In recent months, there’s been a bunch of brouhaha concerning alleged collusion among some Silicon Valley angel investors interested in keeping early stage company valuations from getting too high.  Additionally, Ron Conway and Yuri Milner announced that they’d be offering every new startup to graduate from Y Combinator, a Silicon Valley accelerator, $150,000.  To some, these developments connote the makings of a new Internet bubble comparable to the 2000 bubble. 

Personally, I’d disagree that we’re in a bubble environment.  I believe that today, more than a decade later, the promises of the Internet (i.e., new business models, industry disruptions, etc.) are finally gathering steam and leading to a massive change in how business is conducted (without mentioning the social and political upheavals being felt).  The reason for this is that, with greater bandwidths, massive user population, more powerful and less costly tools and compelling success stories the ground is fertile for all sorts of new businesses to be funded.

Venture Capitalist Ben Horowitz, of Andreesen Horowitz, makes his case a lot more eloquently in a recent blog post where he lays out a number of reasons that he things we’re not in a bubble environment:

• Public market comparables – Ben makes the case that bubble era valuations were 10 times higher than current comparable multiples.
• Venture capital flows – When excessive amounts of money flow into venture capital firms, investment decisions tend to get clouded.  However, whereas venture capital firms raised over $200 billion from 1998-2000, the amount raised between 2008-2010 is below $50 billion. 
• Inflated expectations – Some Internet ideas (video on demand, etc.) that weren’t ready for prime time in 2001, are viable options today.  Increased bandwidth, cheaper computing power, clouds computing and about 2 billion Internet users make for profitable business models.

I just can’t help believing that we’re living through one of those rare moments in history when the actual changes taking place are more disruptive than what people actually consider them to be.   Either we’re in a bubble, or there really are tremendous opportunities to rethink business models and industry competitive dynamics when compared to the amount of entrepreneurs who can create the new companies required of such disruptions.  I’m placing my bet on the latter.