8 ms·

Is it a tech bubble?

81 points by sethbannon 15y ago

j_baker 15y ago
It's nice to see someone approaching this question with actual data, and not gawking at a handful of acquisitions that are arbitrarily deemed "excessive".
- incongruity 15y ago
  Wait. What? Where's the data? There's a citation of P/E ratios for large tech companies and then the author's assertions about his judgements about seed and A series valuations. That's not really a lot of actual data in my book.
  - j_baker 15y ago
    There's always more data you can have. I was merely saying that the author presented enough data to make a credible argument, not that he was correct. His approach, though undebatably imperfect, is much more valuable than the typical "Complain because company x got acquired for too much damn money" approach you see most everywhere else.
- diminish 15y ago
  though i am at the same ship, with a startup, the problem of his analysis is that he already has a lot of investments waiting for an exit. it would be nice to watch carefully opposite ideas to this, of course, with actual data.
deleted 15y ago
[deleted]
hexis 15y ago
Are there any tech investors who say there is a bubble right now? Or do we not get to read about that until after the bubble pops and it becomes status-enhancing to have "known all along" that it was a bubble?
- j_baker 15y ago
  Did you have any facts or logic, or were you hoping that casting VCs as the next subprime mortgage brokers would remove the need to present them?
  - tatsuke95 15y ago
    The evidence is the sub-prime mortgage brokers. Or do you think that there is some invisible line of morals that separates one kind of person who lends money, from another?
    - Volpe 15y ago
      Loaning money that poses no risk to yourself (subprime brokers) is quite different from loaning money you risk losing (VCs). Morals don't come into it, they are factually different. VCs aren't on selling their risk (thus mitigating it). Are they? (I could misunderstand how VCs operate).
- eli_gottlieb 15y ago
  It's a bubble, which is why you've been hearing people hesitantly asking if it's a bubble for 6 weeks.
incongruity 15y ago
The problem I have with this is that there's a lot of conflating what "should be" with what is – he talks a lot about "intelligent investors" and "good investors" – but that says nothing about what is (or isn't) actually happening. It's precisely when bad investments get made quickly, at irrationally exuberant levels that we get bubbles – and the claim is that there is exactly that sort of irrational exuberance going on with many startups/or in VC funding in the tech sector. The only thing that the author offers to refute that specific claim are his own assessments of valuations, but no hard numbers. Further, he tries to argue that the Instagram purchase is justifiable because it's only 1% of FB's value – but that's just it – that sort of thinking is begging the question (in the old sense of the term) or circular. Based on what I've read, a 100 Billion valuation of FB would put its P/E ratio at around 100 – that's high. Really high. So, what if it trades closer to a 20 P/E ratio (where many other tech companies are) – that means the Instagram purchase was nearly 5% of FB's worth – for a 13 person startup with no revenue – made only as a defensive play, according to some. To me, that's excessive. Details aside, the whole point is that you can't use numbers from within the suspected bubble to support the argument that other numbers are rational and thus reflect the lack of a bubble. Those sorts of short-sighted arguments are on my list of warning signs for a bubble. When we get enough of those, the idea of convergent evidences should lead objective observers to bet on it being a bubble...
- j_baker 15y ago
  Really? I would argue that a bubble is a psychological bug that causes investors to ignore the numbers. They're usually right there in front of you, but the bubble effect short-circuits the rational thought process that tells you not to invest without checking the data. Now, I will be willing to grant that perhaps we're about to be in a bubble, but now we're venturing into the land of speculation, aren't we? If gathering data to tell us what the markets are going to do were easy, bubbles wouldn't ever begin in the first place, would they?
  - incongruity 15y ago
    How, exactly, do you see me as arguing that anything but numeric foolishness is going on here? Investors, in bubbles, frequently find ways to justify the numbers – often with talk of how the old rules don't apply, etc., etc. In this specific post's case, however, the author fails to see the lack of quality in the numbers which he (barely) uses. Trusting bad numbers without really digging into them is little different than "ignoring the numbers", as you put it. They're two sides of the same coin – sloppiness because of excitement or other failed thinking. As for your last argument – I'm not sure what to make of it. On the one hand, just a few lines above you argue that the numbers are usually "right in front" of investors and that bubbles are caused by ignoring them... but then you argue exactly counter to that and say that seeing bubbles isn't easy and that data can't tell you when there's a bubble. I strongly disagree with that last point – the housing bubble was definitely spotted using data before it burst, as was the last tech bubble. It's just that few wanted to believe that the old fundamentals still applied. But thus far, they always seem to.
jasonkolb 15y ago
I think there is a bubble in articles about whether or not there is a tech bubble. I cannot wait for it to burst.
- gm 15y ago
  Agreed, enough with the f-ing BS about asking the same question over and over. Signal/noise ratio has taken a nosedive on HN lately; sad.
rythie 15y ago
People need to define what they mean by a bubble, most of the companies mentioned are privately held, it's not clear this is like the .com bubble or that a crash would have wide ranging effects - unless someone would like to explain?
moocow01 15y ago
"Apple (14 P/E), Google (18 P/E), eBay (16 P/E), Yahoo (17 P/E)" Those are some nicely cherry picked examples of mature companies that have been around for a Silicon Valley century. But I don't think the bubble involves mature tech companies but rather is in the private markets for emerging tech companies. The recent IPOs are certainly indicators of this... Linkedin - P/E: 940 Zynga - P/E: No earnings (6B mkt. cap.) Groupon - P/E: No earnings (7.5B mkt. cap.) Pandora - P/E: No earnings (1.5B mkt. cap.)
- pdeuchler 15y ago
  Playing devil's advocate I'd say P/E ratio is a flawed metric to use when talking about what some of these new startups are worth. A lot of the newer IPO's represent companies that have significant assets in new areas that we haven't necessarily found the most efficient monetization scheme for yet. Pandora, for example, may not have any earnings, but the value of controlling the source of 100 million users music is no doubt quite valuable. Similarly, one might even argue that some of these companies are undervalued. Facebook's mindshare and ubiquitousness among the upcoming generation is without a doubt a new phenomenon, and so one could say that their current valuation approaching 100 Billion is small considering it's only based on the current monetization scheme of advertising (you would also have to argue at the same time that more efficient monetization ideas exist). tl;dr- It could be unwise to measure new age technology companies with old age metrics when discerning value Obviously, there are some outliers like Groupon that do create large valuations with little value (arguably)
  - moocow01 15y ago
    I'd agree the P/E isn't the be all and end all of company valuations and I think you make valid points. I think whats more odd is that the article's argument starts out with something that I see as more of a straw man argument. I think if you're going to throw P/Es into the tech bubble discussion, you have to at least address the very high P/Es of the notable SV IPOs and why they are justified. I guess the initial point just comes off as somewhat off-point and disingenuous to me, whether its a bubble or not.
  - incongruity 15y ago
davepeck 15y ago
Good question. I built a site to help us decide: http://techbubbleforeveryoneorjustme.com/ http://techbubbleforeveryoneorjustme.com/
InclinedPlane 15y ago
Of course there's a tech bubble, there will continue to be tech bubbles for a long time. But, it's not that much of a concern any more for several reasons. First, the core strength at the heart of tech continues to get stronger with many diversified sources of revenue, regardless of the bubble. Second, the bubble isn't all encompassing, only some companies are part of the bubble, not all. Third, there's widespread awareness about these bubbles while they are happening. The online business sector has matured tremendously in the last decade and a half, it is no longer even a little bit monolithic. The web is now just a platform, and while some online businesses may play in dangerous bubble infested waters, many others do not. We will never again have a situation similar to the original dot-com bubble, with such a huge impact across nearly every online business and such a huge impact on the entire economy.
- dimitar 15y ago
  How about a "social media" bubble?
jmtame 15y ago
I'll probably take a karma hit for this, but I find it neither intellectually stimulating nor effective to talk about whether we're in a bubble, especially if it's fear mongering. If you want to convince smart people they're living in a bubble, do it with data and intellect. This one at least seems like a step in the right direction using specific companies and PE ratios, whereas the previous articles were pretty easy to dismiss with hardly any data to reference (Chris seems to argue against a bubble in this article, I just like that he's using data). The only thing I can look at and agree with is that seed round valuations are higher. Can a bubble be created based on inflated seed valuations? That'd be a more interesting conversation to have. The A rounds are not trivial to raise--you still need traction, whether it's users or revenue. If we are in fact in a bubble, what exactly are you going to do? Are you going to immediately start focusing on revenue, knowing that it may be harder to earn in the near future? Are you going to go out and raise your Series A/B/C right now given your 6+ months of runway left? Or are you just going to entertain the conversation? It doesn't feel like a very productive conversation to have unless you're actually acting on it right now.
oskarth 15y ago
The best sign that we are not in a bubble is the fact that it's mainstream to think that we are in a bubble. This suggests that the possible overhype is already accounted for in the market price. It's the equivalent of when your taxi driver starts talking about a "hot stock", it's time to sell.
- eli_gottlieb 15y ago
  The best sign that we are not in a bubble is the fact that it's mainstream to think that we are in a bubble. This suggests that the possible overhype is already accounted for in the market price. No it doesn't, because most of these companies aren't trading on the public markets. They're taking venture capital funding or trading on private exchanges. So it takes VCs believing it's a bubble (which it is against their interests to believe!) to actually factor that into valuations. It's a bubble. Time to pick who's a real business, and buy their stock when the whole thing crashes.
confluence 15y ago
This might be relevant: http://www.quora.com/the_edge/Intriguing-answer-on-Silicon-Valley-bubbles-manias-booms-busts-crashes-and-winning-the-startup-lottery http://www.quora.com/the_edge/Intriguing-answer-on-Silicon-V... Apparently housing prices are bottoming out (US domestic) and people are starting to get serious interest in San Francisco property (much more than normal). I remember reading somewhere that rents had a massive run up during the last bubble (where leases killed a bunch of startups - 5 year leases at 2000 prices during the crash). From: http://news.ycombinator.com/item?id=3850170 http://news.ycombinator.com/item?id=3850170 Steve Jurvetson (DFJ Venture Capitalist) has this to say on whether or not we may be entering a bubble: http://www.quora.com/the_edge/Long-wave-boom-and-bust-cycle-from-a-talk-called-Innovation-in-a-disruptive-environment-by-Steve-Jurvetson-at-Stanfor http://www.quora.com/the_edge/Long-wave-boom-and-bust-cycle-... Who knows, with the JOBS act passed, and the consequent relaxation in securities regulations we may have sown the seeds of an unpleasant moment in the near future. Anyway some food for thought. JOBS Source: http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups... JOBS Act criticism: The Consumer Federation of America characterized an earlier version of the legislation as "the dangerous and discredited notion that the way to create jobs is to weaken regulatory protections" Criminologist William K. Black had said the bill would lead to a "regulatory race to the bottom" and said it was lobbied by Wall Street to weaken the Sarbanes–Oxley Act. "gutting regulations designed to safeguard investors", legalizing boiler room operations, "reliev[ing] businesses that are preparing to go public from some of the most important auditing regulations that Congress passed after the Enron debacle" and "a terrible package of bills that would undo essential investor protections, reduce market transparency and distort the efficient allocation of capital".
vectorpush 15y ago
The tech companies who are actually hiring people (i.e. the antithesis of the two person startup seeking technical co-founder) are selling a product or service for money. The only people worried about a bubble are those who are hoping to cash out on their user count. Ask yourself: "does the work I do contribute to a product or service that can be sold?". If the answer is yes, then you're living outside the bubble.
- potatolicious 15y ago
  A bit of an oversimplification, no? There are plenty of startups of the "lots of users, show ads" variety, some of which might actually make viable businesses, most of which probably won't. The trouble here is overvaluation - there are plenty of startups which do sell a product or service for money, but are overvalued and over-hired. I can imagine many startups here that would make viable, profitable, 10-person shops, but instead are swimming around with 100+ engineers. The fact that they have revenue and monetizable product isn't going to save them when the bubble bursts.
  - vectorpush 15y ago
    Indeed, I am generalizing somewhat, but it's a core truth that holds pretty well. Consumers don't really care about a bubble, if they value a product or service they're going to buy it. The bubble won't make a company any less profitable, an over-hired company is still over-hired regardless of whether or not a bubble exists; this applies even to ad-based companies. If the bubble bursts tomorrow, Facebook and Google won't care, it's not as if their ad-clicking users will suddenly stop clicking ads. A bursting bubble is only a threat to those who rely on external cash infusions to bootstrap their operations until they can figure out how to turn a profit. If 10,000 conversions a month is profitable, it will still be profitable when all the VC money dries up.
paulsutter 15y ago
The debate is caused by the binary term "bubble". Neither answer (yes or no) is correct. A better question might be "how exuberant are we getting?" (anyone around in 1996 wil recognize that term)
sparknlaunch12 15y ago
Can someone provide some stats on the number of "tech bubble" tweets and blog posts; versus boom and bust economic cycles? Does the bubble matter? Isn't it more important to be in a safe place when it burst, which means building some reliable now in anticipation?

81 points by sethbannon 15y ago

It's nice to see someone approaching this question with actual data, and not gawking at a handful of acquisitions that are arbitrarily deemed "excessive".

incongruity 15y ago
Wait. What? Where's the data? There's a citation of P/E ratios for large tech companies and then the author's assertions about his judgements about seed and A series valuations. That's not really a lot of actual data in my book.
- j_baker 15y ago
  There's always more data you can have. I was merely saying that the author presented enough data to make a credible argument, not that he was correct. His approach, though undebatably imperfect, is much more valuable than the typical "Complain because company x got acquired for too much damn money" approach you see most everywhere else.
diminish 15y ago
though i am at the same ship, with a startup, the problem of his analysis is that he already has a lot of investments waiting for an exit. it would be nice to watch carefully opposite ideas to this, of course, with actual data.

deleted 15y ago

[deleted]

hexis 15y ago

Are there any tech investors who say there is a bubble right now? Or do we not get to read about that until after the bubble pops and it becomes status-enhancing to have "known all along" that it was a bubble?

j_baker 15y ago
Did you have any facts or logic, or were you hoping that casting VCs as the next subprime mortgage brokers would remove the need to present them?
- tatsuke95 15y ago
  The evidence is the sub-prime mortgage brokers. Or do you think that there is some invisible line of morals that separates one kind of person who lends money, from another?
  - Volpe 15y ago
    Loaning money that poses no risk to yourself (subprime brokers) is quite different from loaning money you risk losing (VCs). Morals don't come into it, they are factually different. VCs aren't on selling their risk (thus mitigating it). Are they? (I could misunderstand how VCs operate).
eli_gottlieb 15y ago
It's a bubble, which is why you've been hearing people hesitantly asking if it's a bubble for 6 weeks.

incongruity 15y ago

The problem I have with this is that there's a lot of conflating what "should be" with what is – he talks a lot about "intelligent investors" and "good investors" – but that says nothing about what is (or isn't) actually happening. It's precisely when bad investments get made quickly, at irrationally exuberant levels that we get bubbles – and the claim is that there is exactly that sort of irrational exuberance going on with many startups/or in VC funding in the tech sector. The only thing that the author offers to refute that specific claim are his own assessments of valuations, but no hard numbers. Further, he tries to argue that the Instagram purchase is justifiable because it's only 1% of FB's value – but that's just it – that sort of thinking is begging the question (in the old sense of the term) or circular. Based on what I've read, a 100 Billion valuation of FB would put its P/E ratio at around 100 – that's high. Really high. So, what if it trades closer to a 20 P/E ratio (where many other tech companies are) – that means the Instagram purchase was nearly 5% of FB's worth – for a 13 person startup with no revenue – made only as a defensive play, according to some. To me, that's excessive. Details aside, the whole point is that you can't use numbers from within the suspected bubble to support the argument that other numbers are rational and thus reflect the lack of a bubble. Those sorts of short-sighted arguments are on my list of warning signs for a bubble. When we get enough of those, the idea of convergent evidences should lead objective observers to bet on it being a bubble...

j_baker 15y ago
Really? I would argue that a bubble is a psychological bug that causes investors to ignore the numbers. They're usually right there in front of you, but the bubble effect short-circuits the rational thought process that tells you not to invest without checking the data. Now, I will be willing to grant that perhaps we're about to be in a bubble, but now we're venturing into the land of speculation, aren't we? If gathering data to tell us what the markets are going to do were easy, bubbles wouldn't ever begin in the first place, would they?
- incongruity 15y ago
  How, exactly, do you see me as arguing that anything but numeric foolishness is going on here? Investors, in bubbles, frequently find ways to justify the numbers – often with talk of how the old rules don't apply, etc., etc. In this specific post's case, however, the author fails to see the lack of quality in the numbers which he (barely) uses. Trusting bad numbers without really digging into them is little different than "ignoring the numbers", as you put it. They're two sides of the same coin – sloppiness because of excitement or other failed thinking. As for your last argument – I'm not sure what to make of it. On the one hand, just a few lines above you argue that the numbers are usually "right in front" of investors and that bubbles are caused by ignoring them... but then you argue exactly counter to that and say that seeing bubbles isn't easy and that data can't tell you when there's a bubble. I strongly disagree with that last point – the housing bubble was definitely spotted using data before it burst, as was the last tech bubble. It's just that few wanted to believe that the old fundamentals still applied. But thus far, they always seem to.

jasonkolb 15y ago

I think there is a bubble in articles about whether or not there is a tech bubble. I cannot wait for it to burst.

gm 15y ago
Agreed, enough with the f-ing BS about asking the same question over and over. Signal/noise ratio has taken a nosedive on HN lately; sad.

rythie 15y ago

People need to define what they mean by a bubble, most of the companies mentioned are privately held, it's not clear this is like the .com bubble or that a crash would have wide ranging effects - unless someone would like to explain?

moocow01 15y ago

"Apple (14 P/E), Google (18 P/E), eBay (16 P/E), Yahoo (17 P/E)" Those are some nicely cherry picked examples of mature companies that have been around for a Silicon Valley century. But I don't think the bubble involves mature tech companies but rather is in the private markets for emerging tech companies. The recent IPOs are certainly indicators of this... Linkedin - P/E: 940 Zynga - P/E: No earnings (6B mkt. cap.) Groupon - P/E: No earnings (7.5B mkt. cap.) Pandora - P/E: No earnings (1.5B mkt. cap.)

pdeuchler 15y ago
Playing devil's advocate I'd say P/E ratio is a flawed metric to use when talking about what some of these new startups are worth. A lot of the newer IPO's represent companies that have significant assets in new areas that we haven't necessarily found the most efficient monetization scheme for yet. Pandora, for example, may not have any earnings, but the value of controlling the source of 100 million users music is no doubt quite valuable. Similarly, one might even argue that some of these companies are undervalued. Facebook's mindshare and ubiquitousness among the upcoming generation is without a doubt a new phenomenon, and so one could say that their current valuation approaching 100 Billion is small considering it's only based on the current monetization scheme of advertising (you would also have to argue at the same time that more efficient monetization ideas exist). tl;dr- It could be unwise to measure new age technology companies with old age metrics when discerning value Obviously, there are some outliers like Groupon that do create large valuations with little value (arguably)
- moocow01 15y ago
  I'd agree the P/E isn't the be all and end all of company valuations and I think you make valid points. I think whats more odd is that the article's argument starts out with something that I see as more of a straw man argument. I think if you're going to throw P/Es into the tech bubble discussion, you have to at least address the very high P/Es of the notable SV IPOs and why they are justified. I guess the initial point just comes off as somewhat off-point and disingenuous to me, whether its a bubble or not.
- incongruity 15y ago

davepeck 15y ago

Good question. I built a site to help us decide: http://techbubbleforeveryoneorjustme.com/ http://techbubbleforeveryoneorjustme.com/

InclinedPlane 15y ago

Of course there's a tech bubble, there will continue to be tech bubbles for a long time. But, it's not that much of a concern any more for several reasons. First, the core strength at the heart of tech continues to get stronger with many diversified sources of revenue, regardless of the bubble. Second, the bubble isn't all encompassing, only some companies are part of the bubble, not all. Third, there's widespread awareness about these bubbles while they are happening. The online business sector has matured tremendously in the last decade and a half, it is no longer even a little bit monolithic. The web is now just a platform, and while some online businesses may play in dangerous bubble infested waters, many others do not. We will never again have a situation similar to the original dot-com bubble, with such a huge impact across nearly every online business and such a huge impact on the entire economy.

dimitar 15y ago
How about a "social media" bubble?

jmtame 15y ago

I'll probably take a karma hit for this, but I find it neither intellectually stimulating nor effective to talk about whether we're in a bubble, especially if it's fear mongering. If you want to convince smart people they're living in a bubble, do it with data and intellect. This one at least seems like a step in the right direction using specific companies and PE ratios, whereas the previous articles were pretty easy to dismiss with hardly any data to reference (Chris seems to argue against a bubble in this article, I just like that he's using data). The only thing I can look at and agree with is that seed round valuations are higher. Can a bubble be created based on inflated seed valuations? That'd be a more interesting conversation to have. The A rounds are not trivial to raise--you still need traction, whether it's users or revenue. If we are in fact in a bubble, what exactly are you going to do? Are you going to immediately start focusing on revenue, knowing that it may be harder to earn in the near future? Are you going to go out and raise your Series A/B/C right now given your 6+ months of runway left? Or are you just going to entertain the conversation? It doesn't feel like a very productive conversation to have unless you're actually acting on it right now.

oskarth 15y ago

The best sign that we are not in a bubble is the fact that it's mainstream to think that we are in a bubble. This suggests that the possible overhype is already accounted for in the market price. It's the equivalent of when your taxi driver starts talking about a "hot stock", it's time to sell.

eli_gottlieb 15y ago
The best sign that we are not in a bubble is the fact that it's mainstream to think that we are in a bubble. This suggests that the possible overhype is already accounted for in the market price. No it doesn't, because most of these companies aren't trading on the public markets. They're taking venture capital funding or trading on private exchanges. So it takes VCs believing it's a bubble (which it is against their interests to believe!) to actually factor that into valuations. It's a bubble. Time to pick who's a real business, and buy their stock when the whole thing crashes.

confluence 15y ago

This might be relevant: http://www.quora.com/the_edge/Intriguing-answer-on-Silicon-Valley-bubbles-manias-booms-busts-crashes-and-winning-the-startup-lottery http://www.quora.com/the_edge/Intriguing-answer-on-Silicon-V... Apparently housing prices are bottoming out (US domestic) and people are starting to get serious interest in San Francisco property (much more than normal). I remember reading somewhere that rents had a massive run up during the last bubble (where leases killed a bunch of startups - 5 year leases at 2000 prices during the crash). From: http://news.ycombinator.com/item?id=3850170 http://news.ycombinator.com/item?id=3850170 Steve Jurvetson (DFJ Venture Capitalist) has this to say on whether or not we may be entering a bubble: http://www.quora.com/the_edge/Long-wave-boom-and-bust-cycle-from-a-talk-called-Innovation-in-a-disruptive-environment-by-Steve-Jurvetson-at-Stanfor http://www.quora.com/the_edge/Long-wave-boom-and-bust-cycle-... Who knows, with the JOBS act passed, and the consequent relaxation in securities regulations we may have sown the seeds of an unpleasant moment in the near future. Anyway some food for thought. JOBS Source: http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups... JOBS Act criticism: The Consumer Federation of America characterized an earlier version of the legislation as "the dangerous and discredited notion that the way to create jobs is to weaken regulatory protections" Criminologist William K. Black had said the bill would lead to a "regulatory race to the bottom" and said it was lobbied by Wall Street to weaken the Sarbanes–Oxley Act. "gutting regulations designed to safeguard investors", legalizing boiler room operations, "reliev[ing] businesses that are preparing to go public from some of the most important auditing regulations that Congress passed after the Enron debacle" and "a terrible package of bills that would undo essential investor protections, reduce market transparency and distort the efficient allocation of capital".

vectorpush 15y ago

The tech companies who are actually hiring people (i.e. the antithesis of the two person startup seeking technical co-founder) are selling a product or service for money. The only people worried about a bubble are those who are hoping to cash out on their user count. Ask yourself: "does the work I do contribute to a product or service that can be sold?". If the answer is yes, then you're living outside the bubble.

potatolicious 15y ago
A bit of an oversimplification, no? There are plenty of startups of the "lots of users, show ads" variety, some of which might actually make viable businesses, most of which probably won't. The trouble here is overvaluation - there are plenty of startups which do sell a product or service for money, but are overvalued and over-hired. I can imagine many startups here that would make viable, profitable, 10-person shops, but instead are swimming around with 100+ engineers. The fact that they have revenue and monetizable product isn't going to save them when the bubble bursts.
- vectorpush 15y ago
  Indeed, I am generalizing somewhat, but it's a core truth that holds pretty well. Consumers don't really care about a bubble, if they value a product or service they're going to buy it. The bubble won't make a company any less profitable, an over-hired company is still over-hired regardless of whether or not a bubble exists; this applies even to ad-based companies. If the bubble bursts tomorrow, Facebook and Google won't care, it's not as if their ad-clicking users will suddenly stop clicking ads. A bursting bubble is only a threat to those who rely on external cash infusions to bootstrap their operations until they can figure out how to turn a profit. If 10,000 conversions a month is profitable, it will still be profitable when all the VC money dries up.

paulsutter 15y ago

The debate is caused by the binary term "bubble". Neither answer (yes or no) is correct. A better question might be "how exuberant are we getting?" (anyone around in 1996 wil recognize that term)

sparknlaunch12 15y ago

Can someone provide some stats on the number of "tech bubble" tweets and blog posts; versus boom and bust economic cycles? Does the bubble matter? Isn't it more important to be in a safe place when it burst, which means building some reliable now in anticipation?