The Tech Bubble That Never Burst – The New York Times


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Erin Griffith and
The venture capitalists are sounding the alarm.
At posh conferences, they buzz about falling valuations for start-ups. On CNBC, they bemoan the sudden lack of initial public offerings. On Twitter, they warn of a coming downturn.
It is a familiar refrain. For the past decade, such warnings have cropped up repeatedly in start-up land. The industry is in another bubble, investors and commentators caution, conjuring the 1999 dot-com era and the dramatic collapse and recession that followed. Jobs disappeared, fortunes vaporized, and reputations were tarnished.
The message since has carried those scars: The boom times are ending. Buckle in for a rough ride.
Yet every time, more money has flooded into start-ups. Instead of a collapse, things got bubblier.
U.S. venture capital funding by month
Today’s warnings are different from those of the last decade. Investors tiptoe around the word “bubble,” referring instead to a “recalibration,” a “pullback” or even a gentle “softening.” The people who once called for caution grew tired of being wrong, and their audiences became numb to the warnings. Every time the alarm bells rang, more money poured into start-ups.
“This time is different” used to be a morbid joke among investors; now people believe it. Tech is too enmeshed in our lives, the thinking goes, and the dot-com bubble is too far in the rear view. This decade-long start-up boom has surged in the face of so many scares, each time amassing even more money and power. Maybe it really is different this time.
Some investors believe market euphorias are a good — even necessary — thing for progress. Without all that attention and excitement, how can a start-up founder convince workers and investors to help turn their crazy moonshot ideas into reality? Sure, most of the people who flock to a bubble are in it for the money. And yes, things can get messy. But underneath, it’s all moving forward. Out of the dot-com ashes, techies like to remind us, grew Amazon, PayPal and eBay.
Even as the biggest factor driving investors to high-growth start-ups over the last decade — low interest rates — begin to change, even as economists worry about an impending recession and even as start-ups lower their valuations or suddenly run out of cash, few today are predicting a total collapse.
A decade of talking about a bubble that never burst will do that.
Additional work by Keith Collins and Andy Chen.
Source: Data from PitchBook
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