{"id":1450,"date":"2015-03-19T11:48:07","date_gmt":"2015-03-19T15:48:07","guid":{"rendered":"http:\/\/www.logikalsolutions.com\/wordpress\/?p=1450"},"modified":"2015-03-18T11:50:27","modified_gmt":"2015-03-18T15:50:27","slug":"dot-com-flame-out-2-0","status":"publish","type":"post","link":"https:\/\/www.logikalsolutions.com\/wordpress\/investing\/dot-com-flame-out-2-0\/","title":{"rendered":"Dot-Com Flame Out 2.0"},"content":{"rendered":"

Anyone who was around for the last Dot-Com Flame Out (affectionately called DOT-BOMBS) remembers how that scam went. Valuations were mostly based on revenue growth (it was the new-new economy but old-old venture money). Groups of Dot-Coms started \u201ctrading services,\u201d many in the form of advertising, to make the numbers exceed what the old economy investors wanted. Yes, a token few pointed out these companies weren’t actually making any money, but the hysteria over exponential revenue growth made idiots of rich and poor alike.<\/p>\n

That was Dot-Com Flame Out 1.0, mostly. Eventually people began to realize these companies should<\/span> have made money and should<\/span> be able to pay their bills without more venture capital. And, well, your retirement account paid the price.<\/p>\n

I believe I have discovered the vehicle by which Dot-Com Flame Out 2.0 will happen. In fact it is already in play. Even NPR<\/a> has been running stories on this, but not quite nailing it. I wish I could have found a link to the one I listened to last night during the money report. The Wall Street Journal<\/a> and others have been talking about eye-popping valuations and the various methods of arriving at them.<\/p>\n

The valuation which is sticking in my mind is \u201ceyeballs.\u201d Yes, a good many are still buying the bull about the Internet being and advertising ecosystem so they are swallowing this eyeball scam hook-line-and-14-sinkers.<\/p>\n

What scam you ask? Why only the newest and easiest non-cash way to raise money. Artificial eyeballs<\/b>. You’ve all seen it, but you haven’t thought about it. Perhaps you thought \u201cOh, this is convenient, now I only have to remember one password,\u201d but you didn’t actually think it through.<\/p>\n

\u201cWhat didn’t I think through\u201d you ask?<\/p>\n

Sign in using your FaceBook, Twitter, Google+ (okay, there are probably only two Google employees on Google+ so that really doesn’t count.) Many of the Web sites offering this \u201cfeature\u201d are new and getting lots of buzz. The official word I got from one of them was they didn’t want to spend their precious startup money developing a login and validation. The dirty little secret is they can lay claim to millions of users the day the site went live even though not a single one of those users has ever been to their site.<\/p>\n

Helloooo venture capitalist, have we got eyeballs to sell you.<\/p>\n

Once the news of a multi-billion dollar valuation hits the press all of those \u201cskilled\u201d chart lemmings follow the stock over the cliff.<\/p>\n","protected":false},"excerpt":{"rendered":"

Anyone who was around for the last Dot-Com Flame Out (affectionately called DOT-BOMBS) remembers how that scam went. Valuations were mostly based on revenue growth (it was the new-new economy but old-old venture money). Groups of Dot-Coms started \u201ctrading services,\u201d many in the form of advertising, to make the numbers exceed what the old economy investors wanted. Yes, a token few pointed out these companies weren’t actually making any money, but the hysteria over exponential … Dot-Com Flame Out 2.0<\/span>Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[908,50,909,907,13],"class_list":["post-1450","post","type-post","status-publish","format-standard","hentry","category-investing","tag-dot-com","tag-npr","tag-stock-crash","tag-tech-bubble","tag-wall-street-journal","bnm-entry"],"yoast_head":"\nDot-Com Flame Out 2.0 – Logikal Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.logikalsolutions.com\/wordpress\/investing\/dot-com-flame-out-2-0\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dot-Com Flame Out 2.0 – Logikal Blog\" \/>\n<meta property=\"og:description\" content=\"Anyone who was around for the last Dot-Com Flame Out (affectionately called DOT-BOMBS) remembers how that scam went. 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