Get your crash helmets ready folks. LinkedIn soared. Yelp jumped 64% on its first day of trading. Facebook will no doubt fly.
Twelve years after the great crash of 2000 (oh, how I remember that well), are we poised for another massive tech correction?
I hope not. The innovation coming out of Silicon Valley, in particular centered around apps, and social media is exciting, and it has revived the VC engine, gotten sideliners back into the investment game, and — most importantly — created a new wave of hiring.
But an article today in the WSJ caught my eye. Turns out the ultimate litmus test for irrational exuberance may lie in our pet’s food dishes.
Remember the brilliant idea of taking online orders and shipping portly bags of pet food around the country?
Sock puppets unite!
Well, amazingly, the idea has resurfaced.
This time it’s called PetFlow.com, and the fledgingly start-up has already raised $10 million (!). The founders, not surprisingly, are quite familiar with the eight ball at their back. Keen they are to talk about “new economics” – shipping dog food in 2012 is markedly different than a decade ago. Part of that comes courtesy of the cloud. Back then Pets.com had to invest a tonne in infrastructure including costly servers. With Amazon Web Services, for example, that’s no longer necessary. Pay-as-you-go and scale your business accordingly. Essentially this is a massive reduction in risk, and enables smaller companies to significantly alter their pay-back forecasts:
Ms. Wainwright [former Pets.com CEO] said it had cost between $7 million and $10 million to get Pets.com running, before acquiring inventory. Now, said Ms. Wainwright, who last year founded an online luxury-clothing marketplace called TheRealReal, it costs about $25,000 to $30,000, eliminating risks for potential investors.
It’s an interesting story.
If the second coming of online pet food works, it could be the ultimate proof point that cloud computing can transform industries and business models.
If not, don’t tell me I didn’t tell you to enjoy the chocolate fountains while they lasted.
Admission: I actually don’t own a dog, alas. I’ve been researching on/off again for three years now. My latest attempt took me to Dianne Feinstein’s breeder in the East Bay where I was warned that a Yorkie will break its leg many times over from jumping off the couch.