At Tech Confab, Debate Over Bubble Or Boom
Julia Angwin
Technology executives, ensconced here at a seaside golf resort, declared the current frothiness in the Internet market as the early days of a boom -- but not the peak of a bubble.
'Qualitatively it feels like a bubble, but quantitatively it's not,' said influential investor Yuri Milner, whose Russian firm DST Advisors owns a large stake in Facebook Inc. He said his evaluation of the data indicates that many Internet companies merit their sky-high valuations.
Still, the bubble feeling was running strong at the D9: All Things Digital conference, the ninth annual gathering of the tech elite.
The so-called swag bag given to all attendees was larger than any could recall: It included a Hewlett-Packard smartphone, a Sony 'bloggie' camera, a Pogoplug 'personal cloud,' and a Lenovo wireless keyboard all stuffed into a Samsonite rolling bag.
The mood in the crowd was giddy, as executives and investors chattered about the string of recent initial public offerings for Internet companies, including social-networking service LinkedIn Corp., Russian search engine Yandex N.V., and Chinese social network Renren Inc., among others. (The conference, like The Wall Street Journal, is owned by News Corp.)
'There is a little exuberance,' said Jeff Jordan, chief executive of OpenTable Inc., an online restaurant reservation system that went public in 2009. OpenTable shares, which were trading Wednesday at $83.69, have nearly doubled in the past 12 months.
Jeremy Stoppelman, co-founder and chief executive of Yelp Inc. compared the current optimism about the Internet to 1997 or 1998, rather than the peak of the dot-com frenzy in 1999.
'The [Silicon] Valley is heating up,' Mr. Stoppelman said. 'We're probably a little overconfident.' He added that Yelp, a seven-year-old site that collects reviews of local businesses, is considering a public offering but hasn't initiated a formal IPO process.
Unlike 1999, however, most of the highly valued Internet companies are making money, attendees said.
'It's a different bubble this time,' said Ross Levinsohn, executive vice president of Yahoo Inc. 'Today there's no question that the [new companies] will be in business and making money. It's just a question of how much.'
To be sure, not all Internet companies are faring well in the boom. Shares in Google Inc. have largely plateaued in recent months.
'This is a bubble that is largely about anticipation of companies that are not yet public,' said Eric Schmidt, chairman of Google.
And shares of Internet publisher Demand Media Inc. have fallen since its debut in January. The stock was trading at $14.95 on Wednesday, down from its IPO price of $17.
'It's not a bubble,' said Richard Rosenblatt, co-founder and CEO of Demand Media. 'This is a different breed of companies with real revenues and open-ended business models.'
Still, some executive remained unconvinced. Jonathan Miller, chief of the digital media group at News Corp. said the current valuations assume none of these new Internet companies would make mistakes or suffer competition.
'If this isn't a bubble,' he said, 'I look forward to seeing what one looks like.'
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