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Optical/IP

Familiar Signs of a Bubble

10:15 AM -- By now, you've heard about Ponzify, right?

It's the next hot Silicon Valley IPO. We know because the title on its S-1 says so.

It's a product of the social media bubble -- and yes, there is a bubble. I'm so tired of people even questioning that.

How do we know? Light Reading was born of the 1999 optical networking part of the dotcom bubble, so we can recognize the signs.

They're all in the Ponzify S-1. Venture capitalists threw money at the founders just for existing in the right space. The company covers up those pesky losses with more meaningful, non-GAAP (i.e., made-up) measures. It's even got arbitrary metrics to track progress, since revenues can't tell the story properly: "For instance, KonBuy (short for 'Konfirmation Bias') scores the popularity of apps and websites based on whether their titles are intentionally misspelled portmanteaus."

The worst part is that the IPO proceeds would be spent on Dig Dug, Dragon's Lair and Frogger. Video games! Actually, that's OK; the problem is that their taste in games sucks. Sure, they anticipate having capacity for two Tron machines, but no Tempest or Gravitar? For shame...

Yeah, Ponzify is fake -- way fake. It's a satire published recently on McSweeney's.

It's playing off an overenthusiasm that cycles through every industry, but especially technology. Anyone else remember the investment banking commercial, circa 2000, where a fictitious stock was a "buy" because it had too much fiber? "They're ready to grow," the narrator said smugly, showing off the keen thinking of the bank's analysts. Were they ready to be wiped out by the fiber glut, too? The commercial skipped that part.

Likewise, Ponzify's phony S-1 has this: "We give away the product for free, then lure advertisers with the promise of connecting them to millions of people who hate to pay for things. Amazingly, it works."

Tech markets are lifeboats: Until the boat is sinking, everybody assumes there's room for one more. It'll play itself out, and the Light Reading readers who lived through this already with Corvis or Nortel or the old Lucent can take smug comfort in knowing they haven't climbed aboard this time.

Or you can invest in Ponzify. Its Twitter buzz is amazing.

— Craig Matsumoto, Managing Editor, Light Reading

Pete Baldwin 12/5/2012 | 5:30:55 PM
re: Familiar Signs of a Bubble

There's at least one JOKE company that's actually gotten funding. If that's not a sign of a bubble, what is?

http://online.wsj.com/article/SB10001424052702303505504577404284117534706.html

I'd feel better if the company actually sounded like a good idea, but it doesn't.


Then there's XKCD's crowdsourced startup, which is pure genius:


http://xkcd.com/1060/

MeerkatMac 12/5/2012 | 5:30:54 PM
re: Familiar Signs of a Bubble

An article that says absolutely nothing about nothing from the perspective of a 10 yr old in 1999.  That's the real JOKE.

Pete Baldwin 12/5/2012 | 5:30:51 PM
re: Familiar Signs of a Bubble

But the article does say something: History repeats, and Silicon Valley is either too dumb to notice or too greedy to care.


I did also write it for the fun of writing about Ponzify, that's true. We do that sort of thing sometimes. We need to do it more, IMHO.


Finally -- I was very much watching the industry in 1999, and also in 1992-3, when there was a PC multimedia frenzy that had some bubble-like qualities. I appreciate the compliment, Meerkat, but in 1999, I was 33.

paolo.franzoi 12/5/2012 | 5:30:49 PM
re: Familiar Signs of a Bubble

Wait Craig...bubble hysteria brought down the dot-coms.  It was not an over investment in companies with no actual business or business plans.  


Meerkat - that might be the biggest bit of revisionist history I have ever read.  The extension into the optical bubble led to things like startups being acquired at a multiple of the number of engineers on staff.  The point of the humorous article is to question whether social networking has an effective business model (how much is a service worth if you can't charge for it in an advertising sense).  The article that was being pointed to was deadly serious and basically asked the question that seems to happen every time...Why is this time different than the last 50 times? (with the implication that it is not)


seven


 

MeerkatMac 12/5/2012 | 5:30:49 PM
re: Familiar Signs of a Bubble

The comment about your age was metaphorical.  It's "bubble" hysteria like this that brought down the dot-com era, and later the housing market.  There isn't any more substance to the bubble hysteria than there is to the optimistic speculation it refers to.  Yet the careless use of this meaningless term can be devastatingly destructive.


Your article lacks substance, and provides no facts to support your assertions.  It simply throws out sensitive catch words like popcorn to pigeons.  Sure, lots of people may flock to read it, but they'll leave with empty calories.


 

Pete Baldwin 12/5/2012 | 5:30:49 PM
re: Familiar Signs of a Bubble

Hey, if that's how you feel, that's how you feel.  You call it bubble "hysteria," I call it taking a sober, grown-up look at markets that get overheated.


Questioning the bubble isn't what brings down the bubble. If that were the case, this one would've died out two years ago. 

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