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The beginning of another tech bubble?


DCG
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What do you guys think? So far, we're mainly seeing signs of this in the private market, but as things like takeover talk increases with larger public tech companies, I can see it quickly moving more to public companies as well.

 

Similar to a decade ago when companies with '.com' in their name were getting crazy valuations, it seems like the same thing is now happening with companies in the mobile space, with mobile apps, mobile advertising or mobile games, as well as even some companies that just add 'cloud' to their name or mission statement. Again, the private market is really where this is currently evident. Tiny startups making things like games for mobile phones that have little to no revenue, let alone profit, are getting bought out for obscene amounts of money relative to the size of the companies.

 

We already have companies like Salesforce, Netflix and Bidu trading for pretty lofty valuations, but other large tech companies (like Apple and Google) still appear undervalued to me.

 

Do you guys see this quickly carrying over to the public markets? Will these private purchases companies are making make sense in the long run? Is this time different?

 

 

 

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I dont see it. Tech companies are loaded with cash, and dirt cheap relatively and on an absolute basis. Companies and Managers have always overpaid in value destroying take overs. Tech will be the same. I would tread carefully.

 

It will be fun to watch though.

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I've been neck deep in the internet business going on 15 years now. I was talking with a friend of mine who gave me my first internet job, who's built and sold a few hi-tech companies, been a partner in a tech-oriented VC, etc, and we were joking around about the idiocy of the entire "cloud" meme.

 

He said "basically you can dust off your old business plans from 1998, search and replace the word 'web' for 'cloud' and BINGO, instant funding at a ridiculous valuation."

 

Cloud is meaningless, it's another word for "internet".

 

Unless a company is involved in the direct facilitation of cloud computing (i.e.  storage appliances, server virtualization companies) then if all they can offer the marketplace is "cloud based _______" (fill in the blank) then it doesn't make any sense. You may as well invest in internet companies that "run on electricity".

 

There is also a serious non-public tech bubble happening. If you look at private pre-IPO marketplaces like sharespost, you see "pre-revenue" "web 2.0" companies trading back and forth at market caps in the billions. In many ways it's even more ridiculous than 1999.

 

 

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There is also a serious non-public tech bubble happening. If you look at private pre-IPO marketplaces like sharespost, you see "pre-revenue" "web 2.0" companies trading back and forth at market caps in the billions. In many ways it's even more ridiculous than 1999.

 

yeah...that's what I was saying in my first post. Outside of a few companies, it hasn't yet translated to public companies, but the valuations being placed on private companies right now is pretty crazy. It's not to the point where it seems like anyone can move to San Francisco, start up a company with a couple friends, claim they are going to make games for mobile phones, not have any revenue whatsoever, and then have a company show up at their door with a check for $400 million. There was a good article in the WSJ on Tuesday about this type of thing.

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