Money Is Pouring Into Tech Like It’s 1999—And That’s Not Good
When respected venture capitalist Bill Gurley said tech startup investors are taking on a level of risk not seen since the dotcom bubble days, the reaction in Silicon Valley was a collective sigh of relief: Finally, someone was saying what everyone was thinking.
In a piece published last week, Gurley told The Wall Street Journal that the huge amount of capital pouring into startups—and the great expectations all that money represents—is forcing new companies to spend more, and faster, than they have in 15 years. So much spending sets companies up for a fall if the funding dries up and they still have big bills to pay.
Despite Gurley’s warning, however, many companies and investors are in too deep to restrain themselves. If your competitors are spending, you must spend too. According to public data, the industry doesn’t appear to be as overextended now as it did at the height of the dotcom bubble. But Gurley isn’t reassured.
“Saying we’re not in a bubble because it’s not as high as 1999 is like saying … Kim-Jong-Un is not evil because he’s not Hitler,” Gurley, a partner with big-name VC firm Benchmark Capital, told WIRED during a recent sit-down at his San Francisco office. “It doesn’t have to match 1999 in order to be madness.”
http://www.wired.com/2014/09/money-pouring-tech-like-1999and-thats-good/
