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Venture Capital - Wednesday, May 30, 2007

11 Signs That The Boom Is Closing In On The End Of Days

As we have posted previously, probably the most common conversation we here these days is that the bubble is on again. We read today on Ooga Labs their water cooler discussion on signs that they have seen that we are in the 3rd quarter. We have to say that we don't agree with the consensus that we are in a bubble. Sure some valuations are over-blown, but on the other hand there are many, many small, frugal companies making a legitimate killing. We didn't see that in the great bubble.

1) high number of new G.P.’s being hired at VC firms, just in time for their investments to crater in 3 years.
(we do think that a number of VCs firms may shake out but that wouldn't end pop any bubble)

2) more people with British accents around Silicon Valley
(We don't like that either. Carpet-baggers.)

3) increasingly attractive people, both men and women, around Silicon Valley
(We were in a Starbucks next to San Hill recently and felt as thought we were at Fashion Week)

4) VC’s you’ve never heard of, backing companies you think, eh? What the hell is that?
(Yes, but many of these are really angel firms set up by people who made out in the bubble.)

5) new HBS grads joining startups
(Creeps)

6) guys in their late 20’s breaking up with their girlfriends rather than getting married and getting distracted from work
(We haven't see this but we believe it.)

7) married couples delaying having babies so they can focus on work.

8) pretty large and pretty swanky company parties
(We have been to a few but it seems the companies are those that are in revenue growth-paths, rather than money losers spending their VC war chests.)

9) oversized marketing departments
(Marketing is really what differentiates Web 2.0 startups)

10) PR companies growing

11) decoupling of earnings from valuations (e.g. Aqantive, You Tube)
(Agreed, but these are a few, exceptional deals. Most M&A these days is not at radical valuations.)

Read - Ooga Labs blog post