Comments on: Is it a tech boom or a bubble? [Infographic]

By: Newcastle Security

Newcastle Security — Sat, 03 Sep 2011 10:07:17 +0000

Both were bubbles. But,there was some LEGITIMATE ECONOMIC expansion behind each boom: namely the expansion of the internet and the expansion of the housing market.

By: randomJoe

randomJoe — Wed, 20 Jul 2011 17:06:44 +0000

“no, it’s different this time”

By: wolfinthesky

wolfinthesky — Wed, 20 Jul 2011 15:24:04 +0000

Bug note: the iPhone FB Like text entry box doesn’t allow use of the native tap-to-select/copy/paste function. Please fix!

By: Sofia

Sofia — Tue, 19 Jul 2011 21:26:31 +0000

This infographic neglects a couple of key points: 1) that the last cycle had much higher capital intensity and barriers to entry, 2) that in the current cycle, many companies which have products that people want don’t have a business model that investors want and 3) that the current cycle is depressed by a post Greenspan/post Lehman economic cycle. Adjusting for these factors, the bubble will look even worse than the last.

By: Daycare Gurgaon

Daycare Gurgaon — Tue, 19 Jul 2011 09:54:00 +0000

A “Booming Economy” means what it always does to Republicans. The richest are doing well–and who cares about the rest of the Country?

By: Wonna Gombaluma

Wonna Gombaluma — Tue, 19 Jul 2011 05:12:35 +0000

How original, “this time its different” – nobody in a bubble ever said that, except for every other bubble we’ve ever had.

By: Justin

Justin — Mon, 18 Jul 2011 22:24:08 +0000

Jason, I see your point. But doesn’t Zynga also have a much lower barrier to entry than EA? EA’s competitors must compete with amazing graphics, immersive storylines, multiple gaming strategies (individual vs. multiplayer), mass distribution, marketing, etc. Zynga has created some pretty interesting games leveraging Facebook’s userbase, but let’s not kid ourselves about whether or not another company can come along and produce similar games and provide massive competition due to the very low barriers to entry. Zynga is low hanging fruit in the gaming world. Groupon has showed us that these new business plans are susceptible to competition (otherwise Groupon wouldn’t be buying every single competitor that pops up). Fortunately, the current wave of tech companies are valued on actual revenues and not eyeballs; however, there has to be some barrier to new entrants otherwise these companies will be the next wave of dot-com busts as each company competes at increasingly lower price points racing each other to the bottom.

By: jnthibeaultw

jnthibeaultw — Mon, 18 Jul 2011 16:21:18 +0000

I agree that valuations are high for private companies but let’s look at what they are based on. Take Zynga vs. EA for instance. EA represents a classic game distribution model which is very expensive. You hope that development and marketing opportunities pay off for a AAA title but it could loose millions. Couple that with user playing behavior (i.e., the rise of casual gaming) and along comes Zynga. But not only are they making casual games, they are also targeting them at where all the users are: Facebook. Furthermore, their production costs for a game title are astronomically smaller in relation to traditional game dev/publishing and they have a revenue stream that has proven to be extremely lucrative: in game micro-sales and targeted advertising. A very interesting thing we are seeing with this round of tech companies is their interconnectedness. Zynga isn’t a company built just on one revenue stream, it has multiple thanks to the maturity of the Internet and the maturity of online user behavior. And given their hockey stick growth coupled with the continued explosion of social media and online advertising, the upside to their millions already in annual revenue is staggering.

Of course, there are many many factors involved in identifying an economic bubble and I’m not one to say that it’s a single this or that which says we are in a bubble or not. Nor is Zynga the poster child for saying it’s not but it is a prime example of how we need to rethink the valuation game. Big valuations in 1990s/2000s were based on pure speculation. Well, that speculation has happened. The internet and online behavior is where they had thought it would be. Unfortunately, few if any companies made it out alive of that time to see it happen.

I agree there will need to be corrections. I just feel that this talk of a bubble gets everybody spun up irrationally without looking analytically at the whole situation using past data as a guide, not as a blueprint.

By: AK

AK — Mon, 18 Jul 2011 16:15:46 +0000

Perhaps we’re in a “booble” :-) This name kind of makes me think of Google, which is no bubble. Nice chart though.

By: Om Malik

Om Malik — Mon, 18 Jul 2011 15:55:06 +0000

Agreed. I think the boom is localized and the bust is going to be localized as well.