We are NOT in a technology bubble. We are in the ‘Great Network Chase of 2012’.
The bubble discussion is on in full force today again. Chris Dixon starts off the latest meme. Nick Bilton, from The New York Times…now at a valuation less than Instagram (so not sure it is worth the read versus sharing another photo), chimes in here. Personally, I don’t like when journalists focus in on massive outliers to prove a point.
I would argue from my experience starting and investing in companies that we have too many Wantrepreneurs. It is very difficult to define an entrepreneur today. The fact that we are using a french word to define it is a problem in of itself.
You can’t have a bubble in startups when it costs so little to start a business. We do have too many startups with angel valuations that are way too high. We are not near the point where the average investor owns these. Yes, Fidelity wants into this space, but Fidelity can’t get in. I would even argue that we need dumber institutional money in the angel space because I want to hire kids that have tried to be an entrepreneur. They can learn about business models in a textbook or on successful entrepreneur blogs while getting stiffed by a customer after flying the redeye.
We will hit the point, likely soon, when the cost of starting a business is offset by the high cost of getting traction and keeping it. I am most wary of this when investing today.
The stock market is far from a bubble. Check prices in Europe. China stocks have crumbled. Solar…dead. Housing…bull trap.
There is so much money on the sidelines waiting for a HINT of good news. It shows up on the edges in the meantime (see $CTXS last week). It shows up on Angelist and it shows up at Y Combinator and TechStars and in the stocks of global consumer brands. It makes total sense to me.
I love all the old fart money on the sidelines. It won’t stay there. They will be chasing bad network effect ideas while the smart money money moves to a different pool to feed on.
Feed Mayo to the Tuna….(first one with the correct movie reference in the comments gets a Stocktwits t-shirt).