Bubble Indicators
There is no question that we are seeing a lot of froth out there, which Mike’s been warning about for quite some time. You should see some of the unsolicited Website launches that get submitted to us every day here. Yesterday alone we received 17 submissions, including one for Hide Pink Shirt Guy. I’m not even sure what that is, but it is not a business.
But are we seeing a financial bubble here,or is there something else going on? There is certainly not as much money being thrown around (yet) as the last time around. While talk of a $10 billion or $15 billion valuation for Facebook feeds into the bubble theory, Facebook seems more like a lone exception. There are convincing arguments that it truly does represent a major new platform and thus deserves a platform-like valuation (there are also convincing arguments against that theory). Nevertheless, the clearest sign of a financial bubble in Silicon Valley would be if valuations across the board began to become divorced from reality. While valuations are certainly up, they are not yet in wacko territory.
Maybe Paul Graham has it right. It’s so cheap to create Web startups these days that we are going to be seeing a whole lot more of them. Many will be inane, redundant, or half-baked. But a few will rise up from the froth and create something lasting. Bubble or not, it’s worth keeping an eye out for those game-changers. We just might have to wade through a lot of junk to find them.