The Wall Street Journal recently ran an article about the new wave of young CEOs (subscription required) and the aging venture capitalists who pursue them. The article is full of cute anecdotes about financial backers trying desperately to fit in with a much younger crowd, and it's a fun read.
But that's not why I'm here today.
The important takeaway from that piece, at least to me, is that a new bubble is forming in Silicon Valley. The venture capitalists have been through one serious boom-and-bust cycle, and they really should be more careful this time around. Yet the upstart entrepreneurs are the ones cherry-picking their backers, not the other way around.
What's going on here?
Last time, the New Hotness was the Internet, and as long as you had a cute sock puppet, it seemed easy to talk somebody into handing over a few million so you could develop your online pet store. Or whatever. It seemed as though little effort went into separating the likes of Google
Yet it seems that history is about to repeat itself now, if the WSJ article is any indication. The new new thing is social networking, as exemplified by sites such as News Corp.
Sure, I may be wrong, but I advise everyone to remember past lessons and be sure to separate real, viable business models from the pretenders as this plays out.
More Foolish reading:
- We can show you some signs of impending doom.
- Then we'll show you some promising startups.
- It all leads to great returns in the end.
So how can you tell whether video site YouTube, Web 2.0 designer 37signals, or tech-news source Ars Technica are the next big moneymakers, or doomed to ultimate failure? David Gardner's staff atRule Breakersare standing by to help you sort the wheat from the chaff, and you can take the service for a free 30-day spin to see whether it's the investment style for you. If you're looking for tomorrow's winners today, Rule Breakers is where you'll find them. Maybe a few venture capitalists could stand to join the gang -- before they throw their money away.
eBay is a Motley Fool Stock Advisor selection.
Fool contributor Anders Bylund owns none of the stocks discussed here and won't admit to using any of the 2.0 services. He does contribute to Ars Technica , though. Foolish disclosure has been in vogue for years.