Of course, many self-proclaimed experts will be crowing that they correctly predicted this bubble. “Why, look at LinkedIn! Look at Groupon! We knew Facebook was going to go flat,” they will say. These experts conveniently ignore the fact that it is they and their brethren who drive the hype. The founders and management boards of these companies share some of the blame, true. But it is the investors, the bankers and the marketing machine that drives the hype. And blog authors with no comprehension or love for technology, but with a head for marketing and data analytics spread the hype with talk of valuations, monetization strategies and acquisition plans.
I wouldn’t go so far as to say technology has no value (come on, you expect me to trash talk technology?) or no cost but in itself, this sector is not to blame. Yes, it needs money; for which an IPO is very useful. It is the usual suspects – investment firms, bankers, non-technology bloggers and their ilk – who poison the well.
Without the hype, an IPO will raise only enough money to meet the real needs of the IPO. It will not make instant billionaires, or even millionaires. A non-hyped IPO should escape the clutches of predatory investors who want nothing more than to pump up the stock, make a killing and get away from the scene. This will also protect the company from returns-oriented shareholders who push for aggressive quarterly profits over progressive long-term returns. Such aggression often forces the company to take decisions that seem good in the short-term but impact the company negatively in the long-term. Of course, the vultures on Wall Street never allow that to happen.
I would say this is not a technology bubble, but an investment bubble. Let the blame fall where it is due – on the banks and investment firms. Wall Street has not learnt its lessons. May be, it does not want to. Those who deal with technology every day – those who build it, use it and nurture it – know its true value.
- Massachusetts fines Morgan Stanley over Facebook IPO (reuters.com)