Europe:Dot-com boom vs Web2.0

Doug Clinton:

It seems to me that at least part of the reason for the level of activity in Europe is the difference in financial model for Web 2.0. The dot-com boom was all about investing a lot of money, developing fast and then going for IPO. Burn rates for dot-coms were legendary and the capital was available on the basis that the investors would reap huge rewards on flotation. This, of course, meant that access to the much more flexible and willing US stock markets was very important.

Web 2.0 seems to be going about things differently. Companies are starting up on shoestring budgets and the exit strategy seems to be to be bought by Google, or some other cash-rich survivor of the last boom. The hardware and software necessary to get an idea off the ground is now trivially cheap in comparison to six years ago so the major cost is people. That means that two or three people who are willing to invest their own time in developing an idea can come up with something innovative and viable in a few months so access to a lot of liquid capital is not as necessary.