Caroline McCarthy of CNET’s blog The Social has a long post that uses as a jumping-off point the party at this week’s Web 2.0 conference thrown by Mashable, with sponsorship from a new social-networking startup (still in alpha) called Chi.mp. The highlight of Caroline’s post, as Erick Schonfeld of TechCrunch noted on Twitter, was a line from an anonymous observer, who provided this humdinger:
“I’ll tell you what Chi.mp is. It’s venture money getting set on fire.”
In other words, no one cares what Chi.mp is or does, and even an alpha site clearly has enough VC money to blow on a fancy party. What does this prove exactly? Nothing, really — although it sure is a great quote. Caroline goes on to quote one of Tim O’Reilly’s typically enthusiastic comments about the Web’s effect on the world, in which he says that “We’re at a turning point akin to literacy or the formation of cities,” and then she notes how it’s easy to raise money if you’re PayPal founder Max Levchin or serial entrepreneur Marc Andreessen, but everyone else had better watch their step because the Web economy looks tippy.
Given that the party — which McCarthy seems to see as a kind of 1920s, pre-crash, Gatsby-style bacchanal — was thrown by Mashable, it’s probably not surprising that Mashable writer Adam Ostrow steps up to challenge the CNET blogger’s post. But I think Adam (who is also a Web entrepreneur, having acquired and relaunched Readburner.com) makes a number of good points. The bottom line is that the Web makes it so much easier to start and run a business — and yes, I’m using that term broadly — that it’s hard to see where the sturm und drang about the crumbling Web 2.0 “economy” comes from.
As Adam points out, the previous bubble was made up of companies with sky-high valuations that had gone public. How many Web companies have done that this time around? Not many. So Slide convinces VCs it’s worth $300-million, and Twitter raises money at a $60-million valuation based on hopes and dreams — so what? That doesn’t hurt anyone except VCs who should know better. Web startups will continue to pop up like mushrooms because it’s just so cheap to put them together. Eric Ly started a scheduling service called Presdo with $35,000 and some code he wrote in a weekend. Let’s try and relax, shall we?