Silicon Valley – the largest and most influential high-tech center in the world. In this region the world’s largest technology companies are situated: Apple, Cisco, Google, Intel, Oracle and many others.
Silicon Valley is also accounting for 1/3 of all of the venture capital investment in the United States. But why?
Because of young, start-up companies like facebook, twitter, zynga or groupon, which suddenly appear – mainly through ideas regarding the social network hype or the mobile app industry – and are said to be worth millions and millions of dollars within a couple of months.
A very interesting article I found in the online version of the New York Times discusses whether this development may evolve into another big bust. Can this be a second dot com bubble?
In his blogpost “Storm Clouds”, Fred Wilson (Venture Capitalist) raises concerns about investors taking too much risk and getting done large deals within a couple of days without due diligence.
On the other hand there is John Doerr (Venture Capitalist), who states that we are currently in the middle of a third wave of innovation, after the PC revolution in the 1980s and the Internet boom in the 1990s.
In a discussion with Fred Wilson at the Web 2.0 summit he states (see video): “I prefer to think of these bubbles as booms. I think booms are good. Booms lead to overinvestment, booms lead to full employment, booms lead to lots of innovation. You know, there was a boom when they started the railroads. We’re in another bubble — or boom — and it’s an exciting time.”
So, both state that there currently is overinvestment in this area, they just name it differently. There are similarities to the dot com bubble, but there are a lot of differences as well. One never knows whether there is a bubble until one bursts.
“It’s like falling into a time machine to hear two venture investors talk this way. The lesson, as always, seems to be to enjoy the ride — and hold on to your wallets.” (Heidi N. Moore, NYT)