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Can you elaborate on how this reasoning doesn't apply to the first dotcom bubble? Is it that more companies were publicly traded during the first dotcom bubble?
by TheEzEzz 14y ago
Can you elaborate on how this reasoning doesn't apply to the first dotcom bubble? Is it that more companies were publicly traded during the first dotcom bubble? How do companies like Zynga and Facebook factor in to your analysis?
(I was just a kid during the dotcom bubble, so I appreciate any insight you can shed.)
- jfarmer 14y agoThe first bubble was characterized by massive speculation in public tech stocks completely detached from fundamentals. Facebook, Groupon, and Zynga getting kicked in the nuts on the public market is the opposite of that.
- dm8 14y agoFacebook et. al. are generating healthy revenues and profits. That was not the case in first dot com bubble. During first dot com bubble going public was just fashionable. Now it's very very hard to get company to an IPO.
- asanwal 14y agoI left a similar comment below. I believe it's different because returns data for seed investing is so opaque In the stock market, you have a very public scorecard at the end of each day telling you and those who know what you've invested in how you are doing. With seed investing, there is no such mechanism and the time horizon is much longer. Not a daily scorecard but one over many years. Add to this that the scoring is imperfect, ie prone to spin as failed companies get dressed up as acquisitions instead of asset sales for example. For this reason, this trend for seed investing will carry on much longer. As for Facebook and Zynga, they may sour opinions on certain sectors of tech but then you see folks like LinkedIn, jive, etc doing well after going public, this just highlights that not everyone can be above average. I personally think there will be a huge shift in companies targeting the enterprise but that's a story for a different day.