In Search of a Tech Bubble

Google campus
I just returned from a week in Silicon Valley in which more than a few people wanted to talk about the looming tech crash. The discussion has been going on for more than a year now, with a line of thinking that goes like this: the rapid growth in investment flowing into tech companies has created a tech bubble in which startups with little or no revenue are commanding excessive valuations. While the examples often cited are $1B+ acquisitions / valuations very familiar to us (e.g. WhatsApp, Instagram, Snapchat, Pinterest), there are behind them a growing list of less well known startups with valuations that also defy optics. To add to the growing angst, you have well known investors such as Marc Andreessen (“co’s will VAPORIZE”) and Fred Wilson (“Burn Baby Burn”) pushing back on the growing gap between revenue and expenses in startups.

I remember well the excesses of the 1990s Dotcom Bubble. While the big name failures of that era are well known to all (e.g. Webvan,, Geocities, Kozmo), I also had many personal connections directly and through colleagues with less well known companies. One of my startups had raised a $30M A round on $100M pre-money valuation with no revenue traction; a good friend contracted for a company that within 18 months of founding was acquired for $400M with nominal revenue; I provided consulting to a local company that floundered trying to ship a product for two years before being acquired for $1B. I also remember the excessive focus on “eyeballs”, “mindshare” and “land grab” at the expense of revenue. Sound familiar?

But there is something odd about all this bubble talk for me in 2014. I have absolutely no personal connection with it. I do not know colleagues whose companies are overvalued, or that have been acquired for what could be considered an excessive price. I am not talking with investors complaining about logic-defying valuations, nor am talking with founders who are driving their businesses with an exclusive focus on mindshare over revenue. In other words: I am missing this bubble entirely.

My best attempt at an explanation: unlike the Dotcom Boom of the 1990s, this bubble seems to be missing Boston entirely. While the Silicon Valley community is talking about excessively valued companies and overpriced acquisitions, I see local companies focused more on building value for customers and revenue for their businesses. Don’t get me wrong: there has been a surge in entrepreneurial activity and investment in the Boston area - but as best I can tell, it seems grounded in fundamentally sound business practices.

Is this bubble missing us entirely, or are we just late to the party?