A huge difference between the dot com bubble and now is that Sarbanes-Oxley makes IPOs a lot less appealing. That is the most likely reason why acquisitions and late funding rounds have replaced IPOs. This also means that the amount of money that can pour into a bubble is less than the last time around.

That said, bubbles usually are based a new theory about valuation for some key asset. The echo chamber of people who believe this theory bids up the value of that asset until they collectively do not have the resources to bid it higher. Then when it starts to collapse, and everyone abandons the theory, the bubble pops.

Given that, the growth of valuations is very worrisome. Doubly so since they center around social apps. One of the elements of the last bubble was the widespread belief in Metcalfe's law, that the value of a network scales as the size of the network squared. I was one of several people who came to the conclusion that O(n log(n)) is a better estimate. See http://spectrum.ieee.org/computing/networks/metcalfes-law-is... for more on that. Networks were not worth as much as people thought last time.

This time round we're again seeing a belief that social networks (such as the one Facebook owns) are worth a tremendous amount. And this belief persists despite the fact that those networks are regularly being forced to buy newer social networks at high valuations because they can't prevent new entrants from gaining traction in the marketplace. So current valuations seem to be based on a theory which we have fairly direct evidence is wrong.

That fact is my top reason for believing that current valuations will not hold up over time.

We are seeing highly successful and VC funded companies like Snapchat and Twitter achieving high user rates, but failing to monetise their userbase. Herein lies the problem: these companies are being valued at billions of dollars because of their VC investment, but they're not making any money (at least not enough to make a profit). In comparison to companies that are making profits, but might only be valued at a fraction of Twitter or Snapchat. Surely this has to have consequences even if they're not on the scale of what we saw during the dot-com bust of the early 2000's.

Maybe we're not in a tech bubble like we saw in the nineties, but I think something is definitely going on. Just because people aren't losing retirement funds due to buying stock in an IPO'd tech company that dies doesn't mean a bubble hasn't formed in other areas that necessarily don't affect your average investor. Like many things involving historical and financial data, nobody knows what is going to happen tomorrow or in 6 months time. We can speculate, but honestly, nobody knows: that's both the beautiful and destructive nature of finance.

VC's are throwing money at these companies that are burning through more money than they are making. Having to go through multiple rounds just to keep the lights on. I don't see how that is sustainable in the long-run, at some point you have to start making money right? It seems the approach most companies take these days is to try and get as much investment as they can and when they reach the point where they've given up X percentage of their company to venture capitalists they either have to IPO or close down.

One thing that is definitely different from the nineties is we aren't seeing startups host ridiculously expensive launch parties and events as much anymore.

At some point the incentivizing would stop after burning through a lot of cash - to show profits. At that very moment some other startup could begin giving out lots of free credits and users could very easily move.

That's when things could potentially come crashing down.

https://hn.algolia.com/?query=tech%20bubble&sort=byPopularit...

Someone will get the timing right though, and go on to do a number of interviews and maybe even publish a book.

I wish people would flip the argument and instead of saying tech bubble, start asking about the death rate of all the millions of apps, small shops, and side projects that are flooding the tech sector. I would like to see if this "fail" rate is too low (in the sense of not having enough winners) rather than a tech "bubble" being too high.

Bubble is such a loaded, judgemental term. How about over-optimistic? A lot of new things have been doing really well: Facebook, Uber, etc. So many investments are priced very optimistically. Some will succeed, many will fail. Many useful investents will be made. Much money will be lost. Unless you are an angel investor I wouldn't lose a lot of sleep over it.

Fundraising being low compared to valuations is a sign that VCs' risk appetites take into account the probability that everything is hugely overvalued.

Fundraising could ultimately surge towards 2000 levels if people really start drinking the Kool-Aid. But if it pulls back then I'd expect to see valuations plummet and, accordingly, share prices.

Who are those parties? How much reliance do they have on borrowed money? That's the big question - who are the losers when the bubble pops?

Looking at it from a technical perspective: there are two kinds of companies out there. There are companies that do something people care about and ones that don't.

Think about Twitter for a second. If Twitter dropped off the face of the earth, would you really care? I wouldn't. Even if I used Twitter, it wouldn't be hard to just go find all the same people on Facebook or whatever and follow them there. People and companies use Twitter for self-promotion, but that puts Twitter into the same business demographic as a TV channel that runs infomercials. Some people watch infomercials, but if the entire infomercial market disappeared, nobody would really care. The problem with Twitter isn't that they can't monetize their product, it's that they don't have a product.

Then there are companies that actually have a product. They may not charge for their product, but if they did, people would pay for it. Uber and AirBNB charge for their products.

Duolingo doesn't charge language learners, but they probably could: my experience is that they are more effective for language learning than Pimsleur, which a lot of people pay for. It's an artifact of the Google age that companies don't actually charge for their product, but charge for ancilliary services around it. Google doesn't charge for search: they charge for ads. But if Google decided to start charging $10/mo for search? A lot of people would pay it.

Businesses making use of modern technology bubble? No.

it does get irritating to hear about "uber as a bubble." Consider how much cash is flowing through uber right now, it is going to become/remain a massive business.

Regardless, I'm honestly kind of scared, despite it not being a particularly rational thing to think.

IoT to the rescue!

This is just the HTML5/ mobile app bubble, or in other words ".com bubble 2: the media companies disguised as technology firms strike back."

I don't care much whether "the market" goes up or down, but I want us to get our fucking values back. How the fuck did "tech" beget Snapchat and Clinkle? Those founders aren't fit to work in tech companies, let alone fucking run them. How'd we let ourselves get colonized by the mainstream business culture and rendered their shitty outpost, instead of being something unique in the world?

The 2011-15 bubble wasn't the worst in terms of numerical overrating of technology companies, but I'm afraid that it will go down in history as the time in which Silicon Valley lost what remaining character it had and became a sideshow for the existing corporate elite, rather than a credible opposition to entrenched and malevolent private-sector stagnation.

That's what I think. Not repeating the same mistakes doesn't mean we're not making new ones.

Which means the bust will also be different, for better or worse.