There's a sort of valuation = real dollars group-think problem I'm noticing in the conversation here. Consider: what are the economic consequences of a $1 inve

There's a sort of valuation = real dollars group-think problem I'm noticing in the conversation here. Consider: what are the economic consequences of a $1 investment in 3x preferred stock for Facebook at a One Trillion Dollar valuation? How about a One Hundred Trillion Dollar Valuation (cue Doctor Evil Music). OMG! HUGE TECH BUBBLE! Answer: the same; the investor will make 3 bucks. Or, if FB goes totally under, she will lose $1. During the dotcom bubble, companies like Zefer had $100 Million SERIES A rounds. <<--- No revenues. This is not happening right now, in any way, shape or form. Are valuations off for early stage companies? Hard to say. Right now, with the YC class returns, they are certainly not off, if you believe a VC firm should earn on average no more than 25% return a year. Of course, that's short term. Long-term, of course, I don't know. But, there are a number of factors that say this is very different than the late 1990s: 4-10x lower cost (time, cash) to deploy technologies, far more tech savvy investors, and a more investor-friendly "this cash is going to let you upgrade from ramen to peanut butter" vibe for early funding rounds. These are significantly different dynamics for the tech world. Finally, if there is currently a 'valuation' bubble, it is most certainly not an 'economic' bubble. The total dollars floating around for these transactions is quite small compared to what happened during the dotcom crash. However much we like doing our startups, almost none of us are materially impacting the US economy. In fact, because the startups are so job-efficient, we are impacting far less per-startup than the last group, ex all of the public IPOs which took grandmother's money.