Tech commentators and investors can't help wondering if we're in the middle of a new, soon-to-burst tech bubble. The evidence: We're seeing shockingly high valuations for Facebook ($85 billion), Twitter ($7.7 billion), Groupon ($25 billion), and Zynga ($10 billion); startups like Color are raising huge sums of venture capital; and Silicon Valley is on a "hiring binge." Is 2011 the new 1999?
Maybe. The gung-ho mindset is worrying: I'm astounded by how much money is flooding into Silicon Valley, says Thomas Weisel, who founded an investment bank that flourished in the first internet boom, as quoted by The New York Times. "The pools of capital... are far greater today than what you had in 2000." Indeed, says Roger McNamee, another investor quoted by the Times. There's a mistaken belief that "every social company will be as good as Facebook."
"Investing like it's 1999"
Don't panic... yet: We're in a period of recovery and growth, says Dean Takahash at Venture Beat, and we'll likely see some good years "before the craziness of a complete and utter bubble takes over." That possibility shouldn't "paralyze" investors. We just need to realize that this is a game of musical chairs, and one day, the music will stop.
"Silicon Valley is abuzz with bubble and recovery stories — too soon?"
No, the good times are back: Since the boom and bust of the late 90s, says Ben Horowitz in The Wall Street Journal, technology and access to it have vastly improved, creating a number of new markets and opportunities. "We are at the very beginning of a gargantuan new technology cycle: the move from Web/PC computing to cloud and mobile." And that means a boom, not a bust.
"Bubble trouble? I don't think so"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Stop making fun of philosophy and read some philosophy
- 43 TV shows to watch in 2014
- The real lesson of the looming Martha Coakley disaster
- Beware of Splenda: The backlash against artificial sugars
- Sorry, we will not all be having sex with robots in the future
- How to live a long life, according to science
- How the brides of ISIS are attracting Western women
- 6 things the happiest families all have in common
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- For Democrats, the right lesson from 2014 is to be more liberal
Subscribe to the Week