7 thoughts on “What Do JP Morgan, KPCB and the Yankees Have in Common?”

  1. When you say “It has been nearly 20 months, during which we have seen a sustained (and somewhat unnatural) interest in seed-stage companies” are you referring to the examples you provided above (facebook, groupon, zynga, twitter)? If so please help me understand your definition of seed stage.

    1. Eric

      I am pretty clear in outlining that there is a sustained interest on the top end of the market — that is where the folks from jp Morgan are rushing to and at the bottom end of the market, where there is a massive seed stage activity. I think in between those extremes is relative quiet for now, barring a handful of deals which are reserved for companies with big traction! Hope that explains things more clearly.

    1. Hmm! I wish the old red herring magazine archives were still around! That would have been a treasure trove. I am sure there are books which might be useful for you!

  2. The flaw with the previous bubble was that companies that had no fundamentals, no business, and even many with barely any user scale, were raising money, and going public. Everyone was betting on potential. Once that potential never showed up, everything collapsed. Today, companies like Groupon and Facebook and Zynga have shown that they can generate cash and can generate it at a serious scale. There are of course a lot of risks in front of them, but they’ve proven that they’ve built a viable business that even if they don’t grow, at least have a sustainable business based on getting money from real world people (not just a VC pyramid scheme). Now companies like Quora and Path and Twitter who haven’t yet built a real revenue generating business and are getting high valuations, well, I think there’s where you get into bubble territory. It’s a mistake to lump them all into one. Luckily, the universe of people who would be affected by Twitter, Quora and Path imploding (not saying they will, but if) are just VCs and LPs, which will have trickle affect, and will affect the funding environment, but I don’t think will have a huge affect on the macro economy. So in my opinion there’s definitely bubbly behavior, but high valuations != bubbly, though it often does 🙂

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