As Bryant Urstadt explains in "Social Networking Is Not a Business", last March Microsoft bought a 1.6 percent stake in Facebook for $240 million, giving the social-networking site a notional valuation of $15 billion. Yet according to Mark Zuckerberg, the company's chief executive, Facebook will lose $150 million this year. Similarly, Google paid $900 million in 2006 for the right to deliver ads on MySpace, the largest of the social networks, for three years--but Google says the results have been disappointing. So far, no one has much idea what will do for Web 2.0 what keyword advertising (the source of most of Google's 2007 revenues of $16 billion) has done for search.

I am ambivalent about bubbles. On the one had, they are tremendously destructive--of capital, but especially of human labor and creativity. When I think of how we toiled at Red Herring--how for years it seemed quite normal to work 14-hour days six or seven days a week--I wince. I still feel wounded.

On the other hand, speculative manias are an apparently inescapable feature of our entrepreneurial capitalism. "America, from its inception, was a speculation," Aaron M. Sakolski wrote at the beginning of his 1932 classic of economics, The Great American Land Bubble. I know that the railway, automobile, and airplane industries were all built in fits of speculative excess. Most of the companies of those eras no longer exist; but the best are still around. Similarly, I remember that the best of the dot-com companies survived the crash and continue to influence our lives.

When I survey the future of the Web (which we describe in this month's special issue), I feel confident that the best of the Web 2.0 companies will weather the inevitable correction. But I confess that I feel sorry for all the entrepreneurs, as young as I was in 2000, who must suffer their bitter lessons. Write and tell me what you think at jason.pontin@technologyreview.com.