Not The Hype Machine

Rob Hyndman says in his comment to my Jealousy post yesterday:

It would be easy, for example, for someone to accuse you of holding to your views just because you're a VC trying to hype the market and get something going. I doubt that's true, but it would be fair game if the discussion is to be at that level ...

Posted by: Rob Hyndman

I have no desire to hype the market for web 2.0 companies. That's not what I am trying to do with this blog.

I think companies should be valued at a discount to the future cash flows, plain and simple.

What I am trying to do is use companies like Facebook and YouTube as case studies to think about potential business models and how they might impact current and future valuations.

That, after all, is a big part of my job. If we can learn from their choices, we can help advise our own portfolio companies.

There is a question out there in the marketplace about the scalability of web services. Many think they cannot scale into large businesses. Brad addressed this exact issue in his post on the Union Square Ventures weblog last month.

Clearly we think these businesses will scale. And so the point of these posts is to explore how they might scale into billion dollar valuations.

I hope everyone reads them with that context in mind.

Because this is not The Hype Machine. You can find that wonderful web service here.

Comments (2) | Posted October 2, 2006 in Venture Capital and Technology

Comments

Hype or no hype I could care less. The YouTube/FaceBooks content is good here Fred....great in fact. Rob's got a point, but you have always been upfront about what you are up to with FeedBurner in every case I can think of where the line might be getting blurry.

Stay the course; thousand points of light.

Posted by: Mike McDerment | Oct 2, 2006 3:44:16 PM

Actually, you are probably disincentivized from hyping the market, so I'm not sure that comment makes sense. Take a look at the last bubble. In spite of the fact that there were quite a number of ridiculous exits, there were so many cruddy business plans, over hyped valuations, and so many bad investors in the market that median return for the average VC investment was probably a lot lower than people think. Throw on top of that the number of me-too ideas that wasted the bandwidth of perfectly good entreprenuers who were probably better off spending time on something else. I think VCs are best served by NOT hyping the market, and I think you are well aware of that. A bubble doesn't really do the market any good.

Posted by: Charlie | Oct 2, 2006 6:03:07 PM

A VC

Musings of a VC in NYC