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Is There a Bubble in Consumer Internet Companies?

Published: 3/24/2011 10:58:38 AM

There has been a lot of discussion recently about whether or not the consumer Internet sector is in a "investment bubble", characterized by extremely high valuations paid for the opportunity to invest in popular companies.

I believe that investment bubbles in technology sectors are generally a good thing and presage the future creation of great companies.

The reason is that investment bubbles signal that there is a tremendous amount of investment in a particular sector.  Sure, many of those investors will get burned as there are usually only one or two companies that have any great success.

But consumers will ultimately win after the ensuing "bubble crash", since surviving companies and scrappy entrepreneurs will pick up the most valuable pieces & technologies and reassemble them to create the next great company.

Creative destruction is the technology industry's best friend.

Don Jones
VentureDeal

 

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Don Jones
CEO, VentureDeal

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