I was in college during the first bubble but shortly after I was building mobile products (for feature phones) without knowing what the Valley or a Startup was. I was privileged to live in an area of the country that had a lot of wealth, specifically within private equity, hedge, money markets, and stock promotion.

Welcome to Worth Avenue

Palm beach was full of itself. I mean FULL of itself. Lambos, resorts, beaches, sun, babes… you name it. Bentleys picking up milk at the grocery store was the norm, and Breakers Hotel was a local hang out. I watched closely how hyping up a company could make a few people rich and lot of people holding the bag. More than a handful of times I watched a number of the people around me become millionaires overnight, then lose it all within months. Some of them might just end up on American Greed. (I am patiently waiting for my interview tell all story)

The lesson I learned was that the hype is real. This goes for both product and in venture. Hype is defined here…

1. Excessive publicity and the ensuing commotion
2. Exaggerated or extravagant claims made especially in advertising
3. An advertising or promotional ploy

Humans are amazing while drinking Kool-Aid (sugar water), they can do almost anything or at least they feel that way. This brings me to my point…

The second tech bubble is here, but it won’t bring down the market. It will bring down the hype machine.

Cash is flowing right now and interest markets are still cheap. Yet, hype is at an all time high. I saw this pattern a few years after the first tech bubble, where the country began to rebuild itself (like where we are now) and everyone started extending themselves with cars, property, and debt. The hype was high and you could flip anything. The art of hype promotion became a BIG business where players could learn small details about a specific company, then push it through the right channels and make a killing on both sides. Right now a number of influencers are making cash off the chatter and noise of other people making product.

“This is stock promotion”

It might be for the love of Valley technology but if it talks like a duck, walks like a duck, it is a promotion. This can come in the form of a blog, tweet, website, or even overhearing an amped up conversation at the Rosewood Hotel.

Last week I had a young VC ask me “How come your not on X yet?”. I responded… you mean the Three Mile Zone?. We both laughed but his question was very revealing. I didn’t defend myself with the fact that my team has their heads down or that we are generating the right KPIs and the systems to track and improve. I simply stated… “the long view”.

My suggestion here is to stop giving into everything that seems big because of a promotional blitz. Stop and think… read the app reviews and read the comments inside of the app. Try for yourself to gain influence within the product or service before jumping head first. Remember when your parents used to say “Don’t believe everything you read”?, the same rule applies here. Social media has become paid media and if you follow it without self-reason or doubt your going to get burned. But… If you love jumping into a new car every year then leasing apps or products might just be your thing.

The second tech bubble is here, but this time it won’t be in the financial markets… it will be the hype machine that burns.