We're in a bubble now, and like all bubbles unless you're thinking about it the "right" way, you don't see it. That's how bubbles are. It wouldn't be a bubble if it were easy to see.
And you have to look at the things you've chosen to overlook. The things, which if you think about them, make you feel funny, so you don't think about them.
Bubble N+1 is usually bigger than bubble N. So don't look for one of the same magnitude as the previous one. Look for one that's bigger. Where the boldness of the assumption is bigger.
Also look for the Ponzi scheme. Business propositions that run out of gas when you run out of suckers.
In the last big bubble you would have found it if you looked for financial instruments that bundled low-quality stuff to create high-quality stuff. Bundles of junk mortgages that become AAA-rated securities.
Okay so now I'm going to skp from all that to the nature of the bubble we're in now. I don't want to argue about it, because it can't really be argued. It's up to each of us to come to our own conclusions and bet accordingly. If you're right you might do better than if you bet wrong. Eventually we're going to pop the bubble that's based on the belief that the human species has a future. At that point, unless your bet put you on another planet you're just as fucked as everyone else, no matter how much gold you have, or guns, whether Mitt Romney is President or Barack Obama.
1. The bubble is that you can build value by understanding people's buying habits. Which not pushed to the extreme, is absolutely true -- you can build value that way. But we're past extreme into euphoria. We're believing there's value because we want to believe.
2. We're bundling young people into things called startups, and selling them to investors for ever-increasing amounts of money.
3. In an effort to bring more suckers in, they just passed a law that makes it legal to pimp these startups to people who don't know anything. You will be able to take their investment by swiping a credit card. Probably using a $4 billion valuation Square dongle for an iPhone.
4. They have started incubators in every major city on the planet. Unfortunately it hasn't been stylish to learn how to program for a number of years, so there aren't that many programmers available to hire. And it takes years to get really good at this stuff.
5. Even if they could find enough programmers, there aren't that many businesses to start to satisfy the demand for investment vehicles. A lot like the situation with mortgages in the last bubble. So the VCs and angels and no doubt some very shady folks are putting together deals with people who can't program with no actual idea for the business. Don't look to Y-Combinator, they're the quality act here. But there are incubators in every city from Santiago to Beirut.
6. They're turning universities into incubators. It's happening at NYU and Harvard, two schools I have some familiarity with. Probably everywhere else too, to some extent. But I'd guess these two schools are pretty leading edge. Stanford has been there for a few generations.
7. It just doesn't matter if the businesses are any good, not to satisfy the bubble. As long as more suckers are coming in.
8. No one can stop it. It won't stop until it collapses. This is what was so depressing about Jay Rosen's podcast with Chris Lydon. That's what he said will happen, and he's obviously right. We don't have a mechanism to, as a society, say let's not go all the way with this bubble.
What can we do? See my recent piece about rebooting the Internet dev process. It's a good way to hedge the bubble. So there might be something left when it pops.