Silicon Valley’s euphoria is tech bubble version 1.5

[Commentary] Here we go again. Barely more than a decade since the last Internet bubble deflated, valuations for digital businesses are again rocketing skyward, a frothiness eerily similar to the last round of irrational exuberance.

Once more, Silicon Valley shows every sign of considering itself to be the center of the universe. Venture funds, parched from a decade of drought, are again besieged by eager investors and are, in turn, just as eagerly vying to fling their capital at youthful entrepreneurs. Megabillionaires – at least on paper – are being minted at dizzying speed, often seemingly overnight. The sizzle and new wealth has pushed Valley real estate to startling heights; one “home” recently sold for $100 million to a Russian venture capitalist who had amassed a Facebook fortune. Asset bubbles have been with us at least since 17th century Holland, when a tulip bulb commanded more than 10 times the annual income of a skilled craftsman. Today’s version 1.5 of Internet euphoria may not have reached those levels and newer business models may prove more sustainable – but a correction in valuations could still be painful.