In my last post, I linked to something that First Round Capital’s Josh Kopelman wrote in 2007. His post was prompted by — wait for it — a New York Times piece declaring that “Silicon Valley’s math is getting fuzzy again.” We were in a BUBBLE! Ahhhhh!!!!

Reading over that post now, it’s pretty awesome.

As Brad Stone and Matt Richtel reported in October of 2007:

Internet companies with funny names, little revenue and few customers are commanding high prices. And investors, having seemingly forgotten the pain of the first dot-com bust, are displaying symptoms of the disorder known as irrational exuberance.

No, that wasn’t written yesterday — but it sure reads like it was.

“Bubble” proof point #1 from 2007:

Consider Facebook, the popular but financially unproven social network, which is reportedly being valued by investors at up to $15 billion. That is nearly half the value of Yahoo, a company with 38 times the number of employees and, based on estimates of Facebook’s income, 32 times the revenue.

Oh that silly little Facebook with its insane $15 billion valuation. 

The company is now weeks away from going public with a market value of around $100 billion. Yahoo, meanwhile, it now worth just under $19 billion. And they’re currently suing Facebook like chickenshits who realize their time is at an end. 

Facebook’s revenue is now past a billion a quarter. Yahoo’s revenue last quarter was about $1.2 billion. Profit for the two companies is about the same. What a difference a few years makes…

“Bubble” proof point #2 from 2007:

Google, which recently surged past $600 a share, is now worth more than I.B.M., a company with eight times the revenue.

Google still happens to be right around $600 a share. It’s now worth just under $200 billion. IBM? $239 billion. Guess what? The market corrected itself. 

But — Google has closed the gap with regard to revenue. Google’s revenue is now just about half of IBM’s on a quarterly basis. And IBM’s revenue is flat while Google’s is still growing.

Crazy, I know. Such a bubble.

“Bubble” proof point #3 from 2007:

More broadly, Internet start-ups are drawing investment based on their ability to build an audience, not bring in revenue — the very alchemy that many say led to the inflation and bursting of the dot-com bubble.

Again, that sounds like it was written yesterday. Either no startup has brought in any revenues in the past 5 years, or it’s extremely silly to imply that young companies will never bring in revenue because they’re not today. You decide.

“Bubble” proof point #4 from 2007 — a quote:

“There’s definitely a lot of betting going on, and it’s not rational,” said Tim O’Reilly, a technology conference promoter and book publisher.

I’d — wait for it — bet that a lot of investors from back then would disagree. And that’s even when you include the broader economic collapse which had absolutely nothing to do with the tech scene.

“Bubble” proof point #5 from 2007:

Putting a value on start-ups has always been a mix of science and speculation. But as in the first dot-com boom and the recent surge in housing, seasoned financial professionals are seeming to indulge in some strange instinct to turn away from the science and lean instead on the speculation.

Major bonus points for calling the housing crisis what it was, but point deduction for equating the 2007 boom times with the dot-com bust and the housing collapse. Not. At. All. The. Same.

“Bubble” proof point #6 from 2007:

“The environmental factors are much different than they were eight years ago,” said Roelof Botha, a partner at Sequoia Capital and an early backer of YouTube. “The cost of doing business has declined dramatically, and traditional media companies have also woken up to the opportunities of the Web.

“That does open up the aperture for a different outcome this time,” he said.

Wait a minute, not actually a “bubble” proof point at all! A voice of reason! There may just be a reason why Botha is one of the best in the business. Perhaps he should write the next “bubble” post for The New York Times.

“Bubble” proof point #7 from 2007:

Some trace the start of the new bubble to eBay’s $3.1 billion acquisition of the Internet telephone start-up Skype in 2005. EBay’s chief executive, Meg Whitman, reportedly outbid Google for the company. This month, eBay conceded it had grossly overpaid for Skype by about $1.43 billion, and announced that Niklas Zennstrom, a Skype co-founder, had left the company.

Not a sign of a bubble, just simply a shitty deal. Big difference.

And wait, didn’t Microsoft just buy that same company last year for $8.5 billion? Yup. Some will use that as a sign that we’re actually in a “mega bubble” now, I’m sure.

“Bubble” proof point #8 from 2007:

Google’s acquisition of YouTube last year for $1.65 billion, under similarly competitive bidding, might have accelerated the transition to loftier values. Google executives and many analysts argued that YouTube was well worth the price tag if it became the next entertainment juggernaut.

It has. And it’s now a good business for Google. That didn’t stop one analyst cited in the piece from saying “We are almost going back to year 2000 types of errors.”

Right.

“Bubble” proof point #9 from 2007:

Twitter, a company in San Francisco that lets users alert friends to what they are doing at any given moment over their mobile phones, recently raised an undisclosed amount of financing. Its co-founder and creative director, Biz Stone, says that the company was not currently focused on making money and that no one in the company was even working on how to do so.

This will be used as another proof point that we’re now in some sort of “hyper bubble”. But Twitter is likely to see something in the neighborhood of $400 million in revenue in 2012. Not Facebook revenue. Not massive. But not nothing. And growing.

Need I go on? Other examples from the article include Geni (which is still around, and paved the way for Yammer, a CrunchFund portfolio company which appears to be doing quite well). And Ning, which ended up selling for around $200 million — right around its perceived (and implied crazy) valuation at the time of the NYT story. Not bad for a “bubble” company.

But here was the most interesting passage from the 2007 story:

Mr. O’Kelley, formerly of Right Media, said other entrepreneurs had begun to think that the financing game is best played by avoiding actual revenues — since that only limits the imagination of investors. “It’s a screwed-up incentive structure, just like you had in the first bubble,” he said.

Compare that with:

“It serves the interest of the investors who can come up with whatever valuation they want when there are no revenues,” explained Paul Kedrosky, a venture investor and entrepreneur. “Once there is no revenue, there is no science, and it all just becomes finger in the wind valuations.”

We’re not just recycling the “bubble” talk, we’re recycling the key arguments behind all of the talk. The dangerous thing here is the implications that the same behavior that led to the 1999 actual bubble is happening all over again. It’s not.

It wasn’t in 2004. It wasn’t in 2005. It wasn’t in 2006. It wasn’t in 2007. It wasn’t in 2008. It wasn’t in 2009. It wasn’t in 2010. It wasn’t in 2011. And it’s not now.

Sometimes it takes — gasp — time to nail a business model. Some startups (and an increasing number, I’d say) focus on this from day one, some don’t. Some take the Google route. Or the Facebook route. And those routes appear to be working out just fine despite what a certain fear-mongering post from 2007 would have had you believe.

Hindsight may be 20/20, but foresight doesn’t have to be as blind as a bat. Again. And Again. And Again.

Twitter’s decision to implement the Innovator’s Patent Agreement could not have been an easy one. While it’s refreshingly straightforward and an obvious crowd-pleaser, it potentially puts the company in a bit of a vulnerable position. What if no one else adopts the policy? They’ll stand alone with their pants partially down.

While I haven’t yet talked to anyone at the company about the decision, my sense is that they made the call using a simple principle: do the right thing.

While obvious, it seems that companies are rarely guided by simply doing the right thing. Legal departments get in the way. Or investors get in the way. Someone gets in the way. What’s right isn’t often what’s “smart”. And that’s a problem on multiple fronts.

When I tweeted about the upsides of this decision earlier, many people were quick to point out some of the practical problems. What struck me is how all the problems mentioned were derivatives of fear. Fear of others. Fear of change. Fear of dying.

The number one reason not to implement the IPA seems to be the fear that one day things could turn south and then your patent portfolio becomes your main asset — either as a commodity for sale (see: Aol) or as a weapon (see: Yahoo). 

That is such a losing mentality. I’d bet any company not willing to implement something like the IPA due to those thoughts is more likely to fail. Failure is quite literally on their minds!

With the IPA, Twitter is taking the opposite stance. They’re betting that rather than having the fallback option to sell their patents at the highest possible price or suing others with them, they’re going to continue to win. And they’re going to continue to innovate.

And if things go wrong, they’ll go down with grace, not with the cowardice that Yahoo is currently showing. But again, things are less likely to go wrong because they’re not busy dwelling on things going wrong.

I think Twitter will find that doing the right thing will pay dividends. It’s hard to imagine a better tool for recruitment in this day and age. True innovators can do what they do best at Twitter without fear that their work will be misappropriated in the future. And in an age of growing concern about the power and intentions of Google, Facebook, and Apple, the broader startup space will look more favorably upon Twitter.

This, of course, isn’t the end of software patents. But it is a practical solution to a problem that was quickly spiraling out of control. 

After the initial high-fiving is done today, the cynics will come out and say this was purely a marketing maneuver. Or that it actually won’t change anything. But that talk is a disservice to what Twitter has actually done here. They’ve gone out on a ledge that others haven’t been willing to go out on — and that some never will.

They’re doing the right thing, which isn’t nearly as easy as it sounds.

How long until Yahoo sues Twitter claiming they patented the IPA idea years ago?

— MG Siegler (@parislemon) April 17, 2012

I used to be addicted to my RSS reader. Now I basically never use it anymore. I’m not sure the last time I had Google Reader open, but it’s just the backend for Reeder now. And even that is just my “catch all” to check quickly at the end of the day.

Instead, I use Twitter, and Facebook, and Tumblr, and Flipboard, and Pulse, and Techmeme to catch up on the news. I used to think I’d miss things this way. But I don’t. If anything, I get the news faster because humans are faster at tweeting things than Google Reader was at delivering the feeds.

The problem with this method of scanning the news is that it’s not all that scanable. For every news story, there will be 20 other personal tweets or status updates from friends.

That’s where Wavii comes in. The CrunchFund portfolio company launched earlier this week after years (quite literally) in the making. 

At a high level, Wavii takes a look at the news being published on the web and extracts the key elements of any story. It then presents this information in Facebook Newsfeed-esque snippets. So, for example, if “Rovio Mobile warns that fake versions of Angry Birds contain malware designed to attack your Android phone.” — an actual Wavii snippet right now — you can easily read that rather than having to read an entire 500-word story on the issue, hunting for the facts.

Back in October of last year, I wrote about one of our early CrunchFund portfolio companies, Everyme. At the time, they were rethinking social networking through the lens of the original digital social network: your mobile phone address book.

They put an app out there and a lot of people were testing it, sending feedback. That’s when the team had a realization: they were onto something, but they weren’t quite there. So they went back to the drawing board and rethought their rethinking of social. The result is the Everyme app launching today.

Address book information is still key, but it’s no longer about recreating your address book to make it social. It’s now about using the connections in there to create small, private networks — called yes, Circles. By syncing your address book information with Twitter, Facebook, and LinkedIn, Everyme can automatically cluster people together and populate some key Circles for you. Your hometown, your college, your current city, your work, etc.

This is similar in concept to what Google does with Google+ Circles, but the key is that most users won’t have to set up their own. And managing them is much simpler. The concept of Google+ Circles is right, but no one is going to manage them. No one does. It’s flawed.

With Everyme, the idea is to keep the Circles very small. And again, private. There are no options to share things to Twitter and Facebook — this is on purpose.

Everyme Circles are actually closer to Facebook’s Smart Lists, which the social network also populates for you based on relationships. But for many people, Facebook has become too large. It’s a network about sharing as broadly as possible for many now. Everyme is about the people you really know and care about — again, those in your address book.

In using the app and seeing how people are using it today, they definitely have some onboarding issues they need to work out. One great thing about the service is that you don’t need to use the app to use it — you can use email or SMS to interact with Everyme. But the flipside is that people are getting pinged to sign up and have no idea what is going on. They’re undoubtedly working on this.

The fact that so many people are working on smaller, more personal networks is a good sign for Everyme. They’re clearly onto something. With investments in Path, Just.me, and Pair, we’re obviously following this whole space closely as well. 

In the age of the Facebook IPO, the smaller network resonates. And that’s especially true on mobile, which is the most personal form of computing. My hunch is that Everyme isn’t an app that will easily win over the early adopter tech crowd, but it’s something a more mainstream audience should love. 

More coverage on Everyme today from The Next Web, TechCrunch, AllThingsD, and GigaOm.

A few years ago, I got a frantic email one evening. It was from a young entrepreneur named Kevin Systrom. “Hey MG, I saw you signed up for Burbn…” is how it started. He was freaked out. Someone had told me about the service and the sign up wasn’t locked down. But Kevin did not want me to write about his fledgling idea just yet. We hopped on the phone. Of course I agreed to hold the story. I’d write when he was ready.

We broke a lot of news at TechCrunch over the years. But I was always happy about the way we treated entrepreneurs with their delicate plans. Big companies are different — they can take hits. Outing young companies before they’re ready: not cool. When in doubt, defer to the entrepreneur. Michael taught us well. 

Anyway, while I sat on the story of a hot new HTML5-based location app, I got to know Kevin and eventually his co-founder Mike Krieger. Really great guys. Idealists. Just insane enough to potentially change things. So when I saw the news this morning that Facebook was buying them for a billion dollars, I was beyond happy.

We weren’t investors — sadly, we came into existence too late — but screw that. This is just a great story about a great product, great founders, a great team, and great execution. And I feel sincerely happy for these guys because I was there pretty much the entire time watching from a distance.

Burbn, of course, eventually evolved into Instagram. Kevin and Mike watched how people wanted to use Burbn to share and saw an opening. Pictures. They decided to take it. I was one of the first users of Instagram. Number 28, if this is to be believed. I immediately knew it was the right way to go. 

A few weeks later, I believe Om broke the news of Instagram to the world. I was annoyed — I HAD BASICALLY HELD THE STORY FOR A YEAR — but I loved the app so much that I wrote a thousand word preview anyway. 

The commenters mainly took a shit on the app and the concept. Another photo-sharing app?!!! That’s why they’re commenters and not out there building things. 

A few weeks after that, the app launched. Adoption was natural. It was a thing of beauty. 

A few days later, the “another photo app” people looked like huge jackasses. Instagram wasn’t just a photo app. It was an application that was able to change the way people view the world around them. It was expression through image. It was a new form of communication.

I wasn’t a picture-taker. I became a picture-taker.

Instagram thrived because Flickr dropped the ball on mobile. Badly. Pictures on the desktop were interesting. Pictures from your mobile device are a thousands times more interesting. Instagram had perfect timing. The iPhone camera got very good. Instagram exploded.

A million users. 5 million users. Bieber. 10 million users. 20. 30. Android is going to push it to 50 million users in no time. 

People are looking at Facebook’s buy today and thinking “what the fuck?” I’m looking at it and thinking that Facebook is ingenious. They’re one of the few large companies that understands how to and when to acquire. You don’t buy at the peak. You buy on the ramp up to the peak. Instagram as it stands right now is awesome. It’s the tip of the iceberg for what they want to do. 

We’ll see if they can execute within Facebook or not. Mark Zuckerberg is saying all the right things. And again, they’ve done great with their acquisitions. I have faith. 

In some ways, this is bittersweet. Instagram is a not insignificant part of why I got into the venture capital side of things. I knew that I had a talent for picking companies that would do well, but Instagram was the first that I knew I had nailed from the get-go. By the time they had done their seed and A rounds, Kevin and I were talking about the potential of me doing this: finding the next Instagram. His thoughts helped steer me to where I am now.

I’ve talked before about the one company I wish I could have invested in (realistically) early on: Square. Instagram would be a close second. And today’s outcome proves the thought.

I know I’ve said this before, but it’s so easy to get cynical in today’s tech world. Uncapped note here, billion dollar acquisition there, IPO over there… At the end of the day, you have to bet on great entrepreneurs to do great things. You have to bet on 5 years from now, not today. You have to bet on the world evolving enough to be ready for what’s coming. 

It’s threading the needle. But it’s so goddamn exciting. That’s Instagram.

Congrats to Kevin, to Mike, to Instagram. A fantastic exit that we all hope is the beginning.