Will Venture Capitalists Burst the iPhone App Bubble?

iPhone Dr. Evil

The self proclaimed World's Toughest Programmer, Mike Lee, who left Delicious Monster to work on iPhone apps for Tapulous has revealed on his blog that he and the Tap Tap Revenge and Twinkle maker have parted ways, and not on the best of terms:

So it came to pass that when my Engineering and Design team had irreconcilable differences with where the company seemed to be headed, I was asked to make good on those promises. Serving as the team’s reluctant spokesman was not in my best interests, but honor dictated my actions. I delivered the team’s message, and was invited to resign.

And what direction exactly was Tapulous headed? The always outspoken John Casasanta, MacHeist creator and iPhone developer, says:

...we’re about to experience in the iPhone world is going to be a bubble along the lines of the one in the late 90s / early 2000s. The vultures are out and and they taste blood. The iPhone’s one of the hottest things around right now and there’s little sign of its popularity letting up anytime soon. And the venture capitalists want in… badly. The fact that the iFund™ exists is overwhelming evidence of this.

Read on for more after the break...

The iFund, of course, is the $100,000,000 venture capital fund Steve Jobs announced only moments after he finished introducing the iPhone 2.0 and App Store. They provide funding for startups with the stated goal of "finding the next Google". But there's no such thing as a free ride, is there? As the VCs give, so do they take. Not all of them are really in it for the long haul -- to build a lasting, generational business. Some are in it for the short turn-around -- to pull as much profit as they can, be it by sales or by sale, longevity and viability be damned.

Mike Lee is now contemplating his own startup, United Lemur, and ironically may be looking for VC funding all his own.

Mac developer Buzz Andersen, by contrast, thinks there's another way:

We’re living in the “anyone can play guitar” era of software entrepreneurship. Because of the confluence of increasingly accessible developer tools and the Internet, it’s now reasonable to think that one or two talented people, with little to no investment, can make anything from a good living to a fortune by bringing their idea to life. What kills me about the outmoded Silicon Valley gold rush mentality that I feel has entered the Mac developer community for the first time because of the iPhone is how much it fundamentally ignores the significance of Apple’s App Store as a field leveler. In many ways I think it’s the most advanced expression of this new era of software entrepreneurship yet. Come on, people: let’s not sell ourselves short on this opportunity for a bit of Palo Alto office space.

(via Daring Fireball)

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, ZEN and TECH, MacBreak Weekly. Cook, grappler, photon wrangler. Follow him on Twitter, App.net, Google+.

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