Is there a new tech bubble?

Something I've been struggling with over the past few weeks is the issue of whether or not a new bubble in the technology sector is developing.

Twitter has been valued at $8 to $10 billion. Twitter hasn't opened their books, they've only promised investors that they are making money. Does this seem crazy to anyone else, especially considering that only 8-10% of the American population, depending on who you ask, are actually signed up for Twitter, with a far fewer percentage actually creating content with frequency?

Then, news breaks today that Color, a mobile photosharing app started by the creator of LaLa, received $41 million in seed money from investing groups Sequoia and Bain Capital. This is an app that not only produces no revenue, but just launched yesterday. So there's that.

That being said, there are several reasons why this bubble is dramatically different than that which happened in the late nineties:

• These investments are being made by private funds rather than individual investors.

In the late nineties, everyone who was anyone rushed to get an IPO valuation of as high as possible to get on the gold rush that was the dot-com investment boom.  And, of course, the banks were happy to facilitate such transactions.  However, this time, with the banking industry on its heels and public investors generally more wary than usual, seed money is being granted to start-ups by venture capital firms and private equity funds, thus limiting the systemic risk of a collapse.

• These investments are in the tens, not hundreds, of millions of dollars.

It's estimated that $300 million in investment capital was lost in Pets.com, the quintessential example of misplaced dot-com exuberance.  Aside from the astronomical valuations of Twitter and Facebook (Facebook's might actually be justified), a small portion of overall venture capital is being invested in startups such as Color.

• The market is still relatively new.

It is fair to these investment firms to say that nobody really knows the value of these technologies yet.  Especially when it comes to apps that deal with augmented reality and photo sharing (the latter of which has potential to have a breakout year), there are no definitive apps or experiences despite a relatively crowded marketplace.  Thus, there is significant opportunity for firms such as Sequoia to place what are essentially side bets on companies that may or may not have huge upside.  Which is, I suppose, what venture capital is.

I'm not ready to start ringing alarm bells yet.  However, it is somewhat distressing to see this much money poured into what are essentially beta tests with no model for revenue generation.  Fueling growth and innovation is one thing; placing unjustified bets just to make a name for oneself in the marketplace (cough, Bain, cough) is another.

-Taylor
africa to new york, haiti then I detour, oakland out to auckland, gaza strip to detroit

I can't tell if this is endlessly endearing or really creepy

Update: Google Announces Mobile Payments

As I discussed yesterday, this could be a big win for Google if they can get this right and popularize it in the areas where they roll it out before Apple has a chance to make a play.

Via Silicon Alley Insider

Rumor: Apple to omit NFC in iPhone 5

Reports from The Independent seem to suggest that the iPhone 5 won't come with NFC built in, rendering it unable to make swipe-based mobile payments (unlike the Nexus S, Google's NFC-capable flagship Android phone). Sides are currently split as to whether this is a good or bad thing, and Apple's reported logic is that they don't want to implement a feature that isn't 100% ready to go on an Apple device in addition to the current lack of industry standards with respect to NFC technology. This rumor comes on the heels of reports that Android devices have overtaken the iPhone in U.S. smartphone market share.

I'm not convinced that this isn't a bad move on Apple's part; however, after thinking about the key issues involved, I am less convinced (just over "slightly") than I was when I first read the news (DEFCON 3). Here is what I've been able to come up with:

Coca-Cola to help Maroon 5 crowdsource new song; will presumably be even more generic than others

In the latest example of social-media-as-art, Coca-Cola is setting up a promotion that will allow users to help Maroon 5 write a song in just twenty four hours. Maroon 5, notable for being one of the first acts to have a hit single (This Love) predicted through computer analytics software, is now one of the first to allow real-time fan interaction and feedback on chords, riffs, and lyrics. Social media-loving fans are expected to encourage the band to adopt Bieber-like haircuts, autotune everything, and invite Lady Gaga for a cameo.

Via Mashable