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There is no bubble. Repeat: there is no bubble. The last time there were Chicken Littles proclaiming a bubble it was about 2005-2007, and there was no bubble th

by sabat 16y ago

There is no bubble. Repeat: there is no bubble. The last time there were Chicken Littles proclaiming a bubble it was about 2005-2007, and there was no bubble that time either. Yes, there was a problem later on with the housing market and with Goldman Sachs et al -- but that had absolutely nothing to do with an internet bubble. 1- it's only a handful of investments that seem excessive to outsiders 2- the investors are private and are mind-bogglingly rich 3- it's really fun to go around yelling "bubble!" to see if you can crap on someone's parade

bertil 16y ago
There is no problem as long as those investing know what they are doing, spend cash they don't need and have valuable skills they can leverage after 50. Chicken Littles like me simply don't want to be quoted by “an idea guy” who wants to “make the new Facebook” in a pitch to a retired plumber. Because anyone know of to use the web and most can sketch a couple of revenue models, a fraction feel like they can invest - that is to say, way too many people. If you say to external investors that high valuation for such or such company is reasonable, they won't be able to make the difference with another project that look very similar to them (both would be bunch of geeks in a garage). I worked for a dishonest guy, helping him pitch: fascination for the billion-dollar idea was alive and well a year ago, and thanks to Sorkin's movie and Groupon financial revelations, they are getting worst. Quick test: if you were not shocked that, in my last sentence I mentioned an “idea” that was worth a lot because ideas are nothing, execution is everything, do not invest (and think hard before working in a start-up). The economic specifics of Silicon Valley (namely signaling, Schelling-type salience) change the assumptions that you need to have a bubble: if a company raises a lot of cash, it gets attention — and that's usually what is decisive to attract talent & revenues. Some have failed, but rarely against all predictions.
- sabat 16y ago
  I understand your points and pretty much agree with them. My issue is with the term "bubble," because it means different things to different people. Originally, "bubble" means stock market bubble, and when one of those things bursts, it's really bad news. You're using it to mean a relative handful of private investors who may be over-investing. That does not have the same kind of consequences.
  - bertil 16y ago
    Never use economic terms without defining them. OK: I cheat, it's my job to define them — actually, I should be preparing tomorrow's lecture.

by sabat 16y ago

bertil 16y ago

There is no problem as long as those investing know what they are doing, spend cash they don't need and have valuable skills they can leverage after 50. Chicken Littles like me simply don't want to be quoted by “an idea guy” who wants to “make the new Facebook” in a pitch to a retired plumber. Because anyone know of to use the web and most can sketch a couple of revenue models, a fraction feel like they can invest - that is to say, way too many people. If you say to external investors that high valuation for such or such company is reasonable, they won't be able to make the difference with another project that look very similar to them (both would be bunch of geeks in a garage). I worked for a dishonest guy, helping him pitch: fascination for the billion-dollar idea was alive and well a year ago, and thanks to Sorkin's movie and Groupon financial revelations, they are getting worst. Quick test: if you were not shocked that, in my last sentence I mentioned an “idea” that was worth a lot because ideas are nothing, execution is everything, do not invest (and think hard before working in a start-up). The economic specifics of Silicon Valley (namely signaling, Schelling-type salience) change the assumptions that you need to have a bubble: if a company raises a lot of cash, it gets attention — and that's usually what is decisive to attract talent & revenues. Some have failed, but rarely against all predictions.

sabat 16y ago
I understand your points and pretty much agree with them. My issue is with the term "bubble," because it means different things to different people. Originally, "bubble" means stock market bubble, and when one of those things bursts, it's really bad news. You're using it to mean a relative handful of private investors who may be over-investing. That does not have the same kind of consequences.
- bertil 16y ago
  Never use economic terms without defining them. OK: I cheat, it's my job to define them — actually, I should be preparing tomorrow's lecture.