Tuesday, October 25, 2005

Did VCs Learn Lessons During the Bubble?

The Seattle PI published an interesting article saying that there are concerns that VCs didn't learn any lessons from the dot-com bubble days. While a couple guys quoted in the article said that the enthusiasm isn't at fever pitch like it was during the bubble, there is some concern that the consumer space is "overheating."

Most interesting quote is from Bill Gurley at Benchmark Capital:

"You have to be careful," said Gurley, an early investor in OpenTable, Shopping.com and Jamdat. "I see what I would suggest are features being funded as companies right now."

Lots of risk of that in the mobile space and the podcasting space I think. I also tend to think that in new spaces markets fragment then consolidate. The consolidation is going to be very interesting to watch in our space. Personally, as you know from a couple of the posts here, I'm a fan of consolidation as long as it's good for consumers.

And to Gurley's point--if you're a startup pitching a feature as a product and you get funding, more power to you. I'd think any smart VC would do lots of diligence before making an investment like that.

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