Why the Bubble-Mania?

What’s up with the Silicon Valley and concerns about the bubble bursting soon? The New York Times puts the spotlight on the issue with a story that kicks off with a great quote from Paul Kedrosky:

“There’s such a heightened sense of bubble awareness in Silicon Valley that people confuse any expression of enthusiasm for a bubble,” said Paul Kedrosky, the executive director of the William J. von Liebig Center for Entrepreneurism and Technology Advancement at the University of California, San Diego.“It’s like people in the valley had bombs dropped on their heads six or seven years ago,” he said, “and now they’re so hyperaware that if they even hear what they think is a lit fuse, they’re scurrying for the exits, yelling, ‘Bubble, bubble, bubble.’ ”

Of course, it didn’t help that Mr. Web 2.0, Michael Arrington, sounded the alarm a couple weeks with a post written in the wee hours of the morning that a bubble-burst was needed to re-calibrate Silicon Valley, and return some sanity to the landscape. It’s hard to tell why Arrington believes this is needed. He repeated his comments during a keynote during the recent mesh conference, suggesting things in Silicon Valley were a lot more fun during the pre-bubble (2003/2004) because there was little money kicking around so it encouraged real innovators.

My take is there may be some good times fatigue happening. It’s been such a good time for so long in Silicon Valley that people are tired – tired of attending events night after night, tired of writing about the latest VC financing and Google acquisition, tired of being inundated with press releases and public relations campaigns.

It’s natural to be concerned about a bubble but no one really knows when it’s going to come. Look at ex-Nortel CEO John Roth, who was talking about market share growing and boosting the company’s sales to $40-billion a month or so before the telecom boom went bust in 2001. My guess is there are some troubling signs on the horizon, highlighted by the flurry of acquisitions recently (Wallstrip, StumbleUpon, Last.fm) but until the public markets (aka IPOs) explode, we should be concerned but not alarmed.
For more, check out Marc Andreessen, who penned a long post dismissing the idea we’re approaching a bubble. He suggests the bubble fears are because “The human psyche seems to have a powerful underlying need to predict doom and gloom.”

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