Comments on: Will Weakening Economy KO Web Startups? http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/ Tracking the Internet Evolution Sun, 07 Sep 2008 11:31:34 +0000 http://wordpress.org/?v=MU hourly 1 By: An Innovative Recession? : Patrick Altman http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-858749 An Innovative Recession? : Patrick Altman Tue, 29 Jan 2008 16:48:55 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-858749 <p>[...] coupled with a very healthy outlook for VC funding. I think these numbers from 2007 will increase as investors pull more of their money out of real-estate and seek to put it somewhere: At the end of August, VC Keith Benjamin of Levensohn Venture Partners proposed that tech IPOs and [...]</p> [...] coupled with a very healthy outlook for VC funding. I think these numbers from 2007 will increase as investors pull more of their money out of real-estate and seek to put it somewhere: At the end of August, VC Keith Benjamin of Levensohn Venture Partners proposed that tech IPOs and [...]

]]> By: Bankers See Modest Growth in Tech M&A for 2008 - GigaOM http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-840543 Bankers See Modest Growth in Tech M&A for 2008 - GigaOM Wed, 09 Jan 2008 19:31:50 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-840543 <p>[...] While two-thirds of bankers expect an expansion in their deal flow in 2008, a mere 13 percent (or four times as many as last year) are forecasting a decline in their business. And although corporate buyers still plan on picking up customers and new technology through acquisitions, with 45 percent expecting to increase their M&A activity, prices are likely to drop. For second-tier and me-too startups and their venture investors, that means the end of the Web 2.0 gravy train could be fast approaching. [...]</p> [...] While two-thirds of bankers expect an expansion in their deal flow in 2008, a mere 13 percent (or four times as many as last year) are forecasting a decline in their business. And although corporate buyers still plan on picking up customers and new technology through acquisitions, with 45 percent expecting to increase their M&A activity, prices are likely to drop. For second-tier and me-too startups and their venture investors, that means the end of the Web 2.0 gravy train could be fast approaching. [...]

]]> By: 2008: The Year of LinkedIn? - GigaOM http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-734047 2008: The Year of LinkedIn? - GigaOM Sat, 01 Dec 2007 03:40:03 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-734047 <p>[...] sober cousin seems well-positioned for any economic weakness that could emerge in 2008, because it doesn’t depend primarily on advertising, but rather [...]</p> [...] sober cousin seems well-positioned for any economic weakness that could emerge in 2008, because it doesn’t depend primarily on advertising, but rather [...]

]]> By: Web 2.0 Manages to Sober Up « GigaOM http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-665942 Web 2.0 Manages to Sober Up « GigaOM Fri, 09 Nov 2007 22:25:07 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-665942 <p>[...] directly affected by gyrations in the interbank lending market, the space could be hit hard by contractions in online advertising. Yesterday’s slide in tech stock prices made it clear that tech can’t wall itself off [...]</p> [...] directly affected by gyrations in the interbank lending market, the space could be hit hard by contractions in online advertising. Yesterday’s slide in tech stock prices made it clear that tech can’t wall itself off [...]

]]> By: Mark http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-597030 Mark Sat, 06 Oct 2007 03:18:08 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-597030 <p>I think this article makes a lot of valid points. The key may be the old keep overhead low, keep costs low, and have a passion for what you're trying to sell. One good example out there is www.couponcowgirl.com . Do we NEED a recession? That's an interesting concept... we'll see</p> I think this article makes a lot of valid points. The key may be the old keep overhead low, keep costs low, and have a passion for what you’re trying to sell. One good example out there is (link) . Do we NEED a recession? That’s an interesting concept… we’ll see

]]> By: TechFruit » Introduction http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-583756 TechFruit » Introduction Thu, 27 Sep 2007 12:11:55 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-583756 <p>[...] again, with companies attempting to solve problems which never really existed in the first place. Some are reporting that the global economic slowdown is going to slow the pace of development of these [...]</p> [...] again, with companies attempting to solve problems which never really existed in the first place. Some are reporting that the global economic slowdown is going to slow the pace of development of these [...]

]]> By: Dave Liu dot com / musings from the edge » Articles of the Day http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-578188 Dave Liu dot com / musings from the edge » Articles of the Day Mon, 24 Sep 2007 18:00:54 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-578188 <p>[...] Clouds on Silicon Valley Horizon - The “R” word (recession) was bandied about last week by financial people after it was revealed Friday that 40,000 jobs were lost in August (analysts were expecting a gain of around 100,000), as companies started to lay off employees in the wake of an economy-wide credit crunch. So what does this mean for the Web industry, GigaOm asks? Is the Silicon Valley startup bubble about to burst?                 [...]</p> [...] Clouds on Silicon Valley Horizon - The “R” word (recession) was bandied about last week by financial people after it was revealed Friday that 40,000 jobs were lost in August (analysts were expecting a gain of around 100,000), as companies started to lay off employees in the wake of an economy-wide credit crunch. So what does this mean for the Web industry, GigaOm asks? Is the Silicon Valley startup bubble about to burst?                 [...]

]]> By: Will The Ad Slowdown Reach The Web? « GigaOM http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-546431 Will The Ad Slowdown Reach The Web? « GigaOM Wed, 12 Sep 2007 22:00:29 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-546431 <p>[...] (EXPGY), Countrywide Financial (CFC) and IAC (IACI), parent company of big-spending Lending Tree. Anne Zelenka and Silicon Alley Insider have written about the impact of this sector’s changing [...]</p> [...] (EXPGY), Countrywide Financial (CFC) and IAC (IACI), parent company of big-spending Lending Tree. Anne Zelenka and Silicon Alley Insider have written about the impact of this sector’s changing [...]

]]> By: Keith Benjamin http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-540220 Keith Benjamin Tue, 11 Sep 2007 02:45:04 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-540220 <p>Forecasting is never simple. Many variables must be considered. For technology start-ups to work, they need to generate revenues and find an exit. Exits tend to be a function of public market investors moving from one sector to another. I believe there is a strong relative case for technology IPOs. The tougher question may be whether or not venture-backed companies will be able to keep growing. The one point missed in this string is that we are in a global economy, where growing economies can help maintain demand for U.S. technology. I disagree that a U.S. consumer-led recession will automatically hurt technology spending. Disruptive technologies will still be able to deliver growth, whether to enterprises or consumers. Clearly, marginal start-ups will keep failing. The swing variable will be the reward for the winners.</p> Forecasting is never simple. Many variables must be considered. For technology start-ups to work, they need to generate revenues and find an exit. Exits tend to be a function of public market investors moving from one sector to another. I believe there is a strong relative case for technology IPOs. The tougher question may be whether or not venture-backed companies will be able to keep growing. The one point missed in this string is that we are in a global economy, where growing economies can help maintain demand for U.S. technology. I disagree that a U.S. consumer-led recession will automatically hurt technology spending. Disruptive technologies will still be able to deliver growth, whether to enterprises or consumers. Clearly, marginal start-ups will keep failing. The swing variable will be the reward for the winners.

]]> By: Michael R. Bernstein http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-540203 Michael R. Bernstein Tue, 11 Sep 2007 02:39:10 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-540203 <p>Anne, there is now large and growing upward pressure on rents.</p> <p>More and more folks are being foreclosed on, or can't qualify for a home loan, increasing demand for rentals.</p> Anne, there is now large and growing upward pressure on rents.

More and more folks are being foreclosed on, or can’t qualify for a home loan, increasing demand for rentals.

]]> By: Anthony Kuhn http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-539436 Anthony Kuhn Mon, 10 Sep 2007 20:14:43 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-539436 <p>Anne:</p> <p>Thanks for your insightful post on the coming storm in technology money, which seems like a repeat of one that happened not even 10 years ago! Loaning money to bad credit risks never made sense in the past, doesn't now, and won't in the futue. I cross-posted on your piece, along with some comments of my own, at http://blog.innovators-network.org The Innovators Network is a non-profit dedicated to bringing technology to startups, small businesses, non-profits, venture capitalists and intellectual property experts. Please visit us and help grown our community!</p> <p>Best wishes for continued success,</p> <p>Anthony Kuhn Innovators Network</p> Anne:

Thanks for your insightful post on the coming storm in technology money, which seems like a repeat of one that happened not even 10 years ago! Loaning money to bad credit risks never made sense in the past, doesn’t now, and won’t in the futue. I cross-posted on your piece, along with some comments of my own, at (link) The Innovators Network is a non-profit dedicated to bringing technology to startups, small businesses, non-profits, venture capitalists and intellectual property experts. Please visit us and help grown our community!

Best wishes for continued success,

Anthony Kuhn
Innovators Network

]]> By: jdavey http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-539141 jdavey Mon, 10 Sep 2007 17:46:23 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-539141 <p>If investors move back to tech, my concern would be the proliferation of garbage that we say before the dot-com bust. At least now, even though there are a lot of useless Web 2.0 startups out there, companies that do receive venture capital have a reasonable chance of succeeding. No matter what happens with the US economy, however, business models will adapt to suit their environment. It would probably be a blessing to see a move away from advertising-generated revenues.</p> <p>Justin</p> If investors move back to tech, my concern would be the proliferation of garbage that we say before the dot-com bust. At least now, even though there are a lot of useless Web 2.0 startups out there, companies that do receive venture capital have a reasonable chance of succeeding. No matter what happens with the US economy, however, business models will adapt to suit their environment. It would probably be a blessing to see a move away from advertising-generated revenues.

Justin

]]> By: eVxz.com http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-539011 eVxz.com Mon, 10 Sep 2007 16:31:31 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-539011 <p><strong>Will Weakening Economy KO Web Startups?</strong></p> <p>Economy watchers see recession as more likely after Friday' s weak jobs data. What does this mean for Web 2.0 hopefuls, now readying themselves for the fall conference season and dreaming of a Club Penguin style acquisition? The job numbers...</p> Will Weakening Economy KO Web Startups?

Economy watchers see recession as more likely after Friday’ s weak jobs data. What does this mean for Web 2.0 hopefuls, now readying themselves for the fall conference season and dreaming of a Club Penguin style acquisition? The job numbers…

]]> By: Anne Zelenka http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-538899 Anne Zelenka Mon, 10 Sep 2007 15:18:38 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-538899 <p>Pascal, there are different ways of measuring inflation, and some measures show fairly high recent inflation. Over the past few years, we've seen incredible home price inflation but that doesn't show up in governmental measures of inflation because they use rent, not home purchase prices to calculate the inflation rate. Also, the core inflation rate strips out energy and food prices which have shown recent increases.</p> <p>As for an overextended corporate sector, we do see that in hedge funds and private equity. Just because it's different actors that are overextended doesn't make it benign.</p> <p>If there is a "consumer recession," there will likely be an overall recession because the economy is interlinked. The fact that there is a secular shift from offline to online will soften the blow for companies with an online focus but it doesn't remove the danger of a contraction that spreads to all parts of the economy.</p> Pascal, there are different ways of measuring inflation, and some measures show fairly high recent inflation. Over the past few years, we’ve seen incredible home price inflation but that doesn’t show up in governmental measures of inflation because they use rent, not home purchase prices to calculate the inflation rate. Also, the core inflation rate strips out energy and food prices which have shown recent increases.

As for an overextended corporate sector, we do see that in hedge funds and private equity. Just because it’s different actors that are overextended doesn’t make it benign.

If there is a “consumer recession,” there will likely be an overall recession because the economy is interlinked. The fact that there is a secular shift from offline to online will soften the blow for companies with an online focus but it doesn’t remove the danger of a contraction that spreads to all parts of the economy.

]]> By: Anne Truitt Zelenka » A Burst of Blogging http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-538852 Anne Truitt Zelenka » A Burst of Blogging Mon, 10 Sep 2007 14:54:34 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-538852 <p>[...] Will Weakening Economy KO Web 2.0 Startups? [GigaOM] [...]</p> [...] Will Weakening Economy KO Web 2.0 Startups? [GigaOM] [...]

]]> By: Pascal Levensohn http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-538833 Pascal Levensohn Mon, 10 Sep 2007 14:40:26 +0000 http://gigaom.com/2007/09/09/will-weak-economy-ko-web-startups/#comment-538833 <p>Recessions usually occur when inflation and an overextended corporate sector are in evidence. Neither of those conditions are present today in the U.S.-- in fact, we are closer to deflation than inflation. When commenting on capital flows into Technology and Venture Capital, your initial comments appear to be narrower than Keith Benjamin's observations-- while some sectors in technology may not benefit from housing related contraction, others may not be impacted. The general point to consider is that most technology companies are unlevered growth vehicles. And even if there is a consumer recession, the underlying growth drivers for online media represent a secular shift from offline to online that has little to do with marginal growth and everything to do with a shift in business model.</p> Recessions usually occur when inflation and an overextended corporate sector are in evidence. Neither of those conditions are present today in the U.S.– in fact, we are closer to deflation than inflation. When commenting on capital flows into Technology and Venture Capital, your initial comments appear to be narrower than Keith Benjamin’s observations– while some sectors in technology may not benefit from housing related contraction, others may not be impacted. The general point to consider is that most technology companies are unlevered growth vehicles. And even if there is a consumer recession, the underlying growth drivers for online media represent a secular shift from offline to online that has little to do with marginal growth and everything to do with a shift in business model.

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