
We are in a Bubble - saeidm
http://sfard.posterous.com/we-are-in-a-bubble
======
hooande
The third point explains the first two. Something has to be done with the
_billions_ of dollars fleeing real estate and the general stock market. You
get billion dollar valuations when people are saying "I have a billion dollars
and I really need a place to invest it"

The startup community needs to get over the idea that "valuations" are based
in reality. Rich people need ways to get richer. They could choose tech
startups, they could choose real estate, they could choose tulips... it
doesn't matter as long as they can make up money and push it back and forth
between one another.

But alas, it feels much better to say "My company was valued at a billion
dollars!" than it does to say "Rich people used my company as tool to transfer
money to each other!" If we would just stop taking the numbers seriously then
we could stop the debate about whether or not we're in a bubble.

~~~
sopooneo
Yes, but the rich only get rich on a bubble if they know it is a bubble and
get out soon enough. So we are to assume that the rich are getting the tech
train moving, letting the Hoi polloi add some rule coal to the fire, then
hopping off before the thing crashes off a cliff?

That is possible, but every part of my forced analogy is necessary for the
idea to hold water.

~~~
mdda
Grammar trivia : "the Hoi polloi" contains redundancy, since "Hoi" duplicates
the "the".

~~~
lsb
Grammar trivia: "children" contains redundancy, a doubled plural. The germanic
plural of "child" is "childer", and that didn't sound plural enough, so they
added the -en that pluralized such fine words as ox -> oxen, and child-er-en
then sounded correct.

------
citricsquid
This bubble will hurt the smaller startups by no-name people, people that
invested everything in an idea that in a non-bubble environment would be
laughed out of the room, but with companies like YC around (not that this is
their fault) that are harping on about the value of ideas and people it's
growing.

There are people here on HN daily that post links to their blog posts that
have put all their savings into their startup that has no potential to ever be
anything other than a furnace for their money, but people encourage them, they
are the people who will be hurt.

How many incubated startups (through programs like yc) will ever go on to be
anything other than shut down? With all this cultish behaviour around YC a lot
of people are believing that making money doesn't matter any more. Just look
at the startups people posted in the yc rejection day threads, some of them
just make absolutely no sense.

There is so much money in the internet now that when everything goes wrong
nobody outside of the startup scene will really notice because the businesses
that matter, the businesses people rely on will be doing fine. There will
always be room for businesses that make money, bubble or not, those businesses
are the ones the "public" care about. How many "normal people" would care if
Instagram disappeared tomorrow and would have their lives impacted a week
later? How many would care if ebay went? I suspect the latter would be the
worse for the general public, and the latter will never happen because ebay
actually makes money.

~~~
ajross
I'm not sure I buy that. Obviously it's true that "outsider" startups will see
their funding dry up faster than YC companies and other "insider" groups will.
But I don't think that's the right metric. In fact access to "big money"
funding is if anything anti-correlated with success among these companies.
Almost all the big YC exits so far were from the early rounds, and those
happened during an era of very limited VC cash.

------
samstave
I am not interested in any of the "we are in a bubble" posts as much as I am
interested in "What the fuck will happen when this bubble bursts!"

I have been in tech in SV since 1997. I was here for the build, frenzy and pop
of the last bubble.

In 2001 I had a BBQ at my place - 50 people came and we ate and drank by the
pool. Of those 50 - all tech workers - 4 had jobs.

I was out of work for 18 months (6 of which I traveled the world) - and
luckily I have more than just tech skills which I was able to fall back on.

On HN we are really focused on technical ability - but there are millions of
employees in all our tech companies that are not technical: think of any
department outside of IT and Development == Sales, Facilities, HR, Marketing,
Finance (although this is the class of people most responsible for this
problem), etc...

ALL of these people are at the greatest risk - what will happen if this bubble
bursts. We will be FUCKED.

What will it look like

~~~
sidman
> _ALL of these people are at the greatest risk - what will happen if this
> bubble bursts. We will be FUCKED_

I have the same thoughts exactly. I was a junior at university when the last
bubble burst so i have no idea what it was like. Currently i have been running
my startup after quitting my job for almost a year and we are doing OK but
this talk of bubble worries me because i dont know what to expect.

Will it only effect startups that are social types that dont exactly generate
revenue but through capital injection( which i assume is what will evaporate
the fastest during a pop) have the potential to become massive such as
instagram etc or will it also effect the startups that actually do turn up a
profit every month so that the founders can eat and re-invest their money back
in the business.

When i try to draw parallels from 2000 from a technology stand point, i assume
the bubble pop killed the tech industry because getting a startup of the
ground required tons of cash, it didnt matter whether you could charge from
day one or it was a great idea but needed to get to scale before you could
make money, you still needed to buy servers, hosting and your development team
was larger because there were no frameworks etc .. basically there was alot to
spend before you could turn a profit, so when capital dried up so did the
ability to start a new company or even continue to run an existing one. As a
founder, unless you were already wealthy you could not _bootstrap_

Now with amazon, great frameworks that cut down development time many times
over and other things of the like, founders can take savings of 10-15k and
start a business that can return that investment maybe after 4-5 months and
start making profit soon after.

The question is, do these kinds of startups still survive, could this be the
differentiating factor this time if the bubble pops.

Maybe after the bubble pops we wont get those massive social startups that
require millions of dollars worth of injection for a while but instead get
many smaller bootstrapped _business_ types that take a small investment and
return a profit monthly that eventually grow into large business. Its slower
but similar to more traditional businesses. If this is the case then i feel
its OK, at least if we find an area there people still have a need and
technology solves that need we can still make a living doing our own startup
and work on things we love.

Im also interested because we are bootstrapped and we have managed to get our
small startup to give us back about 60% of our salary that we used to get at
our 9-5. its enough to live of and not make us wonder where we are going to
get our next dinner, however we are thinking of starting something new because
we feel there is a ceiling to what we can achieve with our current startup and
its important for us to decide what startup to do next if we actually are
heading into a bubble that may pop midway through our next project, 1,2 maybe
3 years down the line

What do you guys think the tech scene will look like in the valley and
possibly around the world if such an event would occur again ?

Sorry for the long post but i thought it important to get ideas from the HN
community on this topic.

~~~
edwinnathaniel
HN readers cannot predict the future.

~~~
sidman
No one is asking for a prediction, just getting input from people who are
experts and have real life experience pre and post bubble.

------
OzzyB
As a personal exercise please go and watch this documentary:

Startup.com __<http://www.imdb.com/title/tt0256408/>

And then ask yourself if what happened then is anyway similiar to what is
happening now.

For starters, I think you will realise that most startups circa 2000/1 were
nothing more than litteral "thin air" -- compare that to the likes of Facebook
who actually _have_ revenues, hell, they even have a _product_.

I know that some of the valuation numbers being thrown about can be unreal,
but I'd rather have a converation about whether FB is worth $1b or $10bn or
$100b, instead of whether is has _any_ value at all.

~~~
nextparadigms
But did Instagram have revenue? The question wasn't if investors back then had
money, but if the company they invested in were making any money. Facebook had
money, Instagram wasn't making any. So to me that's very similar.

Also he's right that now that Instagram was valued at $1 billion, we're
already starting to see others like Square immediately looking to raise
capital at huge valuations, just because Instagram was valued so high.

Besides, doesn't it even that even Facebook and others are valued based on how
much more others will invest in it later on? That's pretty much how Facebook's
valuation grew, and how they got the $100 billion IPO, too.

But isn't that a flawed philosophy? Shouldn't companies be valued based on how
much potential for making money they have in the future, and not how much
potential they have to attract more capital at a higher valuation?

~~~
ericflo
> But did Instagram have revenue?

This is a tired argument. Everything is a tradeoff. In this case it's a
tradeoff between adoption and revenue. Hipstamatic chose the revenue-first
approach (they apparently made plenty of money) and Instagram chose the
adoption-first approach. Which one is more valuable (and you must include
strategic value in this evaluation!) right now? Clearly Instagram.

> Also he's right that now that Instagram was valued at $1 billion, we're
> already starting to see others like Square immediately looking to raise
> capital at huge valuations, just because Instagram was valued so high.

I'm very, very skeptical that this is the case. Has anyone involved in the
situation made any statement hinting at that?

> Shouldn't companies be valued based on how much potential for making money
> they have in the future

Yep! That's what people are doing.

~~~
dkrich
> Hipstamatic chose the revenue-first approach (they apparently made plenty of
> money) and Instagram chose the adoption-first approach. Which one is more
> valuable (and you must include strategic value in this evaluation!) right
> now? Clearly Instagram.

Not necessarily. You're assuming that had Hipstamatic chosen the adoption-
first approach they would have been a more valuable business. That assumes
that both products are basically identical and the successes and failures turn
only on whether the app is paid. Conversely, you're assuming that the only
reason Instagram got such widespread adoption is because it was a free app.

> Yep! That's what people are doing.

Um, no they aren't. Most companies in the social space are valued based on how
much hype they can generate, not how much money. A lot of people assume that
an app like Path must be worth at least a billion. Is that based on money-
making potential? I'm not buying it.

------
stcredzero
_Each incremental company, to some extent, dilutes the values of others._

Ask yourself: Are you part of a herd? Is your company doing what the next one
is doing, just slicker and faster and with a twist? If the answer is yes, and
you're trying to do a startup, then you are part of the bubble that will pop.
(In a bad way. Worse still, you may be part of a "reputation bubble" as in the
music or fashion industry.)

Also ask yourself: Is there an information asymmetry on your side? Do you know
something that most everybody else doesn't? Is there something that scares
everyone else away, or that everyone else hasn't seen yet? If not, then you
might be in the part that pops.

For those standing off to the side: Are there an awful lot of startups doing
similar looking things?

~~~
jfb
_For those standing off to the side: Are there an awful lot of startups doing
similar looking things?_

Yes.

 _EDIT_ : It is getting increasingly difficult to see actual technology
companies through the haze of consumer internet startups, many of which are
indistinguishable "the <some startup that got bought> of <some market>"
roadkill.

 _EDIT 2_ : Not that technology companies are the only ones that can be
profitable; but many of the small startups are positioning themselves _as_
technology companies, because they don't have any other conceivable identity.

~~~
draggnar
Social is a bubble. Sharing information is going to continue to get easier,
and i agree that distinguishing the various services is increasingly
difficult. But i do not buy the x of some market argument. The ebay of space
has built a new type of marketplace.

"Startup" is a way to say an organization that does not follow the rules of
the industrial revolution. Social technologies are a bubble, but there is a
distinction between social technologies and technology in general, and
startups aren't exclusively business models of the former.

------
wtvanhest
We are seeing growth in online advertising which is driving the perception of
a bubble regardless of whether one exists or not.

The "We are in a bubble" argument should be - Ad revenue is capped at a total
# of dollars. We have seen various internet businesses take share from
magazines, cable broadcasters, billboards which has led to unsustainable
growth which will end soon. When it ends people will realize projecting 30%+
growth for website ad revenue is dumb and will lead to massive losses.

The "we are not in a bubble" argument should be: Internet advertising is
taking share from other sources and will continue to do so for a long time.
Because online advertising allows you to buy products right away or customize
ads to individuals, its more efficient. That efficiency makes advertising
spending more likely to increase as a percentage of costs for businesses. A
combination of those will help fuel continued growth in startups.

Regardless of which you believe or a hybrid version, at some point internet
advertising will reach its max and there will be a bubble followed by a crash.
I have no idea whether that is happening now or will happen sometime soon or
in 20 years.

[edit] it is also possible that it will never happen

~~~
wtvanhest
I'm taking a non committal stance while explaining a framework to view
bubble/no bubble. I would love to hear why people think this is such a
terrible framework to down-vote it. I'm sure I could learn something.

------
dglassan
I'm getting tired of hearing people claim we're in a bubble, especially when
people cite the Instagram deal. Instagram didn't have any revenues? So what.
The value of a company is whatever someone is willing to pay for it.

Facebook's killer feature is their photo sharing. Given Instagram's surging
popularity and mobile dominance, Zuckerburg saw Instagram as a threat,
especially if Instagram fell into the hands of a competitor, like Twitter. So
Zuck pulled out FB's wallet and scooped up Instagram.

I've been hearing people say we're in a bubble for at least 2-3 years now, yet
venture firms are raising new funds every week. Acquisitions are happening
every day, IPO's are ramping up again. Unlike the companies of the DotCom
bubble, companies going public today have real business models, with real
revenues, and _most_ of them are already profitable. In 2000 there were
companies going public that were still trying to figure out what their
business model actually was. I guarantee you'd never see that today.

Sure, it may seem like it's easier to raise seed funding nowadays, but that's
thanks to all the incubators that have popped up and the funding model
pioneered by YC. That doesn't mean we're in a bubble. Angel Investors simply
found a way to make seed funding scale in a way that reduces risk.

We're not in a bubble, and no, I have nothing to gain from saying that.

~~~
kls
Right, some of the business going public at that time seemed like they where
written on a napkin two nights before. They where not even at the pivot stage.
It was absolutely insane at the time and everyone knew it. I remember working
at some companies on contract and thinking there is no way this is going to
last. It seemed like the only people that where making money last go around
where the ones providing infrastructure and services, everyone else was just
drinking it up at the party. Make no mistake I think we are bubbling but I
thing today looks a lot more like 1996 than 2000. It can and will get a lot
crazier especially with the crowd-funding bill.

~~~
beagle3
I the 1996 analogy makes sense, but that does not mean there's 5 years left
until the big crash; the nature of investment and trading horizons is such
that it gets shorter all the time -- so what took 5 years 10 years ago, might
take less than 2 years now. (At the extreme - stock price reaction to news
that took hours in 2000 takes seconds now. Most things haven't speeded as
much, but everything speeds up; the tulip bubble took much longer to inflate
and pop than the internet/telecomm bubble of the late 90's).

And, just as in 2000/2001, when the bubble pops, it would look like the
specific reason was independent (some other economic disaster, like a big bank
going bankrupt, or fraud bigger than the MF case, that would disrupt the easy
flow of money and would require some liquidation). But the specific event that
causes a bubble to pop is actually immaterial.

------
roguecoder
Instagram isn't a great example: it was already useful and successful and
might well have been worth more if it had held on. GroupOn is a much better
indication that a bunch of non-technical people are eager to buy overvalued
tech stocks.

Of course we are in a bubble. Not in the real estate bubble sense, mind you,
but in the 1999 tech bubble sense. Tech and health care are the two industries
actually growing.

Right now no one knows which companies are really creating value and which are
just hype. The last bubble created more value than money was invested, but the
investors don't discriminate well between valuable companies and those that
are just taking them for a ride. That doesn't mean that all the companies are
overvalued, just that some of them are.

Plenty of companies emerged successfully from the last bubble. Plenty of
companies will come out of this one by creating actual value. Just don't be an
idiot and invest your money, don't believe companies that tell you they'll get
you rich, don't take jobs that seem to be too good to be true, and who cares
what investors are doing?

~~~
jerf
"GroupOn is a much better indication that a bunch of non-technical people are
eager to buy overvalued tech stocks."

Eh, if anything it's a counterexample, not evidence in favor of a bubble:

[https://www.google.com/finance?client=ob&q=NASDAQ:GRPN](https://www.google.com/finance?client=ob&q=NASDAQ:GRPN)

(Zoom out to "all".) It closed today at 11.76. The official IPO price was 20,
it peaked at just over 26. That's not exactly a stirring argument in favor of
a generalized tech bubble.

------
daniel-cussen
No...no.

 _Surplus of Capital

Since 2008, most traditional investment vehicles like real estate and the
stock and bond market have had poor returns. Capital has been shifting from
these traditional vehicles to Asia and Venture Capital in search of
extraordinary returns._

So, what you have to remember is that there are actually several different
kinds of economic catastrophes, and that a bubble is only one of them. You
also have hyperinflation, for one, and it's much more plausible that this is
what is actually happening. And while this is largely irrelevant for America
as a whole, it matters a lot at a local level: if you're in California, for
instance, you're alright as you're upstream from a lot of folk. If you're in
the Rust Belt, though, you might find it's suddenly even harder to compete
with Asia. So while there is something rotten in the state of Denmark, the
tech sector is not the one in trouble.

------
mukaiji
Surplus of capital is a huge factor. Got numbers?

When Peter Thiel started his class at Stanford, he spent the first couple of
lectures reviewing the 90's. One of his argument to explain the dot com bubble
was the influx of capital from around the world to the U.S., and ultimately to
the valley. Could be the same here. not sure.

~~~
roguecoder
The rise in the inequality of wealth has led to an excess of capital and a
lack of demand for it to fill. It's not just the US: around the world there is
more people who want to invest than there are people with money to spend on
the things they might make.

~~~
eli_gottlieb
So we get "job creation start-ups", aka bubble businesses. The only winning
move is to break the rules of the game by simply redistributing wealth/income
to people who don't have it to spend.

Well, that or to build a luxury rich people will pay for.

~~~
NoPiece
Isn't rich people investing in bubble businesses effectively wealth
redistribution?

~~~
eli_gottlieb
If the investment comes in the form of equity and is used to pay salaries,
yes. It's the stupidest form of wealth redistribution.

------
jpdoctor
Like the last bubble, it will likely end when the Fed raises interest rates.

Until then, party on.

------
edwinnathaniel
It's time to move on from HackerNews and focus on building
companies/businesses rather than talking about things that are not productive
in any way or shape.

Naysayers. Pessimists. Negative thinkers. "No man". Doomsayer. So long...

~~~
vibrunazo
In other words. Just build something of actual value and the bubble talk is of
little relevance to you.

------
_sentient
I've seen a lot of this back-and-forth on HN of late, but I can't help but
wonder what difference it all makes.

Even if we are in a bubble, I doubt we have any real chance of turning things
around gracefully. Everyone participating and benefiting from this bubble are
inclined to support it, while those outside the bubble have no power to change
the current trajectory.

The true losers in this scenario are the entry level players, and other
support folk who become collateral damage when things finally come tumbling.

------
damonpace
General rule of thumb. If your company has solid revenue or is close to
profitability...you will be fine when the bubble bursts. If your company is
not even close to profitable...you will need to polish that resume some more.
The better option is not to let other people's opinions, abilities and
spending habits control your life.

------
ubi
So long as people are still saying its a bubble, its not a bubble.

Beware of a market so hot that you are a fool not to be part of it.

~~~
paulsutter
The term "Internet bubble" was very commonly used during the bubble. And the
term "irrational exuberance" ganied fame in 1996, prior to the greatest
craziness.

It was a lot more obvious than the real estate bubble. The real estate bubble
was only visible to most people as a chart in the NY times that showed the
gains in prices were historically unprecedented and clearly unsustainable.
Most people didn't know that the ratings agencies were earnestly relying on
models that pretended that real estate could never go down, and assumed that
baskets of mortgages are uncorrelated risks. Both of those are obviously silly
assumptions, but the population in general didn't know about it.

On the other hand, it was obvious to most people I knew that Internet
valuations were unreasonable during the first bubble, but a majority of them
werent willing to call a top at any particular point.

------
sytelus
Purely from investor perspective, here's how I would do FB valuation:

Assume that FB doubles its profits in next 2 years. Then also let's say it
gets in to 3 new businesses as big as its current business and dominates them
just as well. That would put their profits to ~$8B.

Now again assume that FB maintains its dominance successfully on all of the
above 1+3 businesses for next 10 years. So in this "dominating life span" of
FB, there would be total $80B made. If you put probability of everything from
inventing new businesses to fending off all competitors successfully for next
10 years at 0.5 then FB's risk adjusted worth would be $40B. It should be
obvious that this valuation is way too on generous side (normally I would more
aggressive parameters). It should be easy to see that valuations like $100B is
extremely unrealistic.

As OP has pointed out bubble is an effect when people take one unrealistic
valuation as a reference point and make their own valuations just as
unrealistic causing system-wide chain reaction. With Instagram, Evernote and
such that chain reaction is unfolding right in front of us.

------
viandante
From a business perspective (and believe it, it hurts me saying that), this
discussion makes no sense. It's like saying: 'are we in a PMIs bubble'? Or,
'are we in a multinationals bubble?'. The point is that we tend to group
things together in categories. But does it make sense to put, say, Facebook
and, say, MakeLeaps (start up that manages invoices for small businesses) in
the same category? It think it does not, as much as it does not make sense to
put Apple and Mc Donald in the same pot. Would you say Apple and Mc Donald are
in a multinationals bubble?

However, those discussions do show something, that there is an underlying need
to understand the market and the businesses out there. More start ups focused
on BtoB I think are needed. Corporate and business software sucks and costs a
lot in terms of actual cost and lost efficiency, when are people going to
realize that and work on that too?

------
lonnyk
>comparing yourself to another company’s valuation based on some metric like
registered users

I really doubt anyone does valuation like this. What is more interesting is
engagement and time using product. # of people is more a 'vanity metric' - it
looks nice, but it doesn't mean much.

~~~
wtvanhest
You should discontinue doubting that. Valuations are done using every
available metric (users, revenue, etc) and some metrics that have to be
"triangulated".

Valuation experts select the one they think is most relevant or mix several
metrics to arrive at a value. Some acquirers view different metrics as
important depending on what they need. Some companies need top line growth to
keep their multiple so they buy less profitable companies with a better chance
to grow revenue for example.

You can argue all day whether you think that is right/wrong, dumb/smart, but
that is the way it is currently done and the smartest people in finance
constantly work on new ways to value companies but most of those ways involve
coming up with new metrics.

~~~
lonnyk
I've been doing some thinking on this and I definitely secede the point that
_nobody_ does valuations like this.

My problem with the article is that it makes it sound as though _most_
valuations are done like this and that is why there is a tech bubble.

~~~
wtvanhest
Most valuations are done like that. It is called the comparable method.

Essentially all valuations have 3 components: . 1) Comparable Method This is
the method you are talking about and it is ALWAYS used. In some cases, with
companies with revenue and net income analysts will value things like
Dividend/Price, or Price/Earnings.

In cases where small changes in the business model can yield huge changes in
Earnings for example, analysts may use other metrics to get a more 'accurate'
measure of profitability. In cases of internet companies it may be users, or
may be 'content share' or some other metric, and they compare it to public
companies like google or facebook.

The downside of course is that no one knows for sure what the value of each
'user' is for the new company. But the upside is it gives the analyst another
way to think about a tough problem.

2) Discount Method - First the analyst estimates future cash flow over a
specified period using assumptions about how the company will perform. He then
'discounts it', divides the future cash flow by a discount rate, and arrives
at a value.

The downside of this method is that the assumptions are very hard to come up
with.

3) Net asset value method - taking the companies hard assets and valuing them.
(I'm not sure if anyone is doing this, but I would guess that the cost of
hiring awesome, top rate engineers is probably modeled and incorporated in the
a NAV when making talent acquisitions.

Now, with instagram you might be saying, wait, they don't have a metric that
gives them a $1B value. That is the entire reason they didn't IPO rather than
sell. Because facebook thought that their were synergies in the deal, whether
they be future earned cash flows, or a reduction in negative future cash
flows.

Zuck may not have done a model, but he very well may have said to himself...

The buyside (stock buyers at mutual funds and hedge funds) all are asking me
about competition, and how I'm going to grow this business over the next 3
quarters (what matters), and he says, for 1% of my valuation, I can probably
get a 10% higher stock price at exit.

This is also why Yahoo sued Facebook a month ago as well. They figured the
lawsuit would cause investors to balk at the IPO which would cause Zuck to
settle it quickly for more than Yahoo could get otherwise.

In the long run, valuations are complex, and so is business. Most
programmers/hackers etc. look at the Wall Street Journal and think that
everyone is crazy and that there is a bubble. There may be a bubble, but
everyone isn't crazy.

------
jhspaybar
"Each incremental company, to some extent, dilutes the values of others."

I take issue with this point in the article as it assumes competition. While
there is competition obviously, many start ups are actually complements for
other companies. It is entirely possible that many of the start ups
"competing" with each other actually thrive on the success of others and even
increase the success of other companies through their existence.

As an example, think about a company like Heroku, and Amazon. Heroku makes
using AWS easier, so Amazon rents more time and servers to Heroku while Heroku
also makes money that otherwise wouldn't have been made. These relationships
exist all throughout the business world and are good, not "bubble" influences.

------
msfd
I think the OP is missing the point here, because there is much more than just
profits when we talk about valuation. There is sales obviously, but assets too
like more materials things (chair, buildings, etc) but also immaterial assets
(employee, IP, so on).

On top of that, the whole situation (the when/how/where thing) is also
important, like someone said, a glass of water worth much more if Zuckerberg
is in the desert, than instagram _at that moment_...

Valuating a company just with profits (or users) is in my opinion, too
simplistic and so undermine a little bit the argument here.

------
dkrich
There's a lot wrong with this, but I'll just say that there are many more than
two ways to value a company, and if you used the first type he cites (taking
the net present value of future profits) you are effectively ignoring any
assets the company currently owns, including IP, cash, property, plant, and
equipment, short-term investments, long-term investments, just to name a few.

------
jack-r-abbit
All this "look at that. now look at this. We're in a bubble"... is this an Old
Spice ad?

Edit: oops.. I forgot to add value to the conversation. Yes, we are in a
bubble. Is it as big as before? probably not. Is it going to deflate (or even
burst) eventually? yes. Is it going to be tragic? yes... a fool and his money
are quickly separated.

------
rythie
The problem is evaluating social networks on a per-user basis without
considering Metcalfe's law: <http://en.wikipedia.org/wiki/Metcalfe%27s_law>

I.e. it is not a linear relationship between the number of users a the value
of the network.

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damian2000
If we are in one, where on the curve are we? [http://blog.ganderson.us/wp-
content/gla/uploads/2011/02/bubb...](http://blog.ganderson.us/wp-
content/gla/uploads/2011/02/bubble-graph.jpg)

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stock_toaster
I think bubbles just love new markets.

The last bubble was the web, then a small web 2.0 bubble. This bubble is
mobile, or SAAS, or PAAS. Maybe Mobile SAAS. I give up.

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davidtyleryork
Amazing how a post with this title gets to the top of Hacker News in a matter
of minutes EVERY TIME

~~~
jwoah12
You have a bunch of people either in the startup scene or very passionate
about getting into it. These people don't want to hear about how their
livelihood/passion may spontaneously combust one day. Then you have people who
aren't involved and are (probably) jealous at least on some subconscious
level, and people who legitimately believe the bubble exists. This makes for
some heated (and usually nonconstructive) debates.

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robwgibbons
Funny, they've been saying this ever since the last one.

~~~
randomdata
We were talking about it at least as far back as 2006, for sure. Source:
[http://online.wsj.com/public/article/SB116679843912957776-fF...](http://online.wsj.com/public/article/SB116679843912957776-fF7CtrdMDTE4n1h5Ju5pv0HKhgM_20071227.html)

At what point is growth in an industry no longer considered a bubble?

~~~
robwgibbons
My point exactly.

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sabat
If I had any amount of money, even a penny, for every time some yahoo
announces that we're in another bubble ...

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ojr
if a developer sells a game for .99 cents and it sells 1.3 million copies, is
the company worth a million dollars? No one knows how this "bubble" will go
down, there should be more focus on the evolution of Javascript

