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The New Tech Bubble

economist.com

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Re: The New Tech Bubble

#11

Post by timr »

maigret wrote: post #7

This may be a private tech bubble though. To me it don't seems like tech stocks are too inflated compared to the revenues we can see. Facebook may be overvalued, the Skype buy was very expensive, VCs invest like crazy, but all of that is private investment. Does anyone here see a risk for the stocks also?

Where do you think all the VC and angel money is coming from? Banks and pension funds and investment firms are almost certainly funneling money into these things, we just don't get to see it because it's being done on the private market.

The very thing that makes everyone comfortable with this bubble (that it's mainly "private" capital) is the scariest part. Last time, you could mostly tell when grandma's retirement fund was betting the bank on social networks for dogs. This time, it's all on the down-low.

Re: The New Tech Bubble

#12

Post by dreamdu5t »

If by "bubble" they mean companies that aren't profitable are being valued at enormous amounts, and continue to garner investment even without any clear revenue or exit strategy, then yes we are in a bubble.

The problem is the web industry considers investment to be revenue... in which case you're never in a bubble because profit doesn't really matter. Success in the web industry is simply getting someone to throw money at you.

Re: The New Tech Bubble

#13

Post by rbranson »

ireadzalot wrote: post #4
GeoffreyHull wrote: post #3

Bubbles require genuine belief of a large group of experts and leaders. They need to be convinced that eyeball counts will rise forever, that real estate will keep going, and that the growth potential of users is near infinite. They will come up with lots of analysis to protect their viewpoints and their belief will get more profound with every passing minute. I dont see that type of blind naivete in today's tech com…

What do you say to the fact that Skype just sold for $8.5 billion when it's income is only about $400 million? And there is Color that is valued at $100 million even though its product is in almost-beta? Anyone who has watched the tech. industry for the past few years could notice that the way valuation of tech. companies are going up, it is alarming and exude "exuberance". (Figures mentioned above are from the origi…

These are just potentially poor decisions made by people with lots of money. Tech startups are inherently risky -- many more succeed than fail -- even if they are well funded. It is a fundamentally different equation than starting a bagel shop or a car wash.

Re: The New Tech Bubble

#14

Post by olauzon »

rbranson wrote: post #13
ireadzalot wrote: post #4

Earlier quoted context omitted.

What do you say to the fact that Skype just sold for $8.5 billion when it's income is only about $400 million? And there is Color that is valued at $100 million even though its product is in almost-beta? Anyone who has watched the tech. industry for the past few years could notice that the way valuation of tech. companies are going up, it is alarming and exude "exuberance". (Figures mentioned above are from the origi…

These are just potentially poor decisions made by people with lots of money. Tech startups are inherently risky -- many more succeed than fail -- even if they are well funded. It is a fundamentally different equation than starting a bagel shop or a car wash.

I assume you meant many more fail than succeed?

Re: The New Tech Bubble

#15

Post by caudicus »

This is the cover of this week's Economist, despite the fact they really only have two other articles in it...one talking about the Skype purchase and another talking about the increased investment of web technology companies in both the US, Europe and China.

Re: The New Tech Bubble

#16

Post by invertedlambda »

I think it goes back to the learnings from the original tech bubble: companies with a real business plan survive, those with a nebulous product don't make it.

For example: Amazon was a rising star during the late-90s tech bubble, and it's still around today. And it's very much a player in the tech space. How many of us use AWS?

Google has a solid business platform and has definitely made it by all measures.

Netflix is another example. Good product, has upset the industry, sky's the limit type stuff.

Could all of these golden companies fail? Absolutely. For example, look at Microsoft right now - they are still innovating in some spaces, but really struggling in others. Will they go the way of IBM? (Hey, I hope so, but let's not start dreaming now).

Then there's Facebook and Twitter - arguably the stars of the current tech bubble. Are they worth what people say they are? Really depends on what happens over the next few years. Both are definitely becoming platforms that people do all kinds of interesting things on. But at the same time, people could get tired of social networking. (That's my personal bias shining through).

So...it's a bubble for some and not for others.

Re: The New Tech Bubble

#17

Post by jameshighsmith »

invertedlambda wrote: post #16

I think it goes back to the learnings from the original tech bubble: companies with a real business plan survive, those with a nebulous product don't make it. For example: Amazon was a rising star during the late-90s tech bubble, and it's still around today. And it's very much a player in the tech space. How many of us use AWS? Google has a solid business platform and has definitely made it by all measures. Netflix i…

Cash is king.

Re: The New Tech Bubble

#18

Post by dreamdu5t »

invertedlambda wrote: post #16

I think it goes back to the learnings from the original tech bubble: companies with a real business plan survive, those with a nebulous product don't make it. For example: Amazon was a rising star during the late-90s tech bubble, and it's still around today. And it's very much a player in the tech space. How many of us use AWS? Google has a solid business platform and has definitely made it by all measures. Netflix i…

I don't think Amazon, Netflix, and Google are the companies people are referring to when talking about this new bubble.
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