QUOTED

January 4, 2008 at 1:54 pm PT

I am only going to make one prediction, but one with broad impact. We will see a dot-com crash in 2008. It will be more prolonged and deeper than the crash of 2000. The crash will be driven by a recession and prolonged slow growth in the U.S. Global investment capital will flee to quality, ending the speculative dumping of cash on Web 2.0 start-ups. … The big players will not be immune from this contagion. Google, in particular, will find its one-trick pony lame, with the advertising market suddenly stagnant or contracting and substantial new competition. The desperate competition with dwindling opportunity will drive profits in online advertising to near zero. Google and Yahoo will find their available cash dropping and will do substantial layoffs.”

–Entrepreneur Greg Linden says someone best get working on F’d Company 2.0

Tagged with: John Paczkowski, quoted, shorty

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http://www.marinsoftware.com Chris Lien

I will wager $10,000 to my favorite charity Juvenile Diabetes that Greg’s prediction will prove 100% wrong. Will the U.S. economy soften? The safe bet is yes, but don’t count out a major rate cut to stimulate the economy as we head to the election (look at most every past presidential election). The Web 2.0 ship has set sail, and the funding won’t run out in 2008 so these companies can continue to spend their funds. As for Google and Yahoo, let’s take them separately. Yahoo should drop 20%+ of its workforce as a jumpstart to get its “Jerry” back. But that has nothing to do with the economy, it’s just how does one re-energize a great company that took its eye off of the balls (search, music, video, social networking, etc.). As for Google, their one-trick pony will likely go down in history as the greatest economic creation (prize now held by MSFT’s OS and applications business), so don’t bet against them just yet. The flow of ad dollars into search will only continue as it works – and they will garner most of the spending. This time is much more rational than in 2000 – certainly there are excesses but that’s Mr. Market’s job to correct. There will be no crash in 2008 in dot-com land – if anything based on what I see the beat will go on and faster (open handsets / mobile this and that, monetizing social networks, more Internet advertising as that’s where one goes to reach consumers, etc.). We’ll look back on 2008 as yet another great year when the Internet continued its march into the mainstream of consumer and business lives.