Tech Bubbles and the Amount of Fsck I Give

This weekend lacked a proper bitchmeme, so the blogosphere played out the debate of whether or not Silicon Valley in specific and tech in general is undergoing a bubble. Again.

Classic quote from Chris’s post demonstrating the linguistic gymnastics that a VC will go through to deny the existence of a bubble:

“Instagram seems to be the case study du jour for people arguing we are in a bubble. Reasonable people could disagree about Instagram’s exit price but in order to argue the price was too high you need to argue that either: 1) Facebook is overvalued at its expected IPO valuation of roughly $100B, 2) it was irrational for Facebook to spend 1% of its market cap to own what many people considered one of Facebook’s biggest threats (including Mark Zuckerberg – who I tend to think knows what is good for Facebook better than pundits).”

Of course, Mark Zuckerberg never said anything of the sort, but why let the facts get in the way of a good story.

In case we’ve forgotten, we’re in an age where Facebook is going to be worth more than most companies in America at IPO, yet having driven far less wealth creation (aside from selling stock in the company) than most companies in America. 

Nick Bilton was pretty close to the truth in the original post that started it all. His examples were a little off, which is unfortunate, since it makes his article rebut-able.  The line that’s truly irrefutable: “The term often used behind closed doors with this no-revenue formula is mark-to-mystery.”

Josh Guttman made a solid point, but not one as poignant as John Furrier.

We’re in a bubble, and it’s no longer about innovation – it’s about total hype. Companies with diminishing momentum and little future are being bought for exorbitant amounts. It does bring out innovation, to be sure, but with the unfortunate side effect of creating less roadkill than reasonable folks like you and I would prefer.