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Comment by w1ntermute | Hacker News Reader

> Hell...there are hundreds (if not thousands) of companies just doing advertising services, alone.

http://idlewords.com/2015/11/the_advertising_bubble.htm

> I often wonder how much of Facebook's revenue (for example) consists of valley startups trying to micro-target indifferent consumers.

During the dot-com boom, a large fraction of Yahoo's revenue was coming from startups, who were using their VC money to pay exorbitant amounts for partnerships with Yahoo. You can guess what happened at Yahoo when the party ended in 2000 and the money men went back to NYC.

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Yep. I remember it well, but people seem to think that since these "partnerships" aren't (obviously) taking place, it can't happen again (also, that idlewords piece is great. everyone in tech should read it, and feel at least a little fear).

There's this great segment in eDreams where the founder of Kozmo.com flies to Seattle to announce a partnership with Starbucks, wherein Starbucks gave them a small amount of money, and they committed to paying Starbucks $30 million a year over five years to put their boxes in Starbucks' stores. Kozmo pitched this as an investment (personal aside: lol), and Starbucks announced that this would increase earnings by five cents a share for fiscal 2001 [1]. Kozmo was, of course, dead by early 2001.

It's painful to watch this now, but it really seems like the same things are happening again. The flow of money is just happening in real time, and not being projected forward on a five-year basis and booked as current revenue. (That happens at the unicorn stage instead, where we seem to have made up fun new ways of booking future recurring revenue as present-day revenue growth, and traditional accounting rules do not apply.)

[1] http://www.wsj.com/articles/SB950479618236414189

> it really seems like the same things are happening again

Indeed, Starbucks pulled almost the exact same thing in 2012 with Square:

http://money.cnn.com/2015/10/15/technology/square-starbucks/

> That appears to be an understatement. Square, which filed to go public Wednesday, said that it has lost a grand total of $71 million from processing Starbucks payments over the past three years.

This partner overall sounds better for sbux.

That's also basically what happened to mighty Sun after it became the Dot in Dot-Com, right?

Sun, Oracle, AOL, EMC, Nortel, Lucent, Cisco - all took huge shots from the ecosystem of dotcoms going under.

Cisco for example, in the 4th quarter of 2000, grew sales by 61% (55% for the year). Famously they had basically accelerated growth every quarter for a couple of years. The projections had gotten almost insane, about how big Cisco was supposed to be in just a few more years.

The money quote from August 2000:

"We see no indications in the marketplace that the radical Internet business transformation in practices like customer service, supply-chain management, employee training, empowerment, and e-commerce that is taking place around the world today is slowing -- in fact, we believe it is accelerating globally," said [then CEO] Chambers.

3Com. They basically shut down their networking division because their management and investors figured that they were now a wrapper around Palm.

At JavaOne, I remember seeing Bill Joy predicting that $1T of wealth creation was going to grow to $10T. I think this was in 1999. A few years later, he warned that nanotech may turn us into grey goo. [I may be exaggerating a bit] Birth of a pessimist?

What are examples of these companies that are public/recently IPO'd?

If you're referring to adtech, Rocket Fuel IPO'd in 2013, and has steadily declined since then[0]. They raised $77M in VC funding, and their current market cap is $138M. The post-IPO peak valuation was ~$3B.

0: http://finance.yahoo.com/echarts?s=FUEL+Interactive#%7B"rang...

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