- Active Facebook users: 800,000,000
- Price per user at current valuation: $125/user
- Annual profit per user: $1.20
The late 1990s saw enormous growth in the tech industry, as have the past several years. But in contrast to what the article's author would like to believe, growth and bubble are not mutually exclusive conditions. In fact, growth begets bubble: One easy way for businesses in a sector to become overvalued is as a result of the hype that tends to accompany periods of growth.
I agree that growth and bubble are definitely not exclusive and that the former is usually what triggers speculation and ends up in the latter.
I also think that right now we're in a phase of growth, without financial speculation. It might be very well possible that this will kick in pretty soon, but I'm leaning towards the idea that it's still going to be difficult given the hard time that their public stock is having.
Sometimes I have the impression that some entrepreneurs like to say that there is a bubble because so they can say: "Yes, he raised all that money, or had that big exit, but not because he is better than me, only because there is the bubble".
Infomation technology means that cost are falling, old business models are getting over turned and innovation is happening in established and new markets.
Bubbles can occur in equity markets independently of this.
Due to easy credit over the past 20 years a lot of debt has built up which is retarding real growth now via the financial crisis.
In summary money introduces a layer of indirection into the system which can mean that growth is slow even when technological conditions promote in some sectors.
