Microsoft CEO Steve Ballmer commented at Web 2.0 yesterday that he would buy 20 companies a year for the next five years at individual price tags of between $50 million and $1 billion. That makes 100 companies at up to $100 billion dollars.
VCs and entrepreneurs, who’ve harbored the fantasy that their efforts would be quickly rewarded by an acquisition, without actually having to worry about business models working, would seem to be justified in that mindset. Indeed, almost nobody is starting Internet companies today with the idea of actually running a business and making a profit over the long term — or even the near term. The idea of being around in 10 years (or even five) at the same company would be a joke to most folks in the industry.
(But see Craigslist and Where2GetIt as companies that have built value by plugging away over the course of a decade.)
Most entrepreneurs are self-consciously building companies to flip to larger players. By making public statements like Ballmer did yesterday, Microsoft is effectively fueling this kind of “magical thinking.”
Screenwerk 
October 19, 2007 at 4:44 pm
Good point Greg. There is also a NYtimes article earlier in the week about the uptick in early stage funding and exit strategies that are being fueled by this type of payoff anticipation (or exuberance).
Not that MSFT is doing anything wrong – it should do what it has to do to gain ground (which it needs to do in lots of product areas). But the byproduct as you say will be a lot of engine revving in the startup world.
Another byproduct is increased use of the B word. Of course this time you have to tack a “2.0” on the end.
http://www.nytimes.com/2007/10/17/business/media/17bubble.html?n=Top/Reference/Times%20Topics/People/S/Stone,%20Brad
(sub req.)
October 20, 2007 at 1:28 am
Pretty inspirational if you know how/where/who to submit ideas to without getting eaten up by the sharks
October 20, 2007 at 9:28 am
Hi Greg,
Great information.
Are we going to witness 1999 again?
A mass entry into the Web 2.0 scenario and killing themselves.
Courteously — S. Kumar
http://www.learnhomebusiness.com
October 22, 2007 at 3:36 am
I was sitting the the 2nd row when he said this. I looked back at the audience and that statement definitely woke up the sleepers.
As I recall, the context was around the fact that Microsoft has historically acquired companies in that range and expected to do so well into the future and the larger ones … like aQuantive and the rumors around Yahoo, are whole different deal from those that fall into the 50M – 1B range.
January 4, 2008 at 7:38 pm
[…] at least for a time. (But perhaps Steve Ballmer will singlehandedly keep the Internet deals flowing with his promise to buy 20 companies a year for the next five years at individual price tags of between $50 million […]