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Comment by d2 | Hacker News Reader

Chris is conflating the startup bubble with a general tech bubble and using the strength of profitable companies to defend startups.

Twitter and Color are startups with no clear business model. Groupon and Google are going concerns.

As per the blog entry: "A bubble is a decoupling of asset prices (valuations) from their underlying economic fundamentals". [Agreed!]

Throwing $45 million at Color with nothing more than an idea and the hint of an app is evidence of a bubble. So is Twitter's recent $7.7 billion valuation based on a predicted $150 million in 2011 revenue.

I know it hurts - hell it's going to hurt all of us - but you better believe it. Prepare to be profitable or die.

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Twitter has a very clear business model: advertising. They are on track to make $150+ million this year from it.

I thought much of Twitter's revenue came from licensing their firehose to Google, etc.

That was true for a moment. They did the Google/Bing firehose deals before they had promoted tweets/trends program.

Which means they're valued at 51 times revenue. To put that in perspective, Google is valued at just over 6 times revenue.

Totally different stages of business and incomparable. Google revenue is growing steadily, since $30B p.a for a single revenue stream is about as big as you can get.

If you want a proper comparison, Google's PE ratio was 150 at IPO (and 300 at the high range of estimates, and it eventually reached that)

A lot of smart people thought that was a bad buy at the time, as well:

http://nikcub.appspot.com/the-google-ipo-skeptics

Google turned a profit every year since 2001 and earned a profit of $105.6 million on revenues of $961.8 million during 2003. They IPO'd August 2004.

and Twitter has revenue of $150M and is probably 2 years away from an IPO. Just because it hasn't made a profit each year, like Google, doesn't mean that you can compare its current 50x PE to Google's current 6x

I would suggest that Twitter are likely waiting to book an entire year of profits and 3-4 years of revenue growth before they file

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