I was reading in the New York Times that Silicon Valley Startups are commanding high prices again, even though they have little revenue to show. Seems like nowadays all it takes is to hire a few technology gurus, go through the throes of company formation, establish a clientele and then try to sell your company for millions.
That’s an interesting view of the cutting edge of this new market, but you cannot forget all the traditional businesses out there who are also generating success out of online channels. I suppose in a way they represent the Long Tail of money that is moving into the online economy. Take, for example, a loan consolidation company. Traditionally they would have used cold calling, TV and print advertising and a whole host of other media to find new clients. Taking their business online gives them global reach at a fraction of the cost of traditional media. They can also use as a way to expand their business. If in the past they only used to offer mortgage refinance, they can now offer credit card consolidation and other forms of product with very little incremental advertising costs (once their platform i established). And they can also capitalise on the media in new ways; for example, by offering advice how to handle credit card debt and other forms of advice.
The amazing this is that 10 years ago, this industry was still in it’s infancy, and 20 years ago the Internet was the dominion of geeks and researchers. The Online World has radically changed the way we live, communicate and innovate, so I’m not surprised that the value of online firms is soaring. Google, at more than $600 a share is apparently worth more than IBM at the moment. Interesting times huh ?