Are we inside Bubble 2.0?

Something truly significant is happening right now in the world of web creation. Engineers, entrepreneurs, and investors are buzzing with the possibilities of web 2.0 technologies, and the interactive applications they enable. There’s an energy — even a joyfulness — pervading the industry that this former web gal hasn’t seen since perhaps 1999. The web is getting fun again.

But the flip side of the fun is the fear that we might be witnessing (or rather, inflating) another bubble. “Bubble 2.0,” as TEDster David Hornik calls it in VentureBlog today:

Over the last couple of months I’ve noticed an increasing sense of unease in the venture community about the trend in Web 2.0 company creation and financing events. While no one is officially willing to peg it Bubble 2.0 for fear of missing the next great opportunity, I’ve been having lots of conversations with venture investors about this nagging feeling that we’ve been here before….

So why am I now getting this increasingly uneasy feeling? … There are a large number of “companies” being created again for the express purpose of being acquired … These folks are unabashed about their intention to be acquired and they are developing their software and services with an eye towards compatibility with their would-be acquirers.

Acquisitions in and of themselves are certainly not a problem. The vast majority of money-making venture investments reach liquidity through acquisition. But, by in large, the most successful venture investments end in Initial Public Offerings (IPOs) … If companies are indeed again being built for acquisition rather than independence, venture investors are in for a rude re-awakening (that will be precipitated by a very loud popping sound). While a few companies being built for acquisition will be acquired, the vast majority will ultimately run out of money and be shut down.

For those of us, as David writes, “who’ve seen this movie before,” it’s an important conversation to continue. Full post from VentureBlog: Built To Be Bought (Bubble 2.0)