> That one of the surest signs of a bubble is out right and rampant fraud. This is critical because when a bubble occurs it means that mass hysteria sets over the general population as neighbors see people "dumber" than them making money. This leads to rampant speculation across the board, which then leads to bad actors committing fraud. They commit fraud because the incentives are high to make a quick buck.
That reads like a description of SV. Mass hysteria - check (eg. BTC, shitty startups)! "dumber" people making money - check! rampant speculation - check (eg. Uber IPO valuation of 120B, bay area shacks going for millions)! Actors committing fraud - check (eg. Theranos, Zenefits)!
So can we say that SV is in a bubble, maybe confined to the tech sector?
Bubbles gain steam by being accessible. The more people that get involved, the larger the bubble becomes. It isn't a ponzi scheme, but acts like one in many ways.
ICOs were well on their way to becoming a bubble, but being pegged to the price of cryptocurrencies, the bitcoin bubble popped before the ICO bubble really took off.
But if you look at the ICOs there was rampant fraud. Basically people writing white papers, with no real companies or products, and then raising millions of dollars. Very similar to the dot com bubble.
SV in and of itself creates a tremendous amount of value. Sure there are some spectacular failures, and some questionable investments, but overall there is value that is created. Without getting into any morality discussions, but purely looking at revenue, profitability, return to investors, companies like Uber, Facebook, Twitter, Airbnb, Tesla, and so forth have created tremendous shareholder value.
When you some a "stupid" app raise $5MM it really isn't much considering how much these other companies have raised, the revenue they generated and so forth.
So SV is definitely not a bubble per say. You could make the case that some valuations are inflated, but that is a sign of the macro market where SaaS companies are enjoying their largest revenue multiples ever, but if that corrects there will be a rest of perhaps 30-50% in market cap, but no where near total collapse.
Additionally these companies do have underlying products, services, benefits, and revenue.
You could say there is hype, over valuation, and so forth, but we aren't anywhere near bubble territory.
> Without getting into any morality discussions, but purely looking at revenue, profitability, return to investors, companies like Uber, Facebook, Twitter, Airbnb, Tesla, and so forth have created tremendous shareholder value.
Facebook yes, but how many of the others have paid any dividends to shareholders? Even these "success stories" seem to have valuations that are based mostly on speculation; plenty of investors have made money but they could have just been selling to "greater fools".
Bubbles are usually based on real anticipated value, that's what gets them started. The opportunity is there and a transformation is ocurring, but the investors in the bubble won't profit as they're too early or late or don't happen to invest in companies which survive.
That reads like a description of SV. Mass hysteria - check (eg. BTC, shitty startups)! "dumber" people making money - check! rampant speculation - check (eg. Uber IPO valuation of 120B, bay area shacks going for millions)! Actors committing fraud - check (eg. Theranos, Zenefits)!
So can we say that SV is in a bubble, maybe confined to the tech sector?