Huge valuations, impossible salaries, perks that are befitting royalty? Must be a bubble, right? Not so fast.
While thereâs a lot of talk about how things are getting out of hand, it seems that nobody is looking at the history of things. In order to be classified as a bubble, it seems to me that weâd need to have a gauge. Thus far, the only marker that anybody seems to be using is their own intuition. While intuition might be great for some things, itâs a terribly poor indicator of fact.
Now letâs look at facts â Numbers.
At the understood peak of the dot-com bubble, March 10th of 2000, the NASDAQ closed at 5048 points. Compare that with today, assuming that this past Friday was the peak of the bubble that weâre supposedly in right now. This past Fridayâs close? 2743. If the economic downfall of an entire industry was indicated by anÂ artificially-inflated technologies market, then weâre far from a bubble.
Now it is worth noting that a good deal of the market inflation of 2000 was due to the fact that there wereÂ more than 300 IPOâs during the year, the fact that we have only 20 in 2010 keeps a good part of the âdangerâ out of the public markets. But the story that weâre looking at today goes much deeper than just IPOâs, or the lack thereof.
Thereâs a pointed difference between where we are with technology today and where we were 11 years ago. In 2000, people might have known the name Google, but chances are that they hadnât used it. The majority of us were carrying flip phones or perhaps BlackBerry devices (mind you, the BlackBerry only appeared 1 year prior). The very idea of building a business on mobile apps wasnât even thought of, primarily because they didnât exist yet.
Roll the clock 11 years forward and weâre in a completely different environment. While the numbers that are rolling out today might seem somewhat insane to us, weâre likely comparing them to the same numbers that we saw 11 years ago. In fact, given a recent headline on Techmeme, this is exactly whatâs happening.
According to the San Francisco Chronicle, tech jobs are climbing to a point that is ânearâ that of the dot-com peak. Why shouldnât this bother you? Everything that we were doing 11 years ago is still there, and a massive amount more. Twitter for instance certainly wasnât around 11 years ago, and it has created 300 jobs on its own. Google continues to be massivelyÂ profitable, and continues a rampant hiring streak. Even âoldâ tech companies, namely Yahoo and Aol, continue large-money business moves long after their individual peaks.
It seems to me (and I might be wrong. Heck, Iâm just a blogger.) that weâve got quite some distance to go before we can fully call the events of late a bubble. While it might not seem to be the smart move, watching investors dump 40+ million into a photo sharing app, it would do us all well to note that the major players of today were the ones that managed to live through the difficult financial times of 11 years ago. What did it take to live through that? Not only a great business, but also the money to keep it alive.