Thursday, September 29, 2011
If this story is true, a lot of people won't get hurt in the IPO market. The relentless hype in the technology industry has been harmful to the economy and pocketbooks of millions of gullible investors. It is nearly impossible to value a young company and its capacity for growth. Most companies flame out in time: A few survive to become great industries. There is no telling today whether Groupon will generate profits or Facebook will face a serious competitor. High-tech hype has a history. In the 19th Century, railroads were the marvel of the age and railroad scams were abundant. Starry-eyed investors then bought shares in roads that went from somewhere to nowhere with no chance of profitability. But, they were railroads, that was all that mattered. So too, the tech hype of today. PR practitioners are guilty of going along with it, and we should be ashamed.