What Bubble?

by Sam on March 29, 2007

I was recently poking around on Google Trends and Alexa and ran a few searches that provided surprising results.

The buzz on the blogosphere (and elsewhere) is that we are in a ‘bubble.’ VC’s investing like crazy, people spending money they don’t have, etc’

Well people say “numbers don’t lie,” so I decided to investigate…

If it were a true bubble I would expect that the term ‘web 2.0′ would be getting more and more airtime as the ‘dumb masses’ begin to learn what it means and write about it. Unfortunately Web 2.0 is in a major correction pattern (see major dip in 2007):

What Bubble?

Next, if it’s true that everyone is starting a company and every MBA wants to be a VC wouldn’t you expect that the number of people searching for and writing about the term ‘venture capital’ would be through the roof? Well, actually the opposite is true:

What Bubble?

Finally if we were in a bubble, people flush with excess cash and higher risk tolerance would be all be investing in the market, right? And if the internet generation were investing, wouldn’t it make sense that they would be using an online brokerage like Etrade? Thus Etrade must be getting traffic like crazy, right? Well, no:

What Bubble?

So what does all this mean? I don’t know.

But, maybe this whole ‘bubble thing’ isn’t all it’s cracked up to be. What do you think?

  • http://www.paulknag.com Paul Knag

    Google Trends, Compete, Alexa, are neat parlor tricks, but are too inaccurate to base any serious decisions or sociographic conclusions. They are diversions created to entertain. And search query volume on a specific term or brand is likely to be influenced by any number of motivations.

    Look at the recent S-1 filings by 2.0 firms that haven’t made yet a dollar. That to me is evidence of a kind of optimism and exuberance that we should have learned to be wary of in 1999.

  • http://www.leveragingideas.com Sam

    Paul:

    Thanks for the comments! I agree that there is bubbleistic activity occurring. However, I think the notion of a full-scale bubble may not be accurate in the sense that this ‘bubble’ is more isolated (Silicon Valley) although I beliwve we hear more about it since media buzz is much greater now with the advent of blogs, etc…

    My graphs are not perhaps as concrete as an S-1, but they are certainly counter-intuitive and do make for good debate.

    Also, I’m not sure I agree that Google Trends is a “parlor trick,” but at what point does it’s statistics become an acceptable source? They definitely have more merit than Wikipedia.

    Thanks so much for the comment!

  • http://www.lutek.ro Roman Alberto

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