The WSJ posted a great piece today about Silicon Valley’s unique barometers for predicting a bubble burst. The article accurately points to key indicators that were abundant during the dot.com era. Silly names, ridiculous company services (like this one highlighted in TechCrunch’s complimentary post titled “Bubble Indicators.”), recycled dot.com ideas that flopped, and over funding in saturated sectors.

There are still several more indicators that have yet to surface, including:

• Absence of office space
• Extremely tight housing/rental market in and around Silicon Valley/SF
• Job-seeking nomads descending in droves into Silicon Valley/SF
• Entry-level candidates demanding company perks typically reserved for senior staff or management
• Excessive burn rates by startups on marketing

Thankfully, the dot.com/stock market meltdown resulted in tighter controls and public skepticism that largely prevents companies that have zero revenues from going IPO en mass.

A perusal of TechCrunch’s company archives show that since around mid-2005 about 1,800 startups have been profiled. It would be interesting to find out the percentage of these that are actually making money. Further, many more startups exist that weren’t able to make the cut into TechCrunch, so we clearly have a lot of fledgling companies looking to gain traction, user adoption, and revenues or that are hoping to be acquired by a deep pocketed, white knight.

Today my colleague and I were discussing the importance of clients being upfront with their PR team about issues or internal weaknesses that they’d prefer didn’t exist or that they presume aren’t relevant to PR. It is not wise for companies to undertake “partial disclosure” with their PR team. Inevitably the company’s “issue or deficiency” is bound to surface publicly, and it may not be a pretty scene when it does. Or it may simply and quietly drive away customers. We’ve seen this bad habit enough to recognize it is not an isolated situation by any means, and I’m sure happens with regularity at large companies just as it happens with the startups. Here are more reasons why full disclosure with your PR firm is the best approach:

• PR firms can be like your legal counselor. By undertaking full disclosure with your PR, they have all the pieces on the table, whether those are good, bad, or (yes) ugly, but they can help you put a more effective long term strategy together. This strategy will help the company navigate what should have been the avoidable!
• When your PR team knows straight up all of the company’s potholes and otherwise, they are in a much better position to counsel the client on the pros and cons. PR can give you the possible fallout: if you do x, then y might happen, etc. That way, the company can make better decisions on how to proceed — or not. So, for instance, don’t oversell your product/service prematurely. Why? Well, when reporters and people begin to try your product, guess what? They probably won’t come back—ever, or anytime soon. When a company publicly launches but the product wasn’t ready for prime-time, they cannot have a “do-over.”
• Rather than have your PR team unknowingly communicating hyperbole on a product, feature or benefit, if the PR team is truly “in the know,” they can adjust their emphasis on that benefit or feature that really doesn’t live up to the claim. Or, PR can tone down promoting a company’s position or approach vis-à-vis the competition, when in actuality; the company’s claim might be viewed as duplicitous by the press or blogger community.
• If a product or service is really buggy or essentially vaporware, companies need to realize that this type of smoke-and-mirrors strategy is not likely to succeed for a sustainable period, so they should resist prematurely marketing a product or service that isn’t ready for prime time. They’ll be spending their resources more effectively, and they will gain more credibility with the public for releasing quality products/services when they are ready to go to market.

While this all sounds reasonable, we often see an overconfidence on the part of entrepreneurs that they won’t get called out publicly for this nonchalant approach. Then when something does surface, they call in PR asking for help.

Yesterday, Brad Stone broke in the New York Times’ blog a rumor that the once high-flying Industry Standard, which crashed and burned during the dot.com days, will be resurrected soon. The timing is interesting. Ordinarily, I think that the Industry Standard would be facing an uphill battle. Here’s why I think they have a strong chance to succeed; they have the full backing of IDG, its track record in rarely stumbling, and its financial resources. The ownership of Industry Standard, circa 2000, was atypical—especially for IDG to be involved. Now it sounds like IDG will be fully in control of the success or failure again for this publication. Another reason why the outlook looks good for Industry Standard is because of the unfortunate death of Business 2.0. As a subscriber to Business 2.0, I believe that a void does exist. Business 2.0 took a unique perspective at high tech business and no other publication really took the same slant and approach that they did in finding and introducing readers to interesting companies, technologies and trends. Now, perhaps Industry Standard can take over the baton and fill the void. Lastly, I think it’s smart for IDG to test the waters slowly via an online site only. With once powerhouse tech pubs like InfoWorld going virtual, IDG knows firsthand the uphill battles they face in today’s publishing environment.

Investor’s Business Daily newspaper recently published an interesting article on social networking. The article* essentially talks about how MySpace and Facebook have attracted the bulk of the traffic to their sites and explores existing niche opportunities for other social networking sites.
It got me thinking: how many social networks are sustainable in the market? When will the market become saturated? According to Hitwise, the number of social networking websites or sites with social networking features has risen 40% over the last year to 4,721 sites. Days ago, Ning announced a new milestone of 100,000 user-created social networks, up from 30,000 in February. When Ignite launched TagWorld in 2005, we collectively ribbed that it was social network site #101. Even back then we knew the company was “late to the party.” But TagWorld had a technological advantage that gave it the ability to leapfrog others; It is now serving as the foundation for MTV’s new foray into social networking. Since 2005, there have been countless other social networking sites catering to older folks, people looking to lose weight, music aficionados, etc. After we helped TagWorld get on the map, Ignite began working with Multiply, a site with a different twist—focused on relationship-based relevancy, ie: real friends and family not virtual buddies.Multiply has succeeded by focusing on their differentiators (privacy, relevancy, and cutting-edge communication features) and is now at the doorstep of becoming a top 100 internet site.

Given Google’s ability to become the leader in search despite facing a saturated market, there’s always a remote possibility for some future social networking contender to usurp MySpace or Facebook. But by and large, the social networking ecosystem for “pure-play social networking sites” has indeed begun to settle with increasingly less room to wedge in and carve out a piece of the social networking pie. Here’s how the landscape seems to have taken shape:

• Leading pure-play social networking sites (roughly 10 million uniques or above)
• Niche-focused social networking sites (music, travel, weight, cooking, singles, exclusive, etc.)
• Age-focused (children, tween, teenager, young adult, adult, senior)

I think there is little opportunity for a brand new upstart (short of one that truly is outstanding) to muscle in against more established players that have already gained a solid user-base (multi millions) and have had a few years to become entrenched. Having said that, since social networking has become the standard for how we increasingly interact with others, I believe we will continue to see a mushrooming of exiting internet sites, newer sites and future ones, none of which are social networking sites per say, introduce a social networking feature/component.As we look ahead, 4,721 sites with social networking features is likely just the tip of the iceberg. (*Disclosure, Ignite facilitated partially with client references for the IBD article.)