Typically, risk taking is something the US startup scene is well used to and, while they understand better than anyone else in the world how to maximize return on startup investments, things do often get overheated, and irrational trends are pursued too long, right up to the point that things really turn bad. Prime example we had in 2000 with Internet startups, with the whole tech scene following a year or two later (e.g. there was just no market for 20 metro DWDM startups). Now Web 2.0 is the buzzword and another one was - it seems - social network business models.

As managing director Barry Schuler of VC Draper Fisher Juvertson (also in 2007 the VC firm with the highest number of startup investments in the US) said at a conference in San Francisco:

"If I see another business plan for a social network, I might blow my brains out."

"It seems like 2000: Everything is the next big social network, even though no one has figured out a real business plan for that yet."

Of course what is said is often not done. Also DFJ has quite a good amount invested into social network sites and many others are still doing so now. Rational behind this? No risk, no fun I guess. For a history on social network sites, read this article here from the School of Information at UC Berkeley.