The Great Silicon Valley Bubble Machine


Brendan McDermid / Reuters / Zak Bickel / The Atlantic

Hearing from the leaders of the tech world is always revealing, and very often surprising. In our second annual Silicon Valley Insiders Poll, a panel of 101 executives, innovators, and thinkers weigh in on some of the biggest technological, political, and cultural questions of the moment.

Ah, the eternal question: Are we in a tech bubble? Not surprisingly, people are pretty well split on this one. For lots of folks in and around Silicon Valley the answer is a simple “no” or “yes.”

On the “yup, totally a bubble” side, there’s Katrina Lake, the founder and CEO of Stitch Fix. “Call me old-fashioned, but I don’t consider buying lemons for $1 and selling them for $0.75 a sustainable business model. The number of businesses out there that losing money on every transaction is astounding.”

And on the “nope, not a bubble” side, you’ll find Andrew Thompson, the CEO of Proteus Digital Health: “We are in the first minute of the first hour of a massive technology cycle. I have no doubt in 1920 people were saying that electricity was causing a tech bubble. But that did not stop the transformation that followed. The incredible power of a building where you could ‘plug in’ is being multiplied many times by the opportunities created by a mobile device where you can ‘log on.’”

For others, the question was a bit more complicated: “Yes. But nobody knows how long it will last or how bad it will be when it pops,” said Todd McKinnon, the CEO of the firm Okta. “And since we don't know that, it doesn’t help much to know we're in one—which everyone knows even if they won't admit it.”

And even among those who disagreed about whether we are really, truly, officially in a bubble, one thing came up again and again: The mega valuations tech firms are getting these days are absurd—and there’s no way they can last forever. “Are VCs acting stupid with their valuations? Absolutely,” said Danah Boyd, a principal researcher at Microsoft Research and the founder of the Data & Society Research Institute. “Too much is focused on hype instead of substance and a few will win the lottery on idiocy, but that's not what's propelling this current phenomenon. There's enough substance on machine learning, data, networked labor, and other substantive pieces for this current situation to ‘pop’ in the dot-com sense. But that doesn't mean that individual companies won't come crashing down.”

Other than that, people’s responses got pretty meta. “We’re in a ‘is it a tech bubble?’ bubble,” said Marco Zappacosta, the CEO of Thumbtack. “Being in a tech bubble is the new normal,” said Kentaro Toyama, the writer and computer scientist.

And if we are in a bubble? The general consensus seemed to be: Well, then we’re in a bubble, I guess. What can you do?

“Probably, but it doesn’t matter,” said Kevin Kelly, one of Wired magazine’s co-founders. “Technology is a bubble machine. It makes clouds of bubbles. After each one pops it is replaced by another.”

Really, the question of whether we’re in a bubble won’t go away until the next big crash. Until then, the eternal question remains eternally unanswerable, too.