It is not the first time that Bill Gurley affirms such a belief. He has done it for several times recently, including his speech at the South by Southwest Interactive Festival that took place last week. Gurley is a general partner at Benchmark, which is a Silicon Valley venture firm based in Menlo Park, California.
He explained that if such bubble burst is to happen again, it will have repercussions in the entire technology industry and not only that, it will reach other segments as well. During his talk at the South by Southwest Interactive Festival, he affirmed that nobody in the Silicon Valley has any fear of such a situation. “There is no fear in Silicon Valley right now. A complete absence of fear.” said Gurley.
Gurley also referred to the abundance of the so called unicorns. By unicorns, he means companies in technology that are estimated to value over a billion dollars. According to him, more than 50 companies value over a billion dollars in the Silicon Valley. And what`s more, as weeks pass by, more and more unicorn are added to the list.
“I do think you’ll see some dead unicorns this year,”
said Bill Gurley, anticipating a not so bright future for the companies located in the San Francisco area.
Gurley thinks that one of the major problems with such companies is that many of them are competing in the same field. For example, Uber and Lyft are rivals in the ride-hailing field, so neither of them has the chance to evolve properly, or to make the best they can of the business. And, even if one of them would surpass its rival and become predominant in its field of services, the other would slowly decrease in power and eventually fall. This, in Gurley`s opinion, leads to dead unicorns.
“Some of the big products that sell themselves on having lots of users rather than making money have huge valuations currently,”
said Paul Quigley, the chief executive officer of NewsWhip.
“I don’t know if that’s justified or not. I don’t think anyone knows. It’s hard to put a value on human attention. In my experience, most Irish venture start-ups are focused on making money. In Ireland you can’t just focus on making a lot of noise and getting attention. You need to actually build a business to make sure there’s more fundraising the next time you come knocking.”
Coming back to Bill Gurley`s point of view, he is convinced that a fall in the Silicon Valley will reach other segments than technology as well, especially in the areas nearby San Francisco. This could be the case of real estate says Gurley. For instance, in the areas near San Francisco, home pricing has increased by almost 100 per cent, meaning it has almost doubled, since January 2000, claims a report offered by the Paragone Real Estate.
So, if the technology in the area of San Francisco will stop going well as a business, the zone will slowly start to decrease as an interesting, promising area. So prices will decrease too.
“Competing business and technology models are at the heart of the rapidly changing tech industry, and does not necessarily imply an impending bust up,”
thinks Simone Boswell, senior vice president of the Silicon Valley company Enterprise Ireland.
She adds that there is a constant growth in the needs of the people for technologically solutions to their problem.
“Silicon Valley remains at the heart of that with all the pressures that can imply. It is complemented by capabilities in other clusters linked to Silicon Valley both within and outside the USA, like Dublin.”
she completed. According to her, if anything was going to happen with the start-up tech companies in the Silicon Valley, experts would have enough time resources to anticipate it and to work out a solution. Boswell thinks that such bubble bursts are a normal step in a normal process.
Image Source: Bloomberg