The stock market plunging these last few days has created palpable jitters here in Silicon Valley -- people seem quick to blame a potential bubble bursting on the increasing proliferation these last few years of "crappy websites" -- you know the ones I mean, the social networks for grandmas, the ones where you are not sure how they got funded because there is no viable source of profit from them. Many of these depend on online ads to survive, and they'll be the first to suffer from a general recession. As these junk sites get eliminated, will we be glad for the overall improvement this will mean to the average quality of ideas floating around, or will they drag the industry down as a whole?
Another question in my mind is really why do people invest in startups they know will never survive? Because they think Google and Yahoo! are dumb enough to buy them eventually? It seems like these giants have already slowed down on their startup shopping sprees. Can it be that they were helping to inflate the current bubble by creating false hope? If the latest stock market slump makes investors (and acquisitions) more cautious, there's no doubt that the startups that don't survive will send skilled unemployed labor and many a Bay Area condo onto the market, and this wave will spread from its tech epicenter to the rest of the country as it did the first time.
The threat of recession along with a regime change in the states promises to make 2008 an *interesting* year for the States at the very least.
Labels: business, startups, web
