News Extra: April 25, 2008 Video

News Extra: April 25, 2008 Video Transcript

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>> I'm Dan Farber, editor in chief at News.com and I'm here with Caroline McCarthy, who wrote a story this week about how the Web 2.0 economy is in limbo. First of all, what do you mean by the Web 2.0 economy?

>> Well, you remember there was the -- the first time we really had an Internet economy was back in the late 90s, and that famously ended in the tech bubble bursting. And now, with the resurgence in start-ups, with companies like Google and Apple and Amazon getting even bigger, we have what some people are saying is another tech bubble. It certainly is another very strong tech economy.

>> Well, you know, what's really strange is we are experiencing a kind of slow down and perhaps a recession. In fact, NPD Group did some research with consumers, and 84% of them thought there was a big slowdown or recession coming. And yet you look at the earnings this quarter, and for a lot of these tech companies, whether it's IBM or Apple or Amazon, Google especially, things are going well.

>> Yeah. It's interesting because there's a disconnect between how the tech economy is doing versus how the broader economic signals are. I mean, obviously, investment banks are in trouble, Bear Stearns, obviously. Food prices are up. Gas prices are up. There are all these scary headlines about the economy, then you look at the headlines of most tech companies -- I mean there are a few exceptions, like, Nokia, NTI. But you look at Apple. You look at Google, Amazon, IBM. They're posting very strong earnings.

>> It seems to me that, you know, going to Amazon or buying an iPod is more important than, you know, the price of gas.

>> Yeah. People are still going to buy those iPods.

>> Now, we were at the Web 2.0 Expo, which is a conference in San Francisco, a gathering of the Web 2.0 digerati. And you went to some parties and had some observations about, you know, whether this is a new bubble, or this, kind of, over-exuberance is deserved or not.

>> Well, I can't say I was really living through the first bubble because I was not involved in tech at the time. I was not in the Valley. But I went to a couple of the Web 2.0 expo parties. People were handing out swag left and right. There were open bars. They were held at really trendy, big new nightclubs. And I was talking to people there and there were a lot of people observing the scene who'd been there the first time around, and they said gee, this does feel like1999. I think that it's not quite as over exuberant. I think that there were -- there was -- it's not -- definitely not as ridiculous this time around. But it is getting to a point where you've got companies that haven't made any money yet that are still throwing these huge parties to get their names out.

>> Now, as part of the Web 2.0 Expo, there was an interview with Marc Andreessen...

>> Yes.

>> ...who's famous for being the founder of Netscape and created the first -- the original browser with a team, the Mosaic browser. And he's gone on to fame and fortune. And he was talking about this notion of a nuclear winter.

>> Yeah.

>> And preparing for that if you're a start-up.

>> Yeah. I kind of wonder if Andreessen talking about nuclear winter is -- if that's going to be the catch phrase that irrational exuberance was in -- during the first tech bubble. What he was taking about is Ning raised, I believe, 60 million dollars. And it already raised a ton of money and so it seemed a little bit absurd.

>> Yeah. So here's a company...

>> Yeah.

>> Here's a company that has -- that does social networks.

>> Yes. Ning lets you build your own social network, they say.

>> And they've raised a hundred million dollars. So what do they need all that money for?

>> Well, Andreessen said that it's to prepare for the coming nuclear winter. And when he used the phrase "nuclear winter," that just set off a firestorm. People were saying is he being -- is he over hyping it? Or what if he's accurate. You know, this is a guy who has been involved in the Internet since, literally, it's earliest days. He -- you know, a lot of people are inclined to think he knows what he's talking about.

>> Well, he -- obviously he has the reputation. He can raise that kind of money. But I think that probably the big concern overall is will advertising really be hurt by a recession or this downturn?

>> Yeah. I mean I've talked to people throughout the conference and what some people were saying is that the big advertising players -- people are still going to have that kind of confidence in. But at the same time, we're seeing so many small ad networks pop up almost every day. And I thing that a lot of those are gonna take a big hit because it's easy for a company to pull back on it's marketing budget because you don't have to fire anybody in the process.

>> Well, we'll just have to wait and see how this turns out. Thanks very much, Caroline.

>> Thank you.

>> I'm Dan Farber for News.com. Thanks for watching. ^M00:04:35 [ Music ]