Are We Facing A New Tech Bubble?

46:29

July 12, 2011

We're talking about the debate over whether or not there's a new bubble in the value put on high-flying Internet firms. Are we partying like it's 1999?

Technology and stock market watchers worry that we may be in the midst of a new tech bubble. (AP)

All the woe aside, there is a hot spot in the U.S. economy.

It’s in high-flying Internet companies — again. Facebook. Zynga. LinkedIn. Groupon. Those and more are drawing billions in investor valuations.

Eighty billion, in the case of Facebook. They’re driving up Silicon Valley real estate, gobbling up venture capital, exciting IPO investors across the country.

That’s the excitement. And then there’s the fear.

That it’s dotcom bubble time again. That we’re partying like it’s 1999.

This hour On Point: weighing the real value to the U.S. economy of the Internet stars this time.
-Tom Ashbrook
Guests:

Gregory Zuckerman, financial columnist and reporter for the Wall Street Journal.
Peter Thiel, venture capitalist with The Founders Fund and president of the hedge fund Clarium Capital. He is serving as a board member for Facebook. He's also the co-founder and former CEO of PayPal.
Mark Suster, angel investor and investment partner at GRP Partners. He also writes for the blog "Both Sides of the Table."
Steven Levy, senior writer for Wired Magazine. He's the author of the new book "In The Plex: How Google Thinks, Works, and Shapes Our Lives."

From Tom's Reading List:

Fortune: "Signs of exuberance are everywhere: Tesla roadsters, soaring real estate, overpriced vinegar - and eye-popping valuations for pre-IPO companies like Facebook and Zynga. So why are so many Silicon Valley denizens reluctant to use the B-word?"

The Economist: "But there is another view that is widespread in Silicon Valley and other tech hubs. This holds that the world is a very different place to the one in which the shares of such notorious firms as Pets.com and Boo.com boomed in the 1990s and then went spectacularly bust. For one thing, many more people are now plugged into the internet and the prospects for e-commerce are brighter than ever. For another, many internet start-ups this time round have impressive revenues and robust business models."

Wall Street Journal: "In what is a volatile business, some of the bigger venture-capital firms have forged ahead, taking advantage of their longtime network of entrepreneur contacts and building on past investment successes to continue getting access to the hottest deals. That helps those firms maintain an edge against less established venture firms, which in turn affects performance and returns."

Wired: "But as I learned in almost year of following the project’s development, with multiple interviews with the team and its executives, Google+ is not a typical release. Developed under the code name Emerald Sea, it is the result of a lengthy and urgent effort involving almost all of the company’s products. Hundreds of engineers were involved in the effort. It has been a key focus for new CEO Larry Page."

This program aired on July 12, 2011.