Why Is Silicon Valley Partying?

silicon valley party

silicon valley party

Remember Silicon Valley in 1999?

It was the year for dotcoms. People with any kind of content were being implored to take venture capital and publish their content ASAP. Risk was not considered and money was available at the drop of a hat.

Today, Silicon Valley is in the same old party mode. Millions are being thrown at ideas and caution is being thrown to the winds. College graduates with ideas are the toast of the town and venture capitalists with cash are their hosts. What’s worse is that these college graduates are turning down offers because they sense that some other capitalist may hike it. Here’s a roundup of what’s happening out there:

Snapchat: All Deals, No Revenue

In May 2013, Benchmark, a venture capitalist firm, invested $13.5 million in Snapchat, which had millions of adolescent members and no revenue. Just recently (in October-November 2013), despite the no-revenue tag, Snapchat turned down multibillion dollar offers from Facebook and Google! What did this mean for Benchmark? – A 4000% return on investment in the space of a few months. If that’s not crazy, what is?

Money and Valuations

Facebook snapped up Instagram for $1 billion. Uber is valued at $3.5 billion. Twitter’s value is pegged at $22 billion. The bad news is that valuations are skyrocketing with each passing month. This is spurring a whole new generation of entrepreneurs armed with wild GPS-based, cloud-based software or information sharing ideas.

Do you remember Groupon.com? It listed close to $30 and it is at $9 today. Before it hit the market there was tremendous hype around its business model. People who invested when it was at its peak have lost a lot of their capital. Will the same story be repeated? Who knows? For the moment, it is party time.

What Do The People Who Matter Think?

Some folks, with deep pockets of course, figure that greed is driving Silicon Valley deals. Earlier, it was fear that dried up the money pool, and now greed is causing a money flood. It is also surprising to note that some people feel that it is not like 1999, but more like 1996, which was the year in which the dotcoms started ramping up.

The dooms-day-ers and the optimists stack up at 50% each and there’s no telling who’s right.

What Happened In 2000?

1999 was the year of greed. The bust came in 2000. That was the year in which money evaporated into nothing – it just disappeared!

Every entrepreneur and capitalist is talking about a mega-winner. There are loads of $200 million deals going around and interest is picking up. If a multibillion deal occurs at any time, it will fire up the Valley. This is what most capitalists and entrepreneurs are waiting for and it is for this reason that entrepreneurs with ideas like GPS-based-information-sharing, email-to-fax, creative software on cloud, pharmaceutical applications and more are holding back – they are waiting for the deal cash to balloon up.

Will the party crash? No one knows for sure. But one thing’s certain – every boom is followed by a bust.

Joe C. Scott hails from Calimesa, CA. He has 2 children and has a flourishing online business. Everything he does is based online, even faxing with his iPad using MaxEmail’s iPad App. So far, this “online” system worked great for him.

The following two tabs change content below.
Administrator and Chief Editor for TLB. Loves to talk. Super freak about publishing. Loves watching obscure movies, good cook and overall gentle fellow. Reach him if you want to write an article for TLB. Email him on marty@thelocalbrand.com