From The Editor: Here We Go Again –

After John Doerr apologized in 2001 for over-hyping the Internet, I figured VCs would take it to heart. But I was reading a story in the Washington Post in November about social networking companies and saw the following quote from Sequoia’s Mark Kvamme: “We are in the process of inventing Internet 2.0.”

Huh?

As Senior Editor Carolina Braunschweig correctly points out in this month’s cover story, social networking sites like Friendster, Tribe and LinkedIn are just the latest in a long line of Internet companies in search of a business model.

Yes, they are fun and can be infectious, particularly if you’re a 20-something college student with nothing better to do. Some, like LinkedIn (backed by Sequoia), offer a pretty good way for businesspeople to network. But social networking sites don’t represent some sort of paradigm shift. They are features, not stand-alone companies. Social networking functionality will be added to all of those sites where it makes sense, starting with online dating services like Match.com.

Don’t get me wrong. Some of these companies will turn out to be good investments. For example, Spoke Software will probably fetch a pretty penny from an ERP vendor for its enterprise software, which allows employees throughout a corporation to share relevant data, like sales leads.

But sites like Friendster aren’t going to be the next eBay or Amazon. Hyping this sector can only cast doubt on the credibility of the VCs investing in this nascent market.