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It seems like after every piece I write here concerning my views on ‘bubbilicious’ (my new monaker for the second generation Internet Bubble) something I say comes true or I am validated in a certain way. Om Malik recently wrote an article for business 2.0 entitled “The new road to riches” that’s basically an article about how startups are now built to flip. This philosophy is basically to build a business to get bought. And that is the business model. In my last post of the bubbilicious series I mentioned how Yahoo just purchased a company who had yet to release a product. This is an example of a company that’s built to flip.

What’s this going to do? This is going to make VC’s attack earlier. If Yahoo is buying up everything that moves in the web service space, VC’s are going to have to get there first in order to compete. That will create an environment where anyone with a sticky idea gets bought (1998). In order for VC’s to see a return on investment, the company they have invested in will either have to be purchased by GYM or taken public via an IPO. The big boys aren’t going to touch a company that a VC has reached first because they will have to pay much more than if they had acquired them early.

I don’t like this cycle because when you pit VC’s and the giants it’s like a startup arms race. This can be no good. We will see. Stay tuned to the bubbilicious series on the new Internet Bubble.

The New Road to Riches - October 1, 2004
Om Malik on Broadband : ? Yahoo Exec Exits For Automattic CEO Gig

the bubbilicious series:
get in line for the next bubble, before it bursts | read | july 2005
more bubble talk | read | january 2006
gym = new vc’s | read | january 2006

Technorati Tags: tech, internet, business, web

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