Startup valuations will go up and down in the future as they have in the past. So they could go down. But it seems very unlikely that anything so dramatic is happening now that people will be calling this "the bubble of 2011" in the future.
Mark Zuckerberg is not a smooth talker who can code. The reason investors are interested in Facebook is their growth.
It makes sense for Twitter's valuation to grow proportionately with its traffic, whatever that is.
Startup investing is not based on revenues, like it would be if you were investing in a part share of a restaurant or something like that. When a startup is valued at $10 million, it doesn't mean that the company, as is, is worth $10 million so much as that it has a 1% chance of one day being worth $1 billion.
The way you make money investing in startups is to make a lot of bets that each have a small chance of paying off big. So while I'm not saying anything about the specific companies you list (most of which I don't know anything about), a list of recent startup fundings should always include a lot (perhaps a majority) that investors will ultimately lose money on.
The problem is, you don't know which the winners will be. They usually tend to look very unpromising. If you'd made this list 5 years ago, it would have included a web site for college students, bizarrely thought to be worth tens of millions of dollars.
A bubble is when investors are making lots of money off other investors by trading stuff that isn't worth anything. Risk is being grossly and broadly mis-assessed (deliberately or inadvertently). The bubble pops when people realize this.
In that sense, "majority of startup companies will end up losing money" is actually not a bubbly thing at all. Bubble mentality would be "most startup companies will IPO for huge valuations within a few years."
All of what you've said is true. However, there is still a trend in rising valuation (near bubble level), of which many other investors have noted as well.
There's something crazy going on in the american start up world. I was astounded that about.me was worth acquiring after listening to the founder of myonepage.com virtually declare it a bit of a disaster as he couldn't monetize it (he's now moved onto bufferapp.com). myonepage.com is practically identical to about.me, founded at pretty much the same time, same idea, good execution. And yet we've got the founder admitting he can't do anything with it.
Some say the about.me acquisition has an excellent team and that's where the money went. myonepage.com is one guy. So you really gotta wonder how great that team actually was.
There's a lot of startups going crazy valuation at the moment with some serious hand waving about business models.
Bubble.
And Facebook will be one of the first to pop, I'm tempted to bet serious money on it. My Dad just joined, he's been a reliable harbinger of death for any popular website.
FWIW, I wouldn't say I've "given up" on OnePage, I have just chosen to focus on Buffer to reach ramen profitability. I still believe it could do very well. I applied to a few accelerator programmes with OnePage and wasn't accepted a few times, I believe partly due to a tough space and partly due to my lack of experience or track record.
I believe OnePage was a "growth first" type of startup, though I could perhaps have introduced pro accounts I don't believe it would have scaled. There is much more customer development I need to do in order to fully understand what the problem is and come up with a solution which resonates with people. I think the space is interesting and the problem is worth solving and will reward the person who does solve it, but I needed a way to try and get out of the freelance work lifestyle and fully into startups without taking funding or joining another startup, so the only real option was to build a SaaS type offering and charge from day 1. Buffer is working out well in that sense and could free my time soon. Once I reach that stage, I will need to decide whether to build Buffer further or use some of my time to rethink OnePage. Not sure which route I will take yet.
Very interesting indeed. I think something like OnePage is more suited for me after I've had some success with another idea or if indeed I had funding, but like you say even those with funding are not making much progress in that space.
I definitely agree that the about.me case was very different from the norm - the founder had previous sold a startup to AOL and worked for them for some time, so that was obviously a key factor.
FWIW, the founder of About.me had really good connections--he'd already had a previous company acquired by AOL, for instance. And some have argued that About.me fabricated their initial user numbers.
Mark Zuckerberg is not a smooth talker who can code. The reason investors are interested in Facebook is their growth.
It makes sense for Twitter's valuation to grow proportionately with its traffic, whatever that is.