Twin posts yesterday on Is There or Is There Not a Bubble from Mike Arrington and hometown VC blogstar Fred Wilson. “This isn’t a bubble. It’s more like a Blubble,” writes Mr. Arrington, who was once worth $40 million thanks to the tech bubble of 2000.
Mr. Wilson is a bit more cautious. “Investors should recognize that the current valuation environment will not exist at some point in the future. The companies we invest in will need to grow into these valuations or we will face writedowns and writeoffs,” he said. “We should not let the greed emotions cloud our judgement. Yes, that hot deal sure looks damn good right now. But deals are actually companies and most venture investments are held for five to seven years. I’ve likened them to marriages over the years. Don’t let the lust for the deal lead to a bad marriage that you have to be in for the next decade.”
(The bit about bloated valuations rings true for One of Union Square Ventures’s founders, Tumblr CEO David Karp, who is very skeptical of valuations in the current market.)
“The word bubble should be replaced with the word waves,” writes one commenter on Mr. Wilson’s A VC. “The bigger the wave the harder the crash. Just like when the earth moves and creates waves, when technology paradigms shifts investment waves start… Investors should decide if they are riding this wave, the more people go in, the more fun it seems, and more people come in.” He links to the Wikipedia entry on big wave surfing. “Entrepreneurs just like surfing…”
“I like that,” Mr. Wilson said.