Y Combinator's Graham Doesn't See "Bubble" in Technology

My favorite line in that, after the interviewer asked PG what the big successes for YC were and he answered AirBnB and Dropbox:<p>Q: "But aren't you forgetting Heroku? They just sold for $220 million."<p>A: "Oh sure, Heroku was a success... but you couldn't buy Dropbox or AirBnB right now for $220 million."

Not the most convincing spokesperson for that issue.<p>"CEOs of all major banks don't see a mortgage bubble!"

Speaking as someone who does not live in the Valley, if this is a bubble it's a great deal smaller than the 1999-2000 one, in the intangibles at least. Buzz may be up in the Valley but it's nonexistent out where I am.<p>I do think there may be a rush to declare bubble. You know, a lot of the promises that powered the first bubble are <i>still true</i>. The Internet really is going to revolutionize every business. Opportunities really are everywhere. It just was and is going to take a bit longer than initially expected, and 1999 infrastructure really couldn't support it. (Remember, in 1999, your top-of-the-line server chip is a Pentium III Xeon, built on a 250nm die, at 600MHz or so, and let's not even talk about the price of one of these. Or how your non-very-tech-savvy customers are supposed to get to your very expensive server.)

I always think this is funny. Most people didn't see the housing crisis coming before it was terribly obvious to everyone. Crying bubble doesn't make you look like you're any good at predicting anything. The only danger of a bubble has to do with debt.<p>Most startups are funded by savings and while that savings can be wiped out no one is hurt after that hit. Businesses fail all the time and only when massive amounts debt is involved is anyone else (outside the people directly involved) affected.<p>A bubble would start to scare me if people started taking out massive loans to startup companies that had no hope to make money. I sometimes wonder about the quality of the companies that are able to raise money now but I'm not worried about them taking it. The investors will learn from their mistakes and hopefully we won't have as many daily deal sites for me to deal with. In the meantime I'm using Yipit to help me who also raised a decent amount of money I guess. Oh well.

PG has all these amazing quips.<p>&#62; "If you have big plans initially, you are probably Webvan" &#62; "The valuation of an early-stage startup is the % chance they will be big. i.e. a $10M valuation ~= 1% chance they will get to a $1B valuation".<p>Also, am I the only one that picked up that AirBnB and Dropbox clearly have a valuation higher than $250M. I wonder what they consider their valuation to be right now.

I think the only valid answer to this is a tweet from <a href="http://twitter.com/hackernewstips" rel="nofollow">http://twitter.com/hackernewstips</a>:<p>&#62; <i>Today, @PaulG claimed there is no tech bubble. In unrelated news, @AdKeeperInc raised $40 mil. in funding for "Delicious, for banner ads".</i><p>Which is exactly what AdKeeper is, btw.

This is one of the classic signs it's a bubble right? (when people in the industry claim it's not)

PG - your enthusiasm is inspiring.

Let's talk about burst scenarios. I'm not worried about the tens of startups raising $500K at inflated valuations. It doesn't really matter.<p>What I'm worried about is someone like Zynga having a bad day. Imagine their next game doesn't quite take off as much. Boom: their valuation crashes. Since they are so linked to Facebook, I'd expect Facebook to crash as well. And once Facebook is not so hot, then Twitter, with abysmal revenue, will crash too.<p>The question is: what happens after that? Angels stop pouring money in startups, Silicon Valley goes into nuclear winter like 2003, or not?

No one really knows if there's a bubble before it bursts. They are easier to see in hindsight.<p>On the one hand everyone in the world is getting a smartphone since the pricing for chips has come down so much this year. That will make the market for mobile computing/commerce/you-name-it huge.<p>On the other hand, Facebook hasn't really nailed their business model. Yes, it's pulling in a lot of cash, but not enough to justify its valuation. Assume Facebook IPOs in 2012 and because everyone except newborns is on the network, the price gets bid sky-high, but they fail to grow revenue. Investors get scared and pull out and take the rest of the tech market with it. Then Facebook grows credits to the be the biggest payment platform in the world and the whole market goes up again.<p>Like PG said, market valuations are a sine wave. They are educated guesses, no one knows anything for sure.<p>Here's more on Facebook's valuation: <a href="http://community.nasdaq.com/News/2011-03/how-to-justify-facebooks-65-billion-valuation.aspx?storyid=60634" rel="nofollow">http://community.nasdaq.com/News/2011-03/how-to-justify-face...</a>

In video it's explained like "valuations are high, but it's not a bubble".<p>Would that mean their growth will stop at certain level for a longer period? I guess realization will need to meet expectation at some level. Expectation for Facebook are sure high, but I doubt it can go go for trillion valuation without multi^2 billion revenue.<p>Would love to hear more thoughts from Paul.

Would you ask the barber if you need a haircut?

Might want to rethink your position in bonds. Much more to worry about there than in startups.

Ha, his shirt is same color as this website bar.<p>(also just realized it's near prison jumpsuit orange, lol)

The tech biz has had boom and bust cycles for as long as I have been alive. While it's true that some of the bubbles are minor ones we should all be aware of the fact that the bubbles will always pop — it's not a question of "if" but "when" (and "who" does it impact and my favorite "why").<p>If you accept this simple fact of life you'll always do better when a gold rush does occur. Also the great thing about throwing away your rose colored glasses is that it makes you stay in the field for the next boom.<p>Yours truly a survivor of the original dot.bomb fiasco who got his first break in the era of HyperCard....

In this video the way he talks(volume, stress, etc.) is really similar to Mark Zuckerberg.

When someone says "There is a Bubble". Which means they are feared, got mass hysteria, jealous of early investors in future hot companies &#38; may actually have some valid point."<p>Valid point is always about 20% of all over hype.

The companies that are being talked about are not public yet - Facebook, Twitter etc. so would a tradational bubble really apply to this?

"Discovered SPAM filtering algorithm" ?

I never knew Paul Graham had an American accent :(