In this month's The Economist, two articles really jumped out at me. The first is an opinion piece on whether or not we've returned to irrational exuberance, and some thoughts on how the changing model for professional angels and VC investments are shaking things up. The second is a more rigorous analysis of tech valuations and the current state of tech investment.
Both are worth a read!
The return of irrational exuberance? (the Economist) http://www.economist.com/node/18681576?Story_ID=18681576
From the article: Facebook and Twitter are not listed, but secondary-market trades value them at some $76 billion (more than Boeing or Ford) and $7.7 billion respectively. This week LinkedIn, a social network for professionals, said it hopes to be valued at up to $3.3 billion in an initial public offering (IPO). The next day Microsoft announced its purchase of Skype, an internet calling and video service, for a frothy-looking $8.5 billion—ten times its sales last year and 400 times its operating income. And those are all big-brand companies with customers around the world. Prices look even more excessive for fledgling firms in the private market (Color, a photo-sharing social network, was recently said to be worth $100m, even though it has an untested service) or for anything involving China. There has been a stampede for shares in Renren, hailed as “China’s Facebook”, and other Chinese web giants listed on American exchanges.
So is history indeed about to repeat itself?
The Digital Gold Rush (the Economist) http://www.economist.com/node/18680048
From the article: The internet world is being transformed by a number of powerful forces, three of which stand out. First, technological progress has made it much simpler and cheaper to try out myriad bright ideas for online businesses. Second, a new breed of rich investors has been keen to back those ideas. And, third, this boom is much more global than the last one; Chinese internet firms are causing as much excitement as American ones.
