The tech boom may get bumpy, but it will not end in a repeat of the dotcom crash

What I am saying is that on the current private market you can keep a company with a fundamentally unsound business in suspended animation for a long time and keep enjoying growing valuation as long as you can convince investors that they will be able to raise the next round. I.e. without it actually having proven that's it's a sustainable business.

Most of the unicorns happens to be from the valley and as far as I can see have more or less the same investors behind them indicating at least to me that it's not purely based on being better at betting on the right companies.

This is a very different feedback-loop than the public market where your ability to make a profit at market expectations often is is king and where this ability is measured every quarter.

Maybe I am paranoid but thats what I see. And yes I haven't gotten my head around a proper way to formulate his intuition yet.

Private valuations aren't unique in this aspect. All prices are based on expectations of claims on future cash flows.

My point is that the latency that exist in privately funded unicorns can end up creating a bubble exactly because the feedback loop is too slow.

Hence the "in a way." And your argument makes the assumption that tech, as a category, will collapse.

> Which of the companies are making profits?

"Tech" is a very big thing, but if we're picking random companies there are a few divisions:

Public: Google makes money hand over fist, Amazon tries not to make profits (and almost accidentally brought in $20m last quarter) while their revenues grow exponentially. Facebook brings in billions, Twitter, the dark horse of this category, is still bringing in >$1B/yr in revenue.

Ok, but those are the titans. Let's look at the YC companies: Airbnb, Dropbox and Stripe alone would make up for every dollar YC ever spent investing.

But even locally, almost every company I talk to is choosing to raise money. Meaning, they have enough revenue to stay afloat, but elect to raise money to grow more quickly. These are companies raising little $2m rounds but are either profitable or could be if they needed to, but elect to grow quickly instead of become cashflow positive. (Admittedly, my company does not fall within that category).

There may be overvaluation, especially at later stages, but the investments being made assume there is. They assume that some (or most) will fail, but that the others will make a multiple.

Some money will be lost, but as long as the entire category of "technology" doesn't collapse altogether, it's not like 1999 again. And given the amount of real profits and revenues in the category of "technology," my contention is that there won't be, as Marc Andreessen puts it, an "earth-shattering kaboom."