Thiel: Tech Bubble? What Tech Bubble?

There has been lots of chatter about a technology bubble in Silicon Valley.LinkedIn’s initial public offering, Groupon’s upcoming I.P.O. and bloated start-up investments and valuations are bringing back painful memories of the dot-com bubble’s burst roughly a decade ago.

But this time there is no bubble, says Peter Thiel, the PayPal co-founder, early Facebook investor and hedge fund manager.

“We don’t have a tech bubble for a variety of reasons,” Mr. Thiel said in an interview. “If anything, we need to be encouraging people to be doing more in tech.”

Mr. Thiel isn’t shy about calling out bubbles. He was outspoken about the dot-com bubble, the housing bubble and what he now thinks is a bubble in higher education.

But he says the technology industry today is missing a key component for a bubble: the ability for the general public to invest and potentially lose money. Despite a couple much-hyped I.P.O.s, almost all the new tech companies are still private, so venture capitalists are the only ones risking their money.

“The first component of a bubble — something a lot of people believe and can act on — doesn’t even exist,” Mr. Thiel said. “Most of these companies are privately held. There is no way for the public to become involved.”

The doomsayers are simply hungover from the last bubble’s burst, he said. “People are still burned out from the ’90s.”

Much of the bubble talk surrounds five companies: Groupon, LinkedIn, Zynga, Facebook and Twitter. Mr. Thiel estimates that those five companies account for three-quarters of the value of new Web companies and, he said, five companies do not make a bubble. If they did, we have bigger problems, he said.

“We need technology for our society to get better in the decades ahead,” Mr. Thiel said. “So if you say there are not even five good companies, that even those five companies are fake, that is saying that our society is completely stagnant and that nothing is happening at all.”

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