Where is the Second Internet Bubble?

I read an interesting blog yesterday by Christopher Mims, a blogger who writes for MIT Technology Review and other publications.  In it, Mims poses a question that has puzzled me recently.  Six times more U.S. households are online today than during the dotcom era, but why have we not experienced a second Internet bubble?  Where is the inflation we experienced in the early days, and why are there no crazy speculative investors throwing money at companies destined to create wallpaper stock?

One could assume it is because lessons were learned.  But, come on, this is about money.  The American investment community gets real irrational real fast about entire sectors when one company has a favorable exit of any kind. Late money -- dumb money --  is never beyond the reach of hungry entrepreneurs who can point to the latest market forecasts and woo investors with the potential return of gaining only a fractional percentage of a multi-billion dollar market forecast. I've experienced it myself as the COO of an early stage company with no profit and barely enough revenue to buy coffee cups listening to otherwise intelligent investment bankers from leading global firms telling the company why we should choose them for our IPO.  

Mims points to the work of Shane Greenstein, an economist at Northwestern University. Writing for the IEEE Spectrum, Greenstein cites serval interesting points, two of which ring particularly true to me:

1. For all the negative memories we harbor, the dot.com era created incredible new e-commerce successes like Amazon, eBay and Expedia that generated significant value, and

2. The second wave of internet business has not been about value creation, but cannibalization of brick and mortar retail. 

If you believe the past helps us define the future, you will be interested in the very negative impact of the Internet that Greenstein describes. He and Mims have a lot more to say on the topic. It's a good assessment that reinforces what we know -- real value usually is borne of innovation and effort not remodeling.