Just got a post in my feed download from john chow in which he has embedded a video from youtube in which some guys are singing a silly web 2.0 bubble song. I’ve embedded it myself in this post because there’s something I’d like to say about web bubbles. When I started out freelancing in the web development industry, everybody was talking about how the first web bubble had exploded. Suddenly everyone thought there was no more money to make on the web and that was that. During that time I even had a shoe salesman tell me that he didn’t understand why I was still in web development. ‘The internet is over !’ he said.

This post is about expressing a different view about internet bubbles, what they are and why it might not happen again. I disagree with many opinions that people have about web bubbles. In addition, it’s amazing how opinions, which aren’t always based on understanding spread like wildfire through the online and off line business world.

But first, let’s take a closer look at a bubble …

What is the web bubble really ?
People use the term web bubble to describe the online business market as a whole. One characteristic of a bubble as you know, is that it eventually explodes, leaving nothing behind.

Bubbles can be big and small, respectively describing a big or small internet business market as a whole. Bubble’s are also empty, they contain air. Imagine a bubble growing, and growing until it finally explodes. The cohesive power of the molecules in the little layer of soap and water has become too small to keep the air trapped inside and the thing finally explodes with small bang.

Why the web bubble description is wrong
First of all, a bubble describes the web business market as a whole. When it explodes, it suggests that the complete internet business market collapses. This is wrong because it suggests that a decline of business opportunity on the web in a certain period effects everybody doing business on the web in the same way. This isn’t the case. Certain businesses may experience a drop in revenue, but they won’t go bankrupt. Web developers are a good example.Secondly, a bubble holds air, suggesting that the services delivered by the internet business market are ‘hot - air’. This is wrong, because the web has become a substantial part of modern business survival strategy. Many services that the internet offers have become irreplaceable in modern business models.

Putting the web bubble theory to the test
You must have noticed that many things in life follow a cycle. In business, we know that the production industry has a continuous cycle of production - sales - revenue - re-investment. Economies as a whole know cycles as well. There’s growth, there’s a top, there’s decline and then the whole thing starts again. Sometimes the drops are extreme, which we call a crash, while sometimes the drop is less radical, which is a recession. So, we have accepted the overall highs and lows which are involved in cycles for traditional economy. The concept isn’t so scary to us anymore, because we can’t avoid it from happening.This is because the forces (wars, oil prices and so on) that are the reason for recessions and changes can’t be controlled. What we do is make these cycles a part of ‘doing business’.What about the new economy then ? (the new economy is a term to describe the economy of the internet). Why is everybody afraid of a web bubble 2.0 explosion (actually a recession or crash) ? What are the forces behind decline of internet business opportunity ? Click prices ?

Does the internet have enough history for us to even draw conclusions about how long a new economy cycle could be ? Aren’t we just buzzing and hyping ourself towards our own bubble bang by expressing our fears, based on what happened years ago without asking ourself why it really happened ?

Where are the experts giving concrete reasons why so many businesses have failed, resulting in a ‘bubble explosion’ all these years ago ? Seriously, what about the fact that online business was really new back then and that companies were jumping on the e-commerce bandwagon without really knowing what they were doing ? I’ve seen big companies try to set up an e-commerce web site with a $750 dollar budget more then often. What kind of web professional can you hire with that kind of money ?

As a technologist with commercial knowledge and years of experience in the field, I can think of quite a few other reasons why things could have went wrong on a massive scale.

Conclusion
Maybe a light just went on in your head while reading the above ? Maybe this explains why some companies did ’survive’ the first ‘bubble explosion’ . I put the term bubble explosion between quotes on purpose. The reason is because even though many people will shrug their shoulders at Peter Thiel’s (co-founder of PayPal) sentence in the video, I wouldn’t.