There is a truism that markets are discounters are all known information. So, for example, when you are inundated by stories in the media and online that the economy is going to pot, markets are over-priced and the next plague is upon us (oh, I just wrote that post), that is actually a bullish indicator.
Why? Because such thinking is collectively "priced" into the market once the information becomes known.
Relative to stock markets, someone once said, that the time to buy is when you see Fortune running cover stories on "The Death of Equities."
Which brings us to the backlash and bubble questions around that nebulous bucket known as Web 2.0.
Over the past couple of weeks, I have noticed a major increase in the number of articles, blog posts, T-shirt spoofs and the like calling out that we are in a Web 2.0 bubble, that innovation is dead, that everything is me-too, a feature not a product, etc.
Just in the past day, I have read posts which assert that:
- Innovation is nowhere to be found in the Web 2.0 world: I have written a pretty detailed response in the comments section of this blog by Russell Beattie, if you scroll that post to the bottom.
- The blogosophere is comprised of a bunch of irresponsible hacks: Again, when mainstream media feels compelled to attack, I would argue that it is a bullish indicator for the space.
- There is "proof of an emerging Web 2.0 bubble: The example cited is actually pretty funny, but I would counter that an example does not a fractal make.
- Attack the Flickr for Video wannabe's (and all Flickr for...derivatives for that matter).
First a disclaimer. I agree with a lot of the underlying commentary, and actually if you read these posts, the positions are to their credit fully formed. I guess my counter is, "Do you have a thesis that drives your investing strategy?" Hope and following the herd is not a strategy.
So let's just say that like any evolutionary system, marketplaces gravitate to wherever the resources are, whether they be cheap-easy-free money, cheap-easy-free open source and mashable software or motivated (cheap-easy-free) people.
Let's further say that the majority of these entities are bound to fail or be acquired for "undisclosed terms." That's just survival of the fittest. Hence, the grim reaper.
Finally, let's just say that the perspective of doom/gloom, discriminating analysis before investing or whatever you want to call it is now being priced into the market.
This will and should effect what get's funded, valuations, where entrepreneurs invest their time and how survivors and thrivers think about strategy.
I guess the nut of it is, do you have a thesis about why what you are doing REALLY matters, how you will monetize it, what your unfair advantage is and how you will grow your venture?
If so, codify that thesis, establish clear metrics of success for measuring how well you are doing, broadcast the indicators and trend lines and iterate as much as necessary.
Conversely, if you really don't have a thesis beyond, "We invest in big growing markets," the time is NOW to start baking one up.
