jtb99

I suspect the calculation was (expected value of FB package) * 1.5

Hi, I'm the author, and I disagree with you about the definition of a bubble.

A bubble is when you're paying for something based purely on speculation about the future value of that thing, rather than on a rational analysis of the expected future return.

I would wager that Google does not have an internal projection of the value of any engineer showing them to be worth $3.5m over four years; rather, I'd bet that comp decision was made based on an irrational fear of yet another defection from Google to Facebook.

Hi, I'm the author, I appreciate your comment. You're demonstrating that you still have some rational perspective here; my thesis is that many people have lost that perspective. I am an ex-Googler, and I am seeing more and more talented engineers leave Google to start a "company" with the express goal of getting acquired for talent, sometimes even hoping to get acquired back by Google.

When people see a valuation in the marketplace (eg, a talent acquisition that makes everyone extremely wealthy) and assume they can achieve the same kind of returns with minimal effort, that is the hallmark of a bubble. The same thing happened with day traders and real estate speculation.