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Are You in a Bubble? (diegobasch.com)
22 points by pacov on May 25, 2012 | hide | past | favorite | 19 comments

Why think about it when http://TechBubbleForEveryoneOrJustMe.com/ has you covered? ;-)

There's a lot of smoke being blown into this "bubble".


Personally, I can't wait for the pendulum to swing. People seem to have forgotten that it's far easier to launch a company when everyone else is panicking and running for safety. You're competing with fewer players, it's easier to find talent and there's more of a focus on starting actual businesses that generate sustained, predictable revenue.

Sounds great to me.

I am not in bubble. I AM bubble. 16 yrs in IT add pounds.

On the other hand: I don't think Facebook "bubbles" will impact IT in a big way. Theoretically, if FB drops dead tomorrow - tech won't suffer that much. It will hurt companies that do business with FB, some marketing people like BuddyMedia etc. But there will be something else to do. And tech market is not based on FB, FB is a niche.

On the other hand, the Facebook bubble could pop any day. Most of the world would barely notice, and LinkedIn would still get business from other growing industries. Disclosure: I own LNKD shares.

Of course he's a believer in LinkedIn and owns shares. His company was acquired by them. I'd like to know if he actually purchased more shares than what he was given with the acquisition.

If he can sell the shares, it makes no difference. They are public and liquid, good as cash.

Reading the title, can't help reacalling Remember Me from TNG, where Beverly Crusher gets entrapped in a warp bubble. Oh, those were the days... watching TNG on nights before almost every exams.

The price of the biggest new tech company of all, Facebook, has done nothing but go down since its IPO.

The public has said it's overvalued at $100 billion.

That indicates to me that we're not in a bubble.

What I do not understand, is why Facebook is called a "technology company". It's no more of a technology company than News Corp or any other media company. The technology there is rather simple, compared to biotech or SpaceX. I would classify it as media/entertainment (which harkens back to Zukerberg Productions) as it used to say at the bottom of FB a few years ago.

I take it you're a web developer of some sort, so web technology seems trivial. But building, evolving and operating a site like Facebook is an incredible technical challenge. Sure it's not biotech or space tech which require hard science, and sure the penalties for failure are not as high, but the infrastructure they're building is world class tech. Running a newspaper site at the same scale would be orders of magnitude easier because it's much more trivially cacheable, and I say "would be" because there is no newspaper site that operates at that scale.

Also, speaking of News Corp, let me point out that a big part of how Facebook killed MySpace was MySpace was not able to come anywhere near the performance, or pace of evolution of Facebook. It's also worth noting that the previous market leader, Friendster, failed because they couldn't fix their performance problems when they were a tiny fraction of the size Facebook is now.

There's no need to mince words: Facebook is slinging serious scalability sauce that could only be developed by a leading technology company.

It is because software is eating the world. Marc Andreessen (who actually sits on FB board) explained this recently[1].

Another way of seeing this, is through how much engineering goes on their scaling problems.

[1] http://blakemasters.tumblr.com/post/22660214207/peter-thiels...

It could be that venture capital is in a bubble, but that the general market is not.

Given the dearth of IPOs I'd say private investors are the only place a bubble could be by definition.

In VC-land, down rounds are highly stigmatized. No one knows what anything is worth, but a company that remains in reasonably good esteem can ensure that the valuation doesn't go down, even if it "should" based on fundamentals. Terms can get worse and funding may become harder to get, but down rounds can be prevented unless something really bad is happening.

On the stock market, where the valuation process is nearly continuous, almost 50 percent of days are down days (the daily drift is tiny in comparison to the standard deviation).

What has happened is that the Facebook stock has gone from an environment with artificial support to one without it. It has nothing to do with whether there's a bubble.

FB is worth approximately the same as Kraft foods (70 vs 68 BN). Take away FB for 3 days and you get people bitching on twitter and some lost business for their advertisers. Take away junk food for 3 days and you get riots. Here is what wolfram-alpha thinks FB is going to do: http://imgur.com/2c5me

Which company will be here in 20 years...

It does in some ways remind me of the first bubble and I'd like to think that we're all a lot smarter now. I don't really see a massive crash happening like before. But anytime there are huge businesses which are not actually making the revenue to merit their stock valuation - there is potential of trouble.

It's not just tech bloggers, here's an article by the Washington Post about Facebook and traders betting against it:


My issue with this bubble is that there's no underlying. Instead of green technology, we see Zynga employing people who work full-time trying to exploit the same class of people that were targeted by the dreaded telemarketers of 10 years ago.

The late-90s bubble was frothier, with all the talk of a recession-proof "New Economy" (oddly, most people now long for the Old one) and the massively overvalued technology stocks. Even still, there was a real underlying. The Internet really was changing the way people do business in a rather permanent way. The reason for the bubble was that people overestimated how soon certain changes would arrive.

This bubble doesn't have much of an underlying. I'd even argue that there isn't one. Facebook is a decent product and has provided a lot of value to its users, but it's not as earth-shaking as the Internet, and these "Facebook's tapeworm" startups like Zynga are insults to the millions of people trying to build things that are real. Also, the current climate of extreme social openness (where people want to broadcast their careers and locations without thought to whether they really want people to have access to that data in 5 years) is going to end, and the "cool" social startups will either be dead, or successful and "uncool", within a few years.

I bet a lot of VC and angel investors right now are looking at those FB quotes and starting to get a knot in their stomach. The jig is up, the Social Network Bubble that VC's have been hyping and pumping non-stop for the past couple years is over. I bet we'll see a return to interest in companies that have actual revenue, actual customers, and actual businesses.

I don't think it'll be over until Twitter IPOs and fails to pop like FB.

I think we need at least these two major brands going thru the same fate for the social networking bubble to be affected.

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