tech bubble

“I don’t think we are in a bubble,” said mega-VC Marc Andreessen onstage today during a Wired conference on business.

Well, no duh — of course a venture capitalist whose livelihood depends on perpetuating tech froth is going to say there’s no bubble. Taking that statement as fact is like listening to a car salesman telling you that fossil fuels aren’t bad for the environment.

Look at the zeitgeisten: A mobile app sells for $1 billion after a paranoia-fueled bidding war. Valuations for apps with no discernible purpose are greater than the GDP of a lot of countries. Startups raise money, get bought, and go public at breakneck speeds, all with headline-making and record-breaking numbers in the hundreds of millions of dollars.

It doesn’t take a meteorologist to look around and see the weather, folks. And it doesn’t take a VC to look around and see that Internet and web technology is experiencing a bubble of financial investment and valuation.

Of course, “bubble” itself is a rather nebulous term and difficult to define. Let’s turn to the data for a moment.