Infographic: Are We in the Middle of Another Tech Bubble? | Hacker News Reader

Infographic: Are We in the Middle of Another Tech Bubble?

theatlantic.com

35 pointsPixelRobot13 comments

Yes - A boom implies the rising valuations are justified. In a bubble the rising prices are based on speculation and hysteria.

We are not in a tech bubble that resembles the dot-com days. There is a ton of money at the seed and early stage for untested ideas (Color) and many VCs and angels will lose money. But more entrepreneurs will get funded and that instinct to gamble is why America has such a terrific tech sector.

This is one of the best infographics I can remember. Really puts a lot of things in perspective that I had forgotten about from the 1999 bubble. CueCat?? AllAdvantage??? Doesn't even compare.

Like most writing on the subject, it seems the creator had an opinion on the subject and then created the presentation to persuade the reader it is correct. Which is quite normal in the field, of course, but when presented with a chart or graph a reader often believes that they're making up their own mind based on the raw data. In some cases this is true, but it is very easy to cherry pick only the data that supports your point - which is pretty clearly what the creator has done here. I'm not saying that means there is private tech asset bubble, but a bunch of pre-selected data points also doesn't prove there isn't.

It's really difficult to conclusively prove anything until you're looking back at the event. Until then there will always be two sides to the argument.

Creator here (I put together the data for FeeFighters, and KissMetrics designed it)... I DO have the view that we're not in a bubble at the moment, but I went into this exercise without much of a view on it... I didn't cherry pick the data at all, I just threw in everything I could think of (hence the length!) Certainly some things now do feel like a bubble. I wanted to put in a section of particularly bubblicious fundings, but the only one I could come up with was Color.

I don't remember the last bubble all that well... I was SHOCKED when reading up on it to make this graphic. Shit was crazy back then, companies literally got funded over a shitty plan on a napkin.

I've since then seen a few counter-factuals... the only one that comes to mind is real estate prices in Palo Alto. Let me know if you think of others, maybe we'll do a second one and show another side of things.

Thank you for making an infographic out of useful information in a statistically adept way. The infographic that focuses on communicating data accurately is a rare treat. I particularly found the valuation and revenue comparison interesting and well done.

Boom or bubble? Is there a difference? (Honestly, I don't mean this as a rhetorical joke.)

Boom - Square : disrupting the payments market by sidestepping entrenched lock-ins (verisign terminals, merchant agreements, etc)

Bubble - Pets.com : doing the same thing somebody else does execept with a Web UI.

A couple of examples that stood out for me.

But to answer your question more directly, a 'boom' is a durable growth in value due to measurable productivity and revenue gains. Typically rising revenue/employee and net-income/per-customer are good indications of 'boom'. A Bubble is often characterized by an increase in value without significant change in the fundamentals of a company (either revenue/employee or income/customer). The latter is speculation that in the future the company will be worth more than it is now, the latter reflects that the company is actually worth more now than it was before.

Loved the graphic too, it was a good characterization. I think there is a tremendous amount of trepidation about the possibility of being 'caught' in another bubble. So much so my Dad asked me if he should move his remaining 401k balance from equities into gold because he was worried the tech bubble was going to 'crash the stock market again.' I suggested that the thing that is going to crash the stock market is the AAA debt crisis.

Has Square made any money yet, enough to put even a dent in their $169M funding? Trotting out companies that haven't validated their product with the public and haven't made much money seems like something that would happen in a bubble, not a boom.

I don't think they have publically announced anything. TechCrunch reported 1M$ in mobile transactions per day [1] which they didn't deny. If they were a 1% transaction fee business that would be $10K/day in revenue, $300K/month. At 2% that would be $600K/month.

Having seen first hand with the hassle of what it was like to take payments before them I understand their value proposition better than I did the one for pets.com (and I do have a dog so presumably was in the pets.com target market)

Of course the whole NFC thing could crimp Square's growth but that is more along the lines of yet-another-disruptive-payment scheme rather than the old system was good enough.

[1] http://techcrunch.com/2011/03/02/square-now-processing-1-mil...

Read this: http://www.levyinstitute.org/pubs/wp74.pdf

The bubble is when there are large numbers of Ponzi finance entities that can only meet their financial obligations by acquiring additional investments. I think that the startup scene particularly Internet related startups often appear to be ponzi financed when they spend a long time acquiring users or data without a stated business model for generating income.

Also, for a bubble to be ready to burst there needs to be large scale public participation. In 1999 everybody was talking about tech stocks (literally everybody). In 06 everybody was talking about flipping houses and cash out refinancing. Everybody doesn't have access to early or even late stage venture financing opportunities. If you see products that allow individuals to invest in this type of speculation and they gain in popularity then the bubble talk will be a lot more real.

Your "Ponzi" example is even more apt about the 1999 - 2000 bubble. Many of the tech companies were engaged in three way revenue exchanges using numbers on paper. The same $100M was being reported as revenue by three organizations, and didn't really even exist.

As someone who appreciates great information designer, I was thoroughly impressed with this graphic. Nice work Kissmetrics/Feefighters teams!

I am confused. The "Q2" on the x-axis makes it look like we're comparing half of a year's total to previous years' totals. My squishy human brain wants to put each point on equal footing.

Edit: I see, the graphs are continuous.

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