Monday, June 16, 2008

A New Business Model - Are We in a Bubble in the Valley?

I've been noticing a common theme in the Valley the past few weeks and it got me to thinking. We finally have some proof that things are changing here in the Valley. In fact, we may be at the end of our nice little bubble. Sure, lots of people don't think we're in a bubble, but I do, and I have for quite a while. At least now I have some proof.

So what's been happening lately that makes me think this? It's all of the startups who are "changing their business model". Company after company has been singing this tune of late. Why? Well, for one, just having tons of users isn't going to bring in the cash like they thought it would. Monetizing these users has been a challenge. See my post on Facebook - and you'll see why. If there weren't underlying problems with the current spate of web 2.0 companies, there wouldn't be this massive push to change business models. It sounds like investors are finally pushing for some returns or at least prospects for a return. This is the same issue lots of companies deal with in the face of tough times and increased competition. I have a feeling we're going to be seeing a lot of these web companies fall by the wayside. After all, while it may not take a lot of money to create a website these days, it takes a lot of money to keep a popular one running (server space, bandwidth, employees, time, etc)

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