A financial bubble means that people are buying something less for its inherent value and more b/c they think that other people will buy it for more. Look at real estate prices. They should always be determined by people's salaries. The amount a person can pay for a mortgage is directly proportional to their salary. Salaries haven't been increasing much lately, but in the last few years real estate prices have gone through the roof. So home owners accept that they will be over-stretched in the short term in the hopes that they can "flip it" for more. Since people have become falsely convinced that "you can't loose in real estate" they are happy buying overvalued houses b/c they "know" that the price will only go up. The problem is you eventually run out of suckers. Eventually people say, this one bedroom condo is not worth a million dollars. After the notion that real estate prices "only go up" is disproved, the bubble quickly pops.
This is all to say that financial bubbles require lots of "transactions" for the positive feedback loop to take hold. People have to see the price going up up up up up up up enough to get hypnotized. Since there are very few public web 2.0 companies I don't see how this can happen. The transactions in Web 2.0 come from angels, VC's and big companies making acquisitions. Since there are very few transactions in the cycle there is little opportunity to pump the price up and pass it on to suckers. Also the suckers in question are professional investors and big software companies. While they may make amazingly stupid decisions from time to time, they are not nearly as stupid as the hordes of unwashed E-traders.
I think the real question is, "is Web 2.0 oversaturated?" That's a very different dynamic than a bubble.
This is all to say that financial bubbles require lots of "transactions" for the positive feedback loop to take hold. People have to see the price going up up up up up up up enough to get hypnotized. Since there are very few public web 2.0 companies I don't see how this can happen. The transactions in Web 2.0 come from angels, VC's and big companies making acquisitions. Since there are very few transactions in the cycle there is little opportunity to pump the price up and pass it on to suckers. Also the suckers in question are professional investors and big software companies. While they may make amazingly stupid decisions from time to time, they are not nearly as stupid as the hordes of unwashed E-traders.
I think the real question is, "is Web 2.0 oversaturated?" That's a very different dynamic than a bubble.