It's a pretty simple situation. Zero and negative interest rates are causing enormous sums of capital to chase yield through non-traditional sources. Sand Hil

It's a pretty simple situation. Zero and negative interest rates are causing enormous sums of capital to chase yield through non-traditional sources. Sand Hill Road VC's have a good pitch and connections, so they wind up with a significant portion of that capital. That capital has to go somewhere, so the VC's basically use the Stanford admissions process as a proxy for screening, and they give anyone that has been admitted and can get an app written huge amounts of this money. VC's haven't suddenly gone crazy; they simply find themselves drowning in money that they have to deploy. Some of these companies will undoubtedly be successful, as the ability to spread virally and scale the IT infrastructure to meet demand these days is absolutely unprecedented. That is the primary difference between the first "bubble" and now. It looks the same in terms of frothiness, but anything that delivers real value to people these days will spread very fast, largely for free, and may actually become profitable. Whether or not the value of the successful companies that emerge from this era will make up for the massive losses of those that fail remains to be seen. I think it's actually possible. The real losers will be the engineers, because when interest rates rise and people pull money out of these funds, all but the most promising companies (in terms of actual traction) will see their funding vanish, and millions of people (thousands of top engineers among them) will be out of work.