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Noah Smith

Worried the Tech Bubble Will Burst? Keep Calm

This isn't like the dot-com boom. Most investors have little at stake.
We may never see his like again.

We may never see his like again.

Photographer: Bob Riha/Liaison/Getty Images

I’m seeing lots of news reports about the end of the new Silicon Valley tech “bubble.” I put that word in quotes because the current situation doesn’t look much like the bubble of the late 1990s. But there still might soon be a broad drop in funding for startups, and a fall in the valuations of these companies. 

For example, the Wall Street Journal reports speculation  that enthusiasm is falling and valuations will soon be lowered. Tech industry bigwigs are warning startups to focus on “unit economics,” a euphemism for “actually making money.” Not a lot of tech companies are pursuing initial public offerings these days. The revelation that Theranos Inc., a medical testing startup, probably exaggerated the efficacy of its technology might turn out to be merely the most flagrant case of overhype.