Canonical and Secret: The dot-com bubble springs two slow leaks

Is it starting? We’ve all been waiting for it: the next Silicon Valley implosion.

The signs are there: ridiculous amounts of money thrown at barely birthed startups guaranteeing fantastic financials with no real evidence, debauched frat boy entrepreneurs who firmly believe their business plan is worth several billion dollars, and Fox contemplating a reality show starring the antique car hoarders of Mountain View. The most recent indications of a digital doom redux are Canonical shuttering its cloud service and the new online Silicon Valley bitch bin, Secret.

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In the ’90s, the word “Internet” had magic moneymaking power. You could graduate from a third-rate college with an undergrad degree in comparative medieval socioanthropology. But as long as you walked into the VC’s office dressed in black, carried the latest laptop, and sprinkled “Internet” and “website” throughout your business proposal, along with predictions of multi-billion-dollar market caps, you’d walk out with a seven- or eight-figure check.

Next, you’d get a loft office and fill it with motivational posters, sports memorabilia, custom desks, Aeron chairs, foosball tables, and a $5,000 cappuccino machine — voilà, the patented environment for guaranteed success! Hire a bunch of programmers dressed like Sherpas or punk rockers, slap together a v1 website with a beta program tested by bribed relatives, and you were set. Within a few months, you’d get an offer of $250 million in stock for your experiment, with expectations of making a billion dollars within a few years.

Then startups began to fail. Investors started looking for actual cash rather than ephemeral stock valuations. Eighteen months on, a whole segment of Porsche-leasing, no-qualification grad students with titles like Rainmaker, Technology Prince, and Money Catalyst went from behaving like boozy jailbirds to suddenly applying for paralegal posts or barista gigs. Reality hit hard and fast, punched low, and inexplicably took most of those guys — as well as previously gleeful investors — by complete surprise.

New magic, same spell

It’s starting to happen again. “Cloud,” “Web service,” and “app” have been the magic words in this bubble. But the frat boy behavior is back with a vengeance, as anyone living in San Francisco will tell you ad nauseum, in the form of nerds trying to look cool by snapping selfies with celebrities paid to attend their parties; business meetings catered by drug dealers and sex workers; and interviews with baked company founders claiming they might buy Google. “Creativity encouraging” offices are back, too, with everything from Oval Office replicas to playground slides.

And those paper-pushing cloud founders who are so technology savvy they’d try using a DNA test to remember their ATM pin codes? They’re still riding on the backs of hands-on developers promising them unparalleled technology innovations while actually playing Titanfall and Flappy Bird during the boss’s lunchtime “engagements.”

A break in the cloud

The failures are beginning, too. A cloud business was considered invulnerable just a few months ago — everybody was starting one, logic be damned. But Canonical’s Ubuntu One is a recent casualty. Was it a good plan to build out a music and media cloud service for a Linux distro aimed at the desktop market, where it has never enjoyed any real presence?

Sure, Ubuntu is a nice enough platform, but it hasn’t moved Linux’s desktop numbers one bit because it hasn’t changed the main weakness desktop Linux has always faced: It’s not about the OS. It’s about the mainstream applications, which Linux has never had. The few hundred folks actively using Ubuntu at a consumer level simply weren’t enough to keep Ubuntu One viable. Splat.

Canonical isn’t alone. Other Silicon Valley startups recently considered shoo-ins for massive market impact are starting to get shaky. Jelly looks like it’s headed toward a dirt nap. Clinkle appears staffed by preschoolers. No one knows what Klout is doing. People are wondering about bright predictions for Box, which is still operating at a $186 million loss, despite $124 million in recent earnings. And, of course, you may recall the game-changing, we-don’t-need-no-regulation bitcoin debacle.

The money madness has certainly taken hold. Hundreds of millions and double-digit billions in IPO and buyout deals are fairly common, spent on radical innovations like text chat, community sites, and photo sharing. You know — unprecedented snowflakes with unlimited potential that will someday change the way we all surf, live, learn, and sniff glue.

Secret is out

Then there’s the current app darling, Secret. Back in the day, the fourth horseman of the dot-com apocalypse was F@#%edCompany.com. The website was devoted to dot-com employees complaining of outrageous behavior from founders who thought they were Steve Jobs or Nikola Tesla and believed their own crazy business plans and valuation math. To prove it, they even leaked the internal memos, surreptitious photos, and documents. Near the very end, I remember a series of pages listing all the dot-coms that were dwindling faster than goodwill on an Obama-Putin courtesy call.

Secret’s turning into the same thing, but using chat as a medium. On Secret, you’ll find developers complaining that they don’t believe in what they’re doing; that their bosses combine the managerial skills of Saddam Hussein with the drug intake of Courtney Love; and that they wake up every morning contemplating suicide by self-immolation rather than going to work. Watch the video interview of Rap Genius co-headcase, Mahbod Moghadam, and you’ll not only witness the downside of legalized weed, but also early writing on the wall: The end is near.

I hope the bubble floats for as long as possible. Sure, it’s spawning truly nerve-grating, know-nothing startup execs who are so groundlessly arrogant they make me cry blood, but it’s also moving cloud, social, and software modality forward, while keeping NSA hackers and civil liberties lawyers employed. We’ve all experienced it before, and it’s a long-standing law of nature: What goes up must come down. Just ask Sheryl Sandberg, who’s already sold half of her Facebook stake.

I’m old, cynical, and obviously a cup-half-empty kind of guy, so maybe I’m ringing the alarm bell a little early, but I don’t think so. It’s coming and it’s going to hurt as much as or more than last time.

This article, “Canonical and Secret: The dot-com bubble springs two slow leaks,” was originally published at InfoWorld.com. Follow the crazy twists and turns of the tech industry with Robert X. Cringely’s Notes from the Field blog, follow Cringely on Twitter, and subscribe to Cringely’s Notes from the Underground newsletter.