Investment Banker Frank Quattrone, the man who helped usher in the first dot com boom by taking Netscape public in 1995, is starting to have “flashbacks” according to the New York Times. “It really feels to me more like 1995, which is the beginning of a new era of I.P.O.’s. The new era is called social, local, mobile, real-time,” he said. Quattrone sees some striking similarities between the IPO market this year, which has sent young web companies such as LinkedIn (NYSE:LNKD), Yandex (NASDAQ:YNDX), Pandora (NYSE:P), and recently Zillow (NASDAQ:Z), surging from the public debuts to in some cases triple digit returns in their first days on the market, and the beginning of the web bubble in the late 90s.
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“If people wanted to invest in Web, that was the only stock they could do it, so Netscape’s market value was higher than it probably should have been, and people could probably say the same thing about LinkedIn today. LinkedIn is the Netscape of its era,” Quattrone continued. While he thinks that the bubble is in the works, he cautions that it is still in its early stages, at least in comparison to the 90s web bubble which took five years to fully inflate and pop. Having recently started a new investment bank of his own, Qatalyst Partners, which has worked on recent deals with Texas Instruments (NYSE:TXN), Electronic Arts (NASDAQ:ERTS), and eBay (NASDAQ:EBAY), Frank Quattrone is far from an outsider to the banking world today.
He believes things to look out for, signaling the bubble is beginning to get blown completely out of proportion, are funny metrics such as “engineers multiples,” that web companies may start using to detract attention from poor financial statements. “When you see stuff like that happen, it’s time to put a big short on the market,” he noted.
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While Quattrone sees a lot of young web 2.0 companies as being over-valued, there is one business he has faith in so far, due to its ability to supplement news sources as a live feeder of information, Twitter. “Twitter has a several-hour advantage in getting information. I don’t follow any particular periodical anymore. I use Twitter as my customized news feed.” With a new round of fresh web IPOs to come from Zynga, Groupon, Living Social (NASDAQ:AMZN), and others, we’ll be sure to check back soon with Mr. Quattrone to see where he stands on the bubble issue.