LinkedIn's flotation paves the way for dot-com bubble 2.0

Bubbles burst. There's no escaping it. And the question everyone in the technology world is wondering right now is whether they should expect to hear the popping sound of the next technology bubble bursting.

Ten years or so ago, the situation was much the same.

As the world approached the third millennium the technology industry was riding high - the internet was taking off, computer sales were soaring and (bar the risk of the Millenium bug) there appeared little standing in the way.

New ventures were formed, web sites were launched, and investment capital was dispensed like free newspapers.

The trouble was, for most of these ventures spend was high, revenue was low and technology was as much of a hindrance as a help.

Take Pets.com. It opened in February 1999 and was closed by November 2000 - along the way it raised $300m in investment capital and advertised during half-time of the Superbowl. And what did it do? Sold pet accessories.

Selling things over the web is far from being a bad idea - look at Amazon. But for a company trying to do so at time when internet connections were painfully slow (mostly dial-up), for niche products, and without consumers having much experience or confidence of shopping online, $300m seems a ludicrously overpriced idea.

Then there was Boo.com, an innovative online fashion site that spent over $130m in venture capital during its short existence. Again, the idea was reasonable, but internet speeds are only now able to cope with interactive clothes shopping, let alone in 1999.

The list of firms that were over-hyped and oversold is not a short one:

• Geocities was bought by Yahoo for $3.5bn and struggled to make any profit, and was eventually closed in 2009.

• Search engine Excite was bought for a terrifying $6.7bn at the start of 1999 and in October 2001 was bankrupt. Over 1,000 staff lost their jobs.

• Netscape, which once commanded over 90 per cent of all browser users online, was bought by AOL for $4.2bn. However, Microsoft's Internet Explorer quickly eroded its market share to just one per cent of all users online.