Bubble 2.0 building?

Congrats to the recent del.icio.us acquisition but I can’t but wonder: what does it indicate when a zero revenue company that has 300k hard-core geeks as non-paying customers is acquired for millions of dollars?

What kind of a signal does this send out to startup X that’s dreaming up stupid Web 2.0 app Y and pitching it to investor Z that just read about the Yahoo acquisition?

Here’s a cool quote from Paul Kedrosky’s blog that kinda says it all:

“What risk? If the company doesn’t work out, we’ll sell it for $150 million. If the company kind of works out, we’ll sell it for $500 million, and if it really works out, it’ll be worth between $2 billion and $10 billion. Tell me how that’s risk.”
— Geoff Yang, Redpoint (Fortune; 12/06/99, Vol. 140 Issue 11, p177-188)