Monday, April 23, 2012

It's definitely a bubble

I can argue with a lot of things that Dave Winer writes, but It's definitely a bubble sounds about right to me, particularly:

"2. We're bundling young people into things called startups, and selling them to investors for ever-increasing amounts of money. 
3. In an effort to bring more suckers in, they just passed a law that makes it legal to pimp these startups to people who don't know anything."

Facebook paid $1 billion for a company not without profits, but without revenues.


Kim said...

Apparently, most VCs aren't making significant profits vs risk. Since 2000 VC funds have not done any better than the S&P 500 with a lot more risk. Looks like a sucker's game for now.

Howard said...

The update to that post is also interesting. "An anonymous commenter suggests that a few VC firms manage to consistently beat the market. It turns out she's right (at least as of 2005). This paper, also by Steve Kaplan, shows that VC firm performance is persistent; those firms that make good returns in one period are likely to make good returns in the next period. VC firm performance also appears to be highly skewed - a few firms are making most of the money."