I don't think there's a bubble at all. The original tech bubble happened because companies IPO'd really early, and Joe Average Investor took equity out of his

I don't think there's a bubble at all. The original tech bubble happened because companies IPO'd really early, and Joe Average Investor took equity out of his home or took cash advances on his credit cards and invested it in high tech stocks. This inflated the value of those stocks, causing more Joe Average Investors to pour money into high tech stocks. Lather, Rinse, Repeat until mid-2000 when that cycle collapsed. There are precious few IPO's right now. And, the people investing in startups right now are accredited investors i.e angels and VC's. There isn't money rushing in from Joe Average Investor in the US, because by law they can't invest in a non-publicly traded company. Angels and VC's plan on a bunch of companies in their portfolio failing. They typically expect to lose money on %40-70 of their investments, break even on %30 of their investments and hopefully make a 2X to GoogleX return on their money on the %10-30 of the companies that "succeed". There are around 250,000 millionaires in the San Francisco Bay Area and 600,000 millionaires in NYC.[1] That's a huge pool of people that can afford to write a check for $25-50k without really hurting if they lose that money. A lot of those people are also increasingly willing to write a check to a couple of entrepreneurs with a promising product and a bit of traction. Why? Because they would rather do that with some of their wealth rather than pay a professional money manager %3 of their investment a year to manage their money for them. ref [1]: http://www.us.capgemini.com/news/current_news.asp?ID=840 http://www.us.capgemini.com/news/current_news.asp?ID=840