Enter The Bubble

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Who Killed the Cloud?

Last week some Major websites (Reddit, Foursquare and Quora are a few) went down for a significant period of time due to the Amazon EC2 infrastructure failing in a fairly big way.  Amazon EC2 or Elastic Compute Cloud is designed to be an ad hoc server solution which can save you a large chunk of change. Users can easily launch new 'virtual' servers to handle load and increased traffic such as when Daring Fireball (@daringfireball) links to your site or blog post and sends triple the amount of normal traffic your site usually gets on a daily basis.

EC2 is great.  EC2 is cheap. EC2 is extremely reliable... well until last week. Cloud Computing was supposed to be the savior of the interwebs, cure cancer, solve the national debt issue, and never go down. First, Cloud Computing basically is nothing but remote hosting, the same old off-site hosting we've been using for years. What EC2 and other companies such as Rackspace are now doing is launching Virtual Server technology to commoditize server infrastructure. Using a rack of servers to host MANY self contained servers in order to take full advantage of CPU time, Memory, Disk space and other resources.

Amazon EC2 has been around for a few years (~2006) and has had a remarkable uptime record. People of the interwebs have started to feel "safe" and when that happens you tend to let your guard down... EC2 is always up. EC2 is fast & flexible. EC2 is extremely reliable... This outage is a subtle reminder that technology is falible and that you should have a backup plan, which most of us don't. Does this outage mean that cash strapped startups or larger fiscally responsible companies shouldn't start using or continue to use EC2?  Don't be ridiculous! Stop spending time ridiculing Amazon for an outage and spend your time more constructively... you know like figuring out a backup plan.

-ETB

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Color Bubbles

So what is a Tech Bubble? Well according to Wikipedia:

A Tech Bubble (or DOT-COM Bubble) is a combination of rapidly increasing stock prices, market confidence that the companies would turn future profits, individual speculation in stocks, and widely available venture capital which creates an environment in which many investors are willing to overlook traditional metrics such as "Price to Earnings Ratio" in favor of confidence in technological advancements.

You can see signs of the past almost everyday now, behemoths like Facebook, LinkedIn, Groupon reaching astronomical valuation levels and insane Venture backed funding. Smaller companies like Zillow, Living Social, Pandora, Trulia, Kayak and even Skype are making moves to try and get insane valuation levels to launch an IPO and make gobs and gobs of cash. Even in the startup ranks there are companies ramping up ideas to launch a product or service and locate an "Exit Strategy" if they don't have one in mind already.

I think one of the most concerning things happening lately are the startups which have landed DOT-COM era funding. Take for instance the newest photo sharing mobile app Color, which allows you to take a photo and share it with people in your general area (which is a simplistic explanation but details the app at it's core...) Color just landed 41 MILLION DOLLARS before it even saw the light of day. Color is lead by uber-successful serial entrepreneur Bill Nguyen, who has assembled an amazing lineup of talent and has convinced VC's to bet on a virtual "Good Thing".

There are a myriad of photo sharing apps, Flickr photos, the iPhone camera App, Instagram, Path, etc... like most of these apps color is trying to change the way people share and consume content and take advantage of social interaction.  Is the Color app going to be successful? Only time will tell, however only Facebook has really been able to claim that honor. More than likely Color has something else planned sinister or not, it will make a splash... 41 Million (and counting) dollar splash?

I can't tell the future, however I think we can at least learn from the past. Something is coming to a head, it could be another DOT-COM like bubble or an event of much smaller scale where the Facebooks thrive, innovators will weather the storm and help grow economies around the world.

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Social Check-In... It's So 2010!

Foursquare Vs. Gowalla Vs. Facebook Places Vs. Yelp Vs. Loopt Vs. Britekite Vs. GetGlue Vs. [insert newest checkin startup here]... You get the point!

Before there were coupon & rewards companies popping up like dandelions in my yard there were Social Check-in Apps. It all started with Dodgeball which was bought by Google and then killed off.  From the idea of Dodgeball came Foursquare, the social check-in App where friends could find friends, then you could earn Mayorships by frequenting your local Starbucks and now you can get a free drop of coffee from Starbucks by becoming the mayor.  Everyone knows how it works!

Today there are fierce competitors such as Gowalla and even Facebook places.  The interesting part of this are the Startups such as GetGlue that let you checkin to an activity, we're not talking about a sporting event or your kids soccer game, but any interaction you do during the day. There are even sites trying to allow you to checkin to your favorite website (One True Fan is in and around this space).

The current saturation level of Check-In centric apps is at a critical level, so much so that traffic at Foursquare is at a steady decline. According to ReadWriteWeb: 

Foursquare’s Web traffic has declined for five consecutive months, amounting to a 50 percent reduction in traffic over that period.

Josh Crowley recently pointed out that Foursquare is already moving to innovate his company focussing on the Future (what you're going to be doing) instead of the present (what you are doing), so hopefully they can prolonge the inevitable downfall of checking in.

Over the last year that I've been using Foursquare (and Gowalla) I've been trying to answer the question: Why am I doing this?  What am I getting out of this Check-In?  Unfortunately I, like many others have been unable to answer that question.  Is there a social status I'm getting for being the Mayor of my local park or my YMCA? I don't think so... which is likely why I'm contributing to the downslide in traffic for Foursquare.  However these companies have some cash... most if not all of it VC funding, but cash none the less.  This will give each of them the time they need to figure out how to innovate, pivot, branch off or exit (if they can).  We're in a bubble, everyone is trying to catch this train and I think I just saw another Check-In App invade my twitter feed.... 

-ETB

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The Future is Real Estate!

Zillow recently announced they are pursuing an IPO.  What the F' is a Zillow? Ok, my wife knows about Zillow the Real estate mapping service where you can get publicly available information about house prices and sale history.  I had no idea who Zillow was or what they did...

II was one of the fortunate people who was able to take advantage of the Real Estate bust and purchase my house in a desirable neighborhood, take advantage of the Federal Home Buyer Tax Credit, and get a really good deal. Throughout the entire process of looking for a home "I" never used Zillow to view homes or track down buying history... During the extensive search process for a home, we took advantage of other methods to find out the history of a property we were interested in.  Just about every local government has a resource for looking up this publicly available information.

Zillow takes this information and basically created a Google Maps Mashup, so you can view this information by looking at a Map, which my local govt. website does as well, but not as nice looking.

So how does Zillow generate profit?  How is Zillow going to grow it's services beyond the mapping functionality? How on earth can this company justify an IPO?  Even a small offering IPO.

I hope that people would have learned that an IPO isn't an answer to your problems.  Mashable just posted an article about the Zillow IPO...

"Zillow isn’t profitable yet, but it is closing the gap. In 2009, the startup had a net loss of about $21.2 million. In 2010, it lost $6.7 million."

$6.7 Millions dollars in losses... SIX POINT SEVEN M I L L I O N dollars gone, never to be seen again.  So we'll launch an IPO and make some cash and eventually shut the doors.  Zillow, to my knowledge doesn't have any technology that can't be re-created using the google maps API

The Zillow IPO is a money grab being made by Greedy, Selfish individuals who don't care about the people responsible for creating and driving the product, let alone the real issues surrounding it... you know such as losing $6.7 Million dollars.  We're not in a tech bubble...

-ETB

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Coupons, Coupons, Coupons...

Coupons are great, there is not denying it.  But how valuable can a Coupon company really be.  Well Groupon the uber-successful and popular group-buying company is full speed ahead pursuing a $15B-$25B IPO. This valuation range means that Groupon could have a higher IPO than the search giant Google.

Groupon has some stiff competition with upstart Living Social who recently landed about $400M influx of cash and is making waves in the Coupon realm, which you can see in their latest TV commercial.  There are also a myriad of startup coupons services popping up almost on a daily basis hoping to catch a ride on the coat tails of these IPO hopefuls.

TV Commercials...  Now I actually like the Living Social commercial (not sure if I've seen one for Groupon) but this step is eerily reminiscent of the mid-to-late 90's when .COM giants such as Sun Microsystems, Pets.com, Lifeminders.com and Netpliance.com all bought ad time during the Superbowl, which ran in the Millions of dollards for 30 seconds.

Most of these companies didn't make it past ~2001, with Sun Microsystems being a lone hold out... scuttled by Oracle last year. Hopefully we've learned from the past.

It will be an interesting ride for sure... Hopefully Coupons/Rewards/Group Buying is more sustainable than buying Diapers & Pet products over the Interwebs... except Amazon does that really well.

-ETB

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LinkedIn = Cashing In

The Professional social platform (or are they still a Networking site?) is another company on an IPO hunt.  ($2B - $10B range as of this writing) This isn't entirely surprising considering LinkedIn doesn't have any other options really for growth or profitability.

Over the last few months the Networking site has taken steps to ward off attrition to the likes of Facebook, Twitter and a slew of new Networking startups (think Hashable, Branchout, Identified) and are integrating social media hooks to a) Become relevant gain and b) engage their very large user base.  I've asked quite a few people I know if they felt LinkedIn was still relevant and the most common response was not really.  My follow up to that was "Then why did you sign up recently?" or "Why are you using LinkedIn?" and Survey Says:

"Because Everyone else is using it!"

Are they? Does posting your resume and adding connections to former co-workers that you wouldn't otherwise socialize with (or want to work with ever again) really count as 'using' a site in todays Interwebs?

I'll leave that answer up to you, however if any IPO bound company has a shot to make a big splash I think LinkedIn is the best candidate... well the best candidate not named Facebook.

-ETB

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Welcome to Bubble Watch 2011

It's a great thing when you see people (tech savvy people) innovating during a recession, especially when those people are creating jobs. Yet over the last few months, maybe even the last year... there have been signs of an impending Tech Bubble.

Welcome to Enter the Bubble! We're going to chronicle the latest going-ons in this new era, from Social Media to Social Check Ins (I'm starting to see a pattern here...) and cover the impending explosion and craziness that is the Tech Scene.

Whether you think there is going to be another bubble, a lesser bubble or just want to see what the Hell Kohort is... Enter the Bubble is the place to be!

-ETB