Most bubbles trickle down. VCs will gladly partner with companies at high valuations because eventually banks, accredited investors, and secondary markets are let in on the deal to drive the valuation higher. The first two groups pray for and/or plan an IPO to dump an even higher valuation on the public market.
Boom is the transfer of wealth from the bottom 95% to the top 5%. Bust is when that transfer is complete.
I've heard these arguments a lot, but I've never seen anyone point to a specific case where someone with under a $50,000 a year income ends up with these stocks. Other than employees of course.
I think this inflationary period is probably closer to past ones (e.g. microcomputer/peripherals in the early 80s) then the wide spread financial asset bubble of 2000.
And if we hear about more of these 'special purpose vehicles', the public/private distinction may well be on its is way to irrelevancy.
Further, the article is a very well-thought and argued piece that doesn't remotely veer into hyperbole. Even if you disagree with its conclusions, it strikes me as incredibly disingenuous to dismiss it as "just another Chicken Little".
I'm not sure whether it's the S-O that's actually keeping companies from going public now.
An alternative scenario is the rise of a hypothetical trend in listing on non-US exchanges.
Still, build something people (with money) want to buy.
The big thing right now seems to be that the overall economy (at least in the US) seems much weaker than the tech economy, so there may be opportunities to arbitrage this somehow ("offshore" development using non-internet programmers from industrial companies in the midwest?).
IMO no one is going to be a more successful tech entrepreneur because he's better at predicting macro economic trends. Those cycles are better spent learning something worthwhile in your problem domain, or actual tech or entrepreneurship skills.
I think the macro trends become increasingly important depending on the stage of your company. E.g. Paypal raised $200 million at the peak of the bubble, and this money saved them from burning out in the downturn when raising capital became very hard. If you are 2 people bootstrapping this does not impact you as much. If you are a later stage company that is not yet profitable, and you need to raise money, macro trends are incredibly important.
Wages also remain stagnant, which would exert considerable drag on any other inflationary pressures.
> "With a zero percent fed funds rate, there's no where else for the money to go..."
Japan battled deflation, not inflation, despite a near-zero rate throughout their Lost Decade (which is now more like a Lost Generation). They also saw considerable wage stagnation.
Our crisis, half-responses and dialogue are almost note-for-note recreations of Japan's experience. But I guess that old yarn about "those who don't learn from history" is around for a reason.
Just now (in 2011) we are living up to most of the tech promises made in 2000. I'll get worried about another bubble when money starts chasing technology that is obvious vaporware.
For instance, how many times did you hear anyone talking of a housing market bubble before it popped? Little to none. Right now, there's just too much talk of a tech bubble for there to actually be one. And it's not just on sites like HN. You see it in the MSM too:
Sorry, but I just don't see it happening just this moment. A year or two later might be a different story. But I don't see it happening now.
After a while, some people thought that the housing price increase was a paradigm shift towards more housing (i.e. a natural phenomenon because the price increases were seemingly sustained.
Software that makes a person 2x more productive is very attractive when everybody is trying to do more with less.
Interesting statement. Anyone else thinking the same (or differently), and can back it up with numbers?