed by a small portion of its user base. The quality of the UGC is low and getting lower. Users engagement has already started to fall. Pageviews/user are off their peaks. Time on site has fallen. Bounce rate has been growing steadily since early 2010. Yes they are cash flow positive – so was AOL for many years. But as a utility they have failed to understand the basic mantra that has kept Apple and Google going – help users focus on what is the most important. If those trends continue – when coupled with their less then great monetization for the majority of advertisers – revenues will begin to cave. You can only make so much money on gaming (particularly when you have other key innovators in that market like Microsoft, Sony, Nintendo, likely Apple) and virtual currency.

    What Facebook (and to a lessor extent Twitter) have created is yet another way for companies to interact with their customers. That all sounds great – but if all it does is create a far more complicated method to create that interaction, it forces companies to have more overhead. That means lower margins for them. Once marketers understand that Facebook emphasizes transitory relationships and requires an ever constant stream of ‘life as entertainment’, companies will begin to have second thoughts about funding Facebook or all of the thousands of start ups that have been put into existence because of Facebook.

    Give it another 5-7 years.