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Innovation Economy

Bubble? What bubble? Things are great. Unless ...

By Scott Kirsner
Globe Correspondent / June 5, 2011

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Editor’s note: It’s January, 2013. Where did the tech boom of 2011 and 2012 lead? These events haven’t happened — but they very well might.

Let’s just dub this the month of the Facebook Face-Plant. After every man, woman, child, and Shar-Pei joined the social network, member growth stagnated for the first time in the company’s history. And it seems like fewer and fewer people are clicking on those omnipresent Facebook ads promising “one weird secret to losing belly fat fast’’; the company said advertising revenue fell 28 percent in the fourth quarter.

Facebook stock shed more than 40 percent of its value, and almost every other tech stock slid, too, including Twitter, TripAdvisor, and Salesforce.com (which acquired Microsoft last month). After a third of the restaurants in New York, Los Angeles, and San Francisco declared bankruptcy, largely as the result of too many half-off meals through services like Groupon and LivingSocial, eateries began to boycott the services.

The Nasdaq’s “Daily Deals’’ index, which includes the 25 largest publicly traded companies that peddle discounts by e-mail, slid 68 percent this past week.

By mid-January, angel investors and venture capitalists were tweeting, blogging, and thwacking about their intention to stop making new investments until the dust settled. (Thwack, the once-popular service that enables live video-casting from inside public restrooms, announced its first-ever layoffs this month.)

It feels as if a bubble has burst — especially to those who remember the dot-com implosion of 2001, the Wall Street crash of 2008, or the cupcake catastrophe of late 2011, when thousands of cupcake bakeries across the country went bust.

So how did we get here? Let’s look at some of the key moments:

May 2011: Shares of LinkedIn, a website that makes it easy to harangue former co-workers for favors, jump 109 percent on the day of its initial public offering.

June 2011: Groupon files to go public. Game developer Zynga, known for obliterating office productivity with online games like Mafia Wars, follows.

July 2011: Intensifying the trend of “acq-hiring,’’ when big companies buy small start-ups solely for their talent, Google pays $155 million for a “social TV’’ start-up called Remotr, only to learn that the company consists of a 14-year-old girl named Charisse and her pet ferret.

August 2011: Your accountant, your Uncle Sal, and the garage attendant at your office building all confide they are cultivating start-ups on the side.

October 2011: In a presentation at the Web 2.0 Summit in San Francisco, Kleiner Perkins partner Mary Meeker, a high-profile Morgan Stanley analyst during the dot-com era, delivers a PowerPoint talk on the future of mobile technologies. By 2012, she projects, the average American will own 1.7 tablet computers and 3.2 mobile phones, and spend more each month on apps than rent.

November 2011: Y Combinator, a “finishing school’’ for promising start-ups in Silicon Valley, announces a partnership with Wendy’s. Every Wendy’s restaurant will designate two booths near the bathrooms for tech start-ups. Y Combinator will supply $30,000 to each start-up, with Wendy’s providing unlimited baked potatoes and Frosties, in exchange for a 5 percent equity stake.

At the end of the program, Nigerian investor Dr. Hassan Dagogo promises (via a polite-but-urgent e-mail) to support each start-up with a follow-on investment of $500,000, wired directly to their bank accounts. Things go awry, and most entrepreneurs in the program end up living in Wendy’s parking lots.

February 2012: Poland Spring announces it will deliver bottled water for free to any start-up, in return for company shares.

April 2012: ABC televises the annual Webby Awards, which honor “excellence on the Internet.’’ Ratings for the telecast surpass those of Donald Trump’s new show on NBC: “The Apprentice: Lean Start-Ups.’’

May 2012: Instead of taking a 30 percent commission on all apps and content sold for iPhones, iPads, iTVs, iDashboards, and iNeuralImplants, Apple decides to pocket 70 percent of the money. The change triggers an investigation by the Justice Department. Apple’s stock enters a prolonged slump, and chief executive Steve Jobs announces his retirement.

August 2012: Jobs unveils his new start-up: FestivalOTurtlenecks.com. The site, offering a wide array of turtlenecks in colors ranging from midnight black to obsidian, lands $150 million from venture capital firms Kleiner Perkins and Sequoia.

September 2012: Frustrated by their inability to successfully pause, rewind, or fast forward video programs online — and tired of “buffering’’ — thousands of viewers cancel subscriptions to Hulu and Netflix and flee to cable and broadcast television. Analysts downgrade ratings of Cambridge-based Brightcove, a maker of online video tools.

October 2012: Crime rings begin targeting active Foursquare users, breaking into homes while individuals are busy “checking in’’ at distant restaurants, bars, or resorts. (One hapless thief is nabbed after using his Android phone to “check in’’ at a pawn shop.) The resulting drop in usage forces the New York company to cut 20 percent of its workforce and postpone its IPO.

November 2012: In a surprise announcement, actor (and angel investor) Ashton Kutcher is made CEO of Twitter. The terse-messaging company has struggled to find a business model since going public in March with a market capitalization that briefly surpassed Google’s.

December 2012: The founders of photo-sharing app Color (acquired by Kodak for $2.9 billion back in February) announce they are forming a new start-up. The company, Cooler, automatically updates your Facebook status with witty quips, photos from exotic destinations, and check-ins at white-hot clubs, all intended to make your friends jealous.

Cooler raises $80 million in first-round funding, most of which it spends hiring the Black Eyed Peas, Lady Gaga, and U2 to play a New Year’s Eve launch extravaganza at San Francisco’s AT&T Park.

“This party is gonna last forever,’’ Gaga tells the crowd.

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.