Mary Meeker presented at the web 2.0 conference this morning [pdf]. Her presentation included this screenshot (click on image for a larger view).
As you can see, she takes the companies that survived the dot-com bust and went on to dominate. She compares their peek worth during the bubble to their lowest value (in the trough of the bust) and their current worth. Their current worth is higher than their value at the peak of the bubble, proof positive (according to her) that we’re in a new “boom” era.
This is the kind of fatuous reasoning that caused the bubble to happen in the first place, straight from the mouth of one of the boom’s principal cheerleaders. Take a closer look at this analysis. She picks the current winners and compares their current value to their previous value. In any industry, over any period of time, this kind of analysis is going to show growth, since by definition the winners are the ones that grew!
What she’s saying is that if you got in a time machine, when back to 2001, and bought the companies that ended up winning, you would have made money. The massive wealth destruction that happened when companies like excite@home went bankrupt is completely missing from these calculations. Fortunately, no one outside of the silicon valley technology world is listening anymore.