Bubble. Not a Bubble. Bubble. Not a Bubble.

Chris “Long Tail” Anderson plucks a few economic petals and muses — Bubble. Not a bubble. Bubble. Not a bubble. — whether the current Valley fondness for all tech things fun and frothy is a bubble. He plumps down on the side of it not being one, citing cheaper raw materials (one of my VEF presentation points), open source software, and the continuing pace of technology adoption.

I don’t disagree entirely, but I think Chris is a little more sanguine than the situation deserves. For example, while less venture capital is going out, when it costs one-tenth as much money to create tech companies you need much less venture capital to do mischief. Similarly, if you invest that venture money narrowly, both geographically and sectorally, then it takes even less money to really screw things up.

Finally, while a reduced obsession with IPOs is good, a market built around acquisition exits (which Chris approvingly cites) comes with its own costs. Not least among those costs is that there are a hell of a lot more potential buyers for the average IPO (all of us market participants) than there are for Web 2.0 companies built to flip (Google-Yahoo-Microsoft).

Related posts:

  1. A New Venture Fund Bubble?
  2. A New Venture Bubble
  3. The Hedge Fund Bubble
  4. The Private Equity Bubble
  5. Distant Echoes of the Equity Bubble

Comments

  1. Fartikus says:

    this is all probably water under the bridge now in any case…if digg is to be purchased i suspect it will be an endnote to this trend, i don’t see much else out there worth buying (and yes, i am including meebo in this assessment)

  2. John K says:

    Bubbles require blissful, fear-free confidence. Do we have that? I don’t think so.
    Same as the real-estate market. Many people are modifying their behaviour already in fear of a bubble. That’s a normal market – one that has ups and downs. That’s not a bubble.
    If all of the articles about bubbles ended with strong assurances that we are NOT in a bubble, then we’d be ripe for a bubble.
    Where’s the Kedrosky Bubble tracker feed? – the one tracks articles promoting “Fear of Bubble” vs “Assurance that there is no Bubble”?

  3. More bubble 2.0 (or lack thereof) dissertations

    A new day, a new article or post about the frothy environment that is developing around us. This time it is Chris “Long Tail” Anderson who publishes a piece in Wired about “the New Boom” in which he suggests that we are not yet seeing the sign…

  4. Ad Thoughts says:

    Brevity

    Chris Anderson- one of my favorite scribblers here in the valley- has followed up John Battelle’s NYT op-ed with a short article explaining why the boom that is just starting here is not a bubble. He says everything I have

  5. It seems to me that Anderson has to be missing something. That equipment costs are dramatically lower is certainly true. But it’s not a static system, so I would expect other costs to then be higher – marketing? Also, the standards change. So while the inidividual unit processing power cost is lower, you need more to be competitive with everyone else.