I wish some insiders in the know would step up here in an unbiased way. Every weighty comments I've heard seems to have come from an emotional or defensive place.
I'm completely outside and absolutely not in the know but it seems to me like (a) professional high risk investors collectively investing $100ms in an industry where companies can be worth $100bs do not make a bubble (the 2001 bubble was in the trillions) and (b) a lot of the typical "bubbly" claims about new economic realities might be true this time.
I think both are evident here. The the former, this is $20m into a company that provides a service to customers that are willing to pay for it, not $200m into something with impossible to value (it could be zero) potential. High risk - yes. Irrational, foolish or systematically risky - I think no.
For the latter, this is a company that has already made an impact in the giant dominated world of financial transactions. The important part is that they did it with very little (relatively) capital input. At a pinch they probably could have done it with less, though maybe more slowly. That is a "new economic realities" type occurrence.
Maybe the world's huge credit card companies and banks can be partially replaced with much smaller new companies. Maybe paypal has run its course. Founded with millions by a few smart guys. Growing to massive scale (with the help of $200m investment). Spending 10-15 years in a dwindling cas cow phase and ultimatey being succeeded. Maybe it is viable for companies to exist on a smaller cycle: being founded, creating value and ultimately being outcompeted by new small companies in shorter timespans. etc. etc. That kind of thinking is bubbly in 2000 when its being used to justify $bn valuations for companies that lose money and don't really serve anyone. For a lot of the companies maturing now, they don't really need any justification, but maybe they can be explained this way. Stripe, from what I understand, creates real tangible economic value for its customers, charges for it and creates a lot of surplus value besides. Interestingly it helps other startups exist.
Heinleinian makes the (reasonable) argument that the interdependance (reliance on APIs) makes for economic fragility - investments fail making services fail making other services fail etc. But isn't this economies in general? Most B2C commerce would collapse if Visa & Mastercard went out of business. Construction collapsed when banking fails which collapsed when merchant banking screwed up. Interdependency is economics and overall its pretty robust.
To be clear, I wasn't saying that Stripe and Github receiving funding was a sign there was a bubble. I was responding to the other poster who was saying this was a sign there was _not_ a bubble, to which I'm saying, that's not so clear. (i.e. He's saying A, therefore B. I'm saying A is not therefore B, as opposed to A therefore !B...)
I suppose its possible that Stripe and Github receiving funding will signal to angels that companies seen as having a customer base that is primarily other start-ups are the way to go, and therefore open the floodgates of angel funding further. But maybe not. I really don't have strong feelings about this yet at all (which is why I said "there is an argument to be made" and not something stronger). Like you I'd like to see a discussion about it though. It seems like we're in a rather unprecedented time for new startups which makes it all pretty hard to predict.
I'm completely outside and absolutely not in the know but it seems to me like (a) professional high risk investors collectively investing $100ms in an industry where companies can be worth $100bs do not make a bubble (the 2001 bubble was in the trillions) and (b) a lot of the typical "bubbly" claims about new economic realities might be true this time.
I think both are evident here. The the former, this is $20m into a company that provides a service to customers that are willing to pay for it, not $200m into something with impossible to value (it could be zero) potential. High risk - yes. Irrational, foolish or systematically risky - I think no.
For the latter, this is a company that has already made an impact in the giant dominated world of financial transactions. The important part is that they did it with very little (relatively) capital input. At a pinch they probably could have done it with less, though maybe more slowly. That is a "new economic realities" type occurrence.
Maybe the world's huge credit card companies and banks can be partially replaced with much smaller new companies. Maybe paypal has run its course. Founded with millions by a few smart guys. Growing to massive scale (with the help of $200m investment). Spending 10-15 years in a dwindling cas cow phase and ultimatey being succeeded. Maybe it is viable for companies to exist on a smaller cycle: being founded, creating value and ultimately being outcompeted by new small companies in shorter timespans. etc. etc. That kind of thinking is bubbly in 2000 when its being used to justify $bn valuations for companies that lose money and don't really serve anyone. For a lot of the companies maturing now, they don't really need any justification, but maybe they can be explained this way. Stripe, from what I understand, creates real tangible economic value for its customers, charges for it and creates a lot of surplus value besides. Interestingly it helps other startups exist.
Heinleinian makes the (reasonable) argument that the interdependance (reliance on APIs) makes for economic fragility - investments fail making services fail making other services fail etc. But isn't this economies in general? Most B2C commerce would collapse if Visa & Mastercard went out of business. Construction collapsed when banking fails which collapsed when merchant banking screwed up. Interdependency is economics and overall its pretty robust.