He's right, but so many tiny startups aren't overvalued and they won't tank. Also, I find it hard to imagine an event that would lead to a collapse. It's not like there are tons of IPOs that can dry up.

The interesting part is the diff between now and then. The availability of easy money can change fast. Unless there is a very large collapse in the dollar, most startups wouldn't be affected by the marginal changes in consumer behavior.

Well, one thing a recession and resulting drop in ad revenue will do is slow down acquisitions by large public companies of small private companies that are still experiencing 'notional' revenue (ie with no business model).

Startups that are built on a feature rather than a business will find it harder to identify any takers. And less startups being bought will result in less entrepreneurs taking the plunge to start... not so much a collapse of the startup ecosystem, but a localized minimum inside of it.

What about the significant drop in ad spending which occurs in every recession? Or is it "different this time" like in 2000?

I'm probably biased because Tipjoy isn't affected in the least by a drop in spending in Ads. We're probably boosted, all things being equal. Consumer frugality would certainly affect us though.

Your business model shouldn't change on the margins. A slow or fast season in Ads won't make a typical business die or become viable.

Otherwise you would be, by definition, a marginal business, and that's not a good place to be (again by definition, the first one to die when things go bad).

I tend to value people's bets based on what they're willing to risk on it. All of this idle surface speculation doesn't do much for me. Particularly non-insightful.

How could you bet against an overvalued private company? Are VC funds ever publicly traded?

You can always wager your reputation, or at least make some definitive claims that can be held against you if you end up being wrong.

"Some companies with high valuation will tank" is neither informative nor original advice. It's beating up on an easy target without adding anything new.

This was pretty specific:

"companies who make widgets for Facebook are not worth anything close to $500,000,000."

It's not about what the company does now. It's about what they're going to do in the future. Tons of profitable companies have humble beginnings.

So really there's not much to discuss here without more information.

I agree with your last thought, but let me just point out that there is absolutely nothing humble about the kinds of companies in question. It's explosive growth built upon ephemera.

/Agreed.