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Let’s stop comparing tech bubbles

I do not know with certainty if we are in the midst of a tech bubble. It feels like it — particularly with Uber in talks to raise funding at a $17 billion valuation — but I also felt that way when Microsoft (MSFT) invested in Facebook (FB) at a $15 billion valuation.

But I do know this: Whether or not we are in a tech bubble cannot be discerned by comparing today’s conditions to those of 2000.

In her 2014 State of the Internet report, Mary Meeker acknowledged that there is some tech valuation “excess,” but then tried to allay fears by pointing out

* Tech IPO volume is 73% below peak 1999 levels.
* NASDAQ is valued 18% lower than its March 2000 peak.
* Venture capitalists invested 77% less in U.S. tech companies last year than they did in 2000.

Conversely, there have been plenty of bubble believers who have written about the similarities between 2000 and today, in order to lend their argument further credence.

But here’s the thing: Each bubble is unique. Each one has different causes and different magnitudes. Today’s tech market may indeed have crossed from “excess” into “bubble” territory, but that doesn’t necessarily mean that it will (or won’t) eventually help send the country into a recession (as the dotcom bust did in 2001). After all, sometimes bubbles pop and sometimes they just deflate. Or perhaps the fact that today’s tech landscape is so different than it was in 2000 — deep smartphone penetration, ubiquitous enterprise adoption, etc. — means that we could actually top 2000 in terms of things like IPO and VC volume without being in a bubble.

There certainly is value in analyzing the past for clues to the future, but I think it’s dangerous to follow those clues into definitive conclusions. We’ll know our present-day condition with certainty once it’s in the rear-view mirror. Until then, let 2000 be its own bubble.

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