We are in a tech bubble. There’s no doubt about that. Anyone who thinks otherwise is delusional.
I’m not a millionaire if my house can be sold for a million dollars. You’re not a billion-dollar company if someone gives you ten million dollars for one percent ownership. These assets are illiquid. You don’t have that money. You can’t use that money. Worth and value are tricky to define and are infinitely subjective on this nihilist hellscape, but for simplicity’s sake, a company’s value on an economic level is purely what’s in their bank account.
Most tech start-ups do not make profit. Twitter does not make a profit. YouTube does not make a profit. Snapchat does not make a profit. Those companies are only operational because they have ‘runway.’ (Or, for the sake of YouTube, they’ve been bought out by a larger company, such as the advertising firm Google, who sees them as a loss-leader for their other services, such as their AdSense advertising platform — Google makes more money with YouTube than they would make without YouTube, especially now that YouTube services are so intermingled with Google, and particularly because YouTube’s use of AdSense legitimizes AdSense, bringing AdSense more value.)
Runway is the amount of time a company can operate before running out of funds. In that time, a company hopes to ‘take off’ by either finding a way to self-sustaining profitability, finding further investors to give them more funding for a longer runway, or finding a company more sustainable than themselves and willing to buy them. ‘Investor story time’ is all-so common, where, “oh, we aren’t a multi-billion dollar company yet, but when we are, if you invest in us right now, here at the ground floor, you’ll be rich.” Becoming profitable sometimes requires ‘pivoting’ the company in new directions, but the only certain path to profitability, even if that profitability is only technically true, is being bought out by someone else, so that it’s their problem, not yours, and you can safely exist on the profits of the company’s more-successful endeavors.
It’s a horse race. Silicon Valley is comprised of rich people betting on which companies will be bought out by the giant industry-incumbents first. The current group of investors are nothing more than the retired nouveau riche who cashed out of the previous dot-com bubble before its crash in 2000. They’re day-traders, shuffling numbers in a spreadsheet around, chasing trends, producing nothing of value. They’re banks, giving out loans that actual banks find too risky.
Very little true value is produced in Silicon Valley. Apple makes quality hardware and software. Google, despite being an advertising firm, hosts utility services like GMail, which reliably carries half of all email traffic alone. Most everything else coming out of Silicon Valley, including its hip San Franciscan compadres and their bogus ‘sharing economy’ app scene, is a shallow whiz-bang toy for the bored global rich to entertain themselves with, funded on borrowed money, praying to be bought out and rolled into a larger, more sustainable company.