This isn’t just a worry that we’re looking at another bubble — though we most certainly are, as if the preceeding 5–6 ones (at least), each punctuated by a major international crisis, taught us nothing — it’s also a worry because it stifles growth.
No, not the kind of growth most economists talk about — for reasons that are in dire need of a revisit, most economic theorists are fine with everything that happens up to (and sometimes including) the burst. I mean growth in realized potential.
Basically, what happens is, the first Uber (or whoever) valued over a billion makes everyone want to be — or be early investors in — the next one. From that moment on, nobody is looking for innovations that actually make a difference; they’re just looking for business plans that can be spun to support another such valuation. Additionally, even the innovations that might have happened in “first Uber” fall by the wayside quickly — actual Uber, and airbnb, and whoever else is in this club have all but stopped developing, or even caring about, value or service for their users. For them, it makes sense; when you have billion-dollar investors, and pocket-cash customers, guess who gets priority in your day-to-day.
Hell, one of my friends is CEO of a startup that hasn’t even reached a viable launch version of their product yet — yet the focus of the company has already switched almost completely from the service they set out to create, to chasing investors all over the countryside. And they don’t even realize it.
If not for this vicious cycle getting repeated over and over again we’d probably have flying cars, or at least clean energy, by now. Or, you know, other impossibly cool innovations that noone got around to because they were out chasing investors.