Blank's argument doesn't completely hold up. Bubbles happen, but not all bubbles are created equal. The Big Bad One, from 1999, does not compare to whatever you want to call this one. The irrational exuberance exercised in that era was much, much greater and far less sane.
Yes, Linked In is/was overvalued. Same with Groupon and a handful of others. Color raised $40 million without a product (gads! no product before a venture round?). But we've been through this before, and not all the investors are going to be suckers. Color will not IPO. There will not be hordes of companies going public. John Q. Public Investor will not be directly affected. And the VCs are not solely investing in companies without products, business models, and income.
Pandora is profitable. Facebook is profitable (AFAIK). Twitter has figured out how to make money. Y-Combinator companies are being bought out not in a flurry of impulse and whim but because it makes business sense (e.g. Wufoo).
edit:
Steve Blank: No one doubts that social networks and web and mobile applications are reinventing commerce. Obviously, some of these companies will have hundreds of millions of customers, unprecedented revenue growth and great profits. Yet none of these companies have earned the valuations that they are receiving.
Block that kick! Mr. Blank is leaping from "there are some companies that have not earned these valuations" to "we are in a widespread bubble." That's my problem with this logic -- it's unjustified. We're still talking about a handful of overvalued companies. We're being way too sensitive. Bubble, maybe, but a tiny one. Not a really big one. Not one that's going to have any significant effect on the economy.
Oh, and Mr. Blank: the reason driving through Palo Alto is tough is because the Valley economy is in better shape than it was a year ago, not because of your tiny bubble. People are working again, but they're not all working for Color and Linked In.
edit 2:
Quote from an Economist commentor: The fact is that a bubble "in Tech", which was the debate topic looks highly unlikely just based on the fact that the success of the high-fliers hasn't started raising all boats. The market is still acting properly and choosing winners and losers, and the losers' shareholders would be the first to point that fact out.
Exactly. Those screaming "bubble" are looking at a skewed picture. "Hey, these five companies are overvalued!" Yes, but these X thousand companies are not. Why does that handful warrant so much attention, fear, uncertainty, and doubt?
We are in the beginning phase of what might end up being a humongous bubble. Angel investment valuations[prices] are up, IPOs are starting to take off. But it isn't totally crazy yet, and it may never get there.
As Brad DeLong says these days: it isn't a Great Recession anymore, it's a Little Depression. (And could get worse before it gets much better).
Yes, Linked In is/was overvalued. Same with Groupon and a handful of others. Color raised $40 million without a product (gads! no product before a venture round?). But we've been through this before, and not all the investors are going to be suckers. Color will not IPO. There will not be hordes of companies going public. John Q. Public Investor will not be directly affected. And the VCs are not solely investing in companies without products, business models, and income.
Pandora is profitable. Facebook is profitable (AFAIK). Twitter has figured out how to make money. Y-Combinator companies are being bought out not in a flurry of impulse and whim but because it makes business sense (e.g. Wufoo).
edit:
Steve Blank: No one doubts that social networks and web and mobile applications are reinventing commerce. Obviously, some of these companies will have hundreds of millions of customers, unprecedented revenue growth and great profits. Yet none of these companies have earned the valuations that they are receiving.
Block that kick! Mr. Blank is leaping from "there are some companies that have not earned these valuations" to "we are in a widespread bubble." That's my problem with this logic -- it's unjustified. We're still talking about a handful of overvalued companies. We're being way too sensitive. Bubble, maybe, but a tiny one. Not a really big one. Not one that's going to have any significant effect on the economy.
Oh, and Mr. Blank: the reason driving through Palo Alto is tough is because the Valley economy is in better shape than it was a year ago, not because of your tiny bubble. People are working again, but they're not all working for Color and Linked In.
edit 2:
Quote from an Economist commentor: The fact is that a bubble "in Tech", which was the debate topic looks highly unlikely just based on the fact that the success of the high-fliers hasn't started raising all boats. The market is still acting properly and choosing winners and losers, and the losers' shareholders would be the first to point that fact out.
Exactly. Those screaming "bubble" are looking at a skewed picture. "Hey, these five companies are overvalued!" Yes, but these X thousand companies are not. Why does that handful warrant so much attention, fear, uncertainty, and doubt?