It's a nice personal account of appreciating lessons from the past. I believe PG has written that there is no bubble. I have to agree on that statement.

The dotcom bubble had totally different characteristics from today's upward shift. One can easily understand this difference from the IPOs of 1999. This was the target back then. Build it, grow it, sell it to the ignorants without any profit in the foreseeable future. Yes I know there were exceptions like Amazon that made it a few years down the line. However most of the entrepreneurs back then and their investors knew that their product/service will have no chance to make it in reality and all they wanted was the easy way out.

So what's the difference now?

Currently evaluations run high. Buyouts, not IPOs. If you don't like “Google” buying XYZ startup, just don't buy "Google" or sell it. However “Google” has a real sense of what they want to achieve and if they miss on a buyout, then they are the first to hit the ground. Hit the ground it is for some biggies, but we are not going to do name-dropping here. Their boards should have known better on who they put as CEO.

So are we seeing a bubble now?

Not by 10 million miles. And the reason is simple. Most of 1999 bubbles were copycats of the kind: Our Super Duper Site is going to be the NEW e-commerce market bla-bla that nobody thought and everyone needs. Give us 1 billion through IPO and we'll make it.

To begin with, the vast majority of Web 2.0 startups, are growing with “peanut” funding compared to 1999. However those that grow deliver good returns for their investors that are professionals (Angel Investors and VCs). So if someone takes a wrong call to invest in a startup, it won't be a pensioner hoping to turn 50$ into vacation in the Caribbean, but rather a professional who took a wrong bet. After all they know the odds and they have agreed to play the game. No tears.

Now not to underestimate the importance of Web 1.0, but Web 2.0 is the real revolution of IT in the cloud. One IT revolution was with the PC in the 1980s and the second one is Web 2.0. What are the reasons? In my opinion 2 main reasons:

1) Bigger bandwidth with popular DSL connections that can handle fairly demanding applications. 2) The explosion of publicly available open software tools from OS, to databases, to frameworks, to everything.

So when are we going to see another bubble?

I asked Nostradamus and he said in 6 years.