So over at Rawstory there’s an article asking if “The dotcom bubble is about to burst again.”
I’ve been wondering about this for awhile since the first one was pretty damn awful – and now that I live in Silicon Valley, a bit closer to my heart and wallet.
Over time however, I’ve come to a different theory. I don’t think we’ll see a repeat of the previous bubble – we’ll see something else.
Yes, there’s plenty of money going around startups. Yes there’s some truly lame ideas people sink money into. Yes, I’m sure there will be some very dumb investments and purchases.
But there’s also a sense going on that people know they’re gambling. There’s balancing the odds. Startups have been running leaner and smarter (easy when you have so much infrastructure). We have large, stable players providing some anchors to IT.
In short, most people know what they’re in for, and I think enough awareness is built into the system to avoid a large bubble. Small ones of course are entirely possible. In fact, I think we’ve had mini-bubbles for quite some time. Little areas that burst and fail early. Regional ones. You’re always hearing little stories, seeing stock drops and spikes/etc.
So I’m not that worried about a big bubble.
What I am worried about is a kind of weardown of the system.
Right now we have lots of people chasing startups and basically placing bets. But if things go sour for a lot of them, investors may slowly dry up or move on – not right away, but over time.
Right now we have skill issues. IT creates more senior jobs than junior. Junior people may be worn out or when their startup fails not have the skillset to take other jobs. Wages are very distorted by external pressures.
Right now we have constantly raising stakes – at some point people may not want to invest. Maybe after awhile they go for something more stable and less erratic.
Right now we have people looking to “disrupt” the economy – but how much disruption can you do, and how much may damage the economy or cannibalize others in your space?
Also out here in Silicon Valley the insane living prices don’t exactly help. It’s a great place, a wonderful place, but let’s just say I’m glad I have a roommate.
So my concern is not so much a bubble, but that the “frothiness” of the whole IT and dotcom world gradually goes flat from structural issues. More financial caution. Skill issues. People and investors just getting worn out. Economic changes going faster and faster until a lot of the foundation is changed or gone. Financial challenges limiting those who can benefit – and limiting those that can make a contribution.
I’m not worried about a bubble. I’m worried about the dotcom world and IT going kind of flat and tepid. That, though it could go on for years, or over a decade, going “flat” is a lot harder to recover from.