Paul Graham says there’s no bubble. Ha
michaeldeshazer.wordpress.com
michaeldeshazer.wordpress.com
> Paul, I like you, but (big but): the mortgage bubble of the 2000s didn’t have anything to do with increasing productivity in a “new economy” or money being moved from bonds to stocks, and that bad boy busted like an adolescent’s pimple.
Total non sequitur here. Bringing up the mortgage crisis is out of left field. Paul's statement regarded the comparison of today's tech startup market with that of the late 90s.
Is Mr. Shazer making a new comparison of today's tech startup market to the mortgage crisis? I'm not sure. There's no there there.
> Paul, JP Morgan just closed on a $1.2 billion fund for new tech startups. And many other banks are following suit, because that’s what banks do, just like they wear them. Carlyle and other buyout firms are swallowing up VC firms like a toothless prostitute. So, a little more than a few guys like Yuri Milner and Zuckerberg.
Bandwagon != bubble. It could be that the tech startup market is still undervalued. Just noting that banks are investing in it does not make it a bubble.
Of course there is the question of bias. Mr. Graham clearly stands to benefit from higher startup valuations. Tell us something we don't know and with less hyperbole.
> There is a bubble. And it’s getting bigger.
An effectively bald though entirely anticipated assertion.
I understand Paul wants to be unbiased, but he cannot realistically do so. It's like asking the head of the Realtors board if home prices are stabilizing or asking Ben Bernanke if we're seeing an economic recovery. They will only ever give one answer because they have nothing to gain from giving any other response.
I feel confident if PG thought there was a bubble in start ups now, he would probably say just that, because being right "gains" something priceless, while being someone whose words mean nothing, loses everything.
With second quote, I think I remember Alan Greenspan saying that the mortgage bubble wasn't one because it involve "a lot of local markets" so reasoning is "just because you have a very local phenomena doesn't mean you don't have a bubble". The other point is that when you investment banks falling over themselves to buy VC and when have Milner making a blanket investment in every Ycombinator, you again have blind investment.
I don't know if all of this is true, just raveling his cryptic comments.
As bubbles go, one thing that comforts me is both the dot-com and the mortgage bubble show that bubble need to reach a fair percentage of the whole economy in order to truly die. So if this is a bubble, we've got some time ;->
If YC funds 400 startups, they've spent somewhere around 8 million dollars. In the late 90s one .com startup probably spent that much on their office chairs.
Granted, there are subsequent rounds of funding, and maybe some less than prudent investments, but while we may be in an 'expansion' cycle of funding, it isn't fair to say that it's 1999 all over again.
stay classy