

Are We Heading for Another Tech Bubble (debate)? - donohoe
http://www.nytimes.com/roomfordebate/2011/03/30/are-we-heading-for-another-tech-bubble?hp

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sabat
_Even though ordinary investors have been locked out of the game, should this
bubble burst, the financial elites will most certainly find a way to shift the
consequences of their folly onto the rest of us._

Cynical although certainly possible. But what remains unanswered: how big a
hit would be coming if Zynga didn't grow into its valuation (and every other
"overvalued" company failed as well)?

It does not compare, even a little, to the 1990s. This is a much smaller
scale, and that's why I object to the use of the word "bubble". It's like
calling a three-foot-high wave a "Tsunami".

~~~
arethuza
"It's like calling a three-foot-high wave a "Tsunami""

In deep water before they hit a coast tsunamis aren't very high - in fact they
can be about 3ft.

<http://en.wikipedia.org/wiki/Tsunami#Characteristics>

As someone who co-founded a startup in '95 (and did the whole arc of VC money,
IPO, acquisition, death over 7 years) I have to say that there are certain
elements of the current situation that do seem awfully familiar.

~~~
sabat
You're taking my analogy too literally. I meant a wave that is just a wave.

 _there are certain elements of the current situation that do seem awfully
familiar_

Perhaps, but I've been involved in the startup world since around then, and
the fundamentals that made the dot-com bust what it was are not present now.
People didn't know what they were doing back then, and every MBA was sure he
knew he could make millions with a .com domain name. There was a lot to learn.
Not everything has been worked out, for sure, and irrational exuberance rears
its head more often than we'd like. But this is not a repeat of the '90s
bubble. Companies are making real money, and are able to sustain it. The
general public is used to what the internet is and is willing to do business
with it. The first generation of internet-savvy youth are coming of age. There
are few IPOs, and the companies that have done so (e.g. OpenTable) are
profitable and growing. That's why I insist that we are not in a bubble -- not
a stock market bubble, not a tech bubble. There are overinvestments, but
they're not going to bring the industry or the stock market to its knees.

Chicken Littles are running around yelling that the bubble is coming, and a
few people are trying to reason with them. I'm attempting to be one of those
people.

