Caught In The Webb

How To Avoid That Hangover When The Tech Bubble Bursts

A fallen keyboard warrior

Since my column last week, many people (well, okay, my editor) asked me what can be done to avoid another tech bubble. Generally, I loathe pat, wannabe-solutions that aren’t realistic, like “pass a law that does this!” or “change the system”. So I thought I’d offer a few concrete things everyone in the ecosystem can do to help.

Of course, not everyone will do them, and of course, some of them run contrary to perceived common sense and rational economic actions during a bubble. But that’s the point. If you follow these, you won’t be that dude who makes the undeserved billion. And you still may be the dude who ends up broke when the bubble bursts. But you’ll have your pride and morality intact, which is kind of nice, I promise.  Read More

Bubble Cops

Bubble Cops: SEC Looking Into Groupon’s Accounting Ahead of IPO

What's a few hundred million between friends?

One of the reasons a bubble formed in the tech sector back in the 1990s was that companies with very little history and flimsy financials were able to go public at hundred million dollar valuations. While the market for tech IPOs seems to be gathering steam, one encouraging sign is that the SEC is taking a hard look at some of the questionable accounting of Groupon, which has drawn a lot of criticism for its fishy S-1 filing and rush to spend capital paying back early investors and employees.

Groupon had an operating loss of $420 million last year. But the daily deal giant asked that stock pickers use a strange metric to gauge the company’s profitability: adjusted consolidated operating incomes, or adjusted CSOI. As Reuters Breaking Views column pointed out, “Strip out marketing expenses, acquisition-related costs, stock compensation, interest expense and payments to the tax man and, presto, the Chicago startup led by Andrew Mason earned $60.6 million. If investors accepted this fantastical form of accounting, all sorts of companies would be worth billions more too.” Read More

Tech Bubble Watch

IA Ventures’ Justin Singer: It’s All Humanity’s Fault We Can’t Avoid a Tech Bubble

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Justin Singer, a VC at IA Ventures in New York, has stepped into the ongoing debate between whether we’re all extras in Dotcom Bubble: The Redux or merely in the middle of  “a blubble,” which Michael Arrington loosely defines as that irrepressible whining sound perpetuated by early stage VCs and angels and regurgitated by the press. (We guess that makes Mr. Arrington  part of the press since a month later he took most of it back.) Now, in a post on his Tumblr, Trying and trying again, Mr. Singer predicts a tech bubble will happen in the next 15 years. It would be easy to lump it into our bubble watch, if Mr. Singer’s prediction wasn’t accompanied by a rather alarming graph  . . . and blame an leading indicator that’s unlikely to change: human instinct. Read More

The Pollyanna

Why Is Everyone Talking About a Tech Bubble? This Was Supposed to Be a Party

bubble

Everyone  in tech keeps griping about this “massive bubble,” but I’ve been thinking: Bubbles are like, little effervescent miracles of water, sudsiness and the breath of life. That sounds awesome! A bubble is a metaphor for a thing that is good, weightless, shiny and carefree, not something for bloggers to moan and groan about. Well, not this blogger!  Read More