MediaFile

Are we living through another tech bubble?

By Kevin O’Connor

The views expressed are his own.

Yesterday’s announcement that Groupon is planning an IPO has accelerated the view (at least in some quarters) that we are living through a second tech bubble, fueled by social media companies.

Perhaps we are, but the conclusions to draw from that are not so simple. I still remember the negative reaction we received from potential investors back in 1995 concerning our forecast for Internet growth.  Well, they were right – our forecasts were way, way off – the Internet grew a lot faster than we or anybody else could envision.

I lived through the bursting of the dot-com bubble and watched in horror as our stock – DoubleClick – plummeted, with 75% of our customers going out of business.  My mother was so embarrassed I was a CEO of an Internet company she began telling friends I was a mid-level crack dealer.

Thankfully, sanity prevailed, as “great” Internet companies continued to produce real value for both their customers and shareholders.

Now, fifteen years on, I’m CEO of another Internet startup – FindTheBest. Six months ago we raised venture financing, and it’s clear things are far different from 1998.  Back then, if you moved you got money and if you could crawl you did an IPO.  Today, VCs are far more tight-fisted and the few companies that have done IPOs have real revenue.

Tech wrap: LinkedIn shares skyrocket in debut

LinkedIn made its remarkable debut on the New York Stock Exchange, at times trading more than 171 percent above its IPO price of $45. The stampede to buy the stock had some remembering back to another time when investors also loved tech stock IPOs: the 1990s and the dotcom bubble.

Does the response to LinkedIn suggest investors are in for another bubble that bursts when the fundamentals overtake the hype? Or is it a sign that investors are hungry for any piece of the social media pie and LinkedIn’s happens to be first out of the oven? While Facebook, Groupon, Twitter and Zynga are still expected to go public, LinkedIn Chief Executive Jeff Weiner cautions that his company’s spectacular debut should not be seen as a proxy for them.

While American social media companies are testing the IPO waters, their European counterparts at Viadao, Mind Candy, Sulake and Telmap are expressing skepticism at the Reuters Global Technology Summit about the sky-high valuations of U.S. start-ups and the potential for another bubble.