Let's talk about burst scenarios. I'm not worried about the tens of startups raising $500K at inflated valuations. It doesn't really matter.
What I'm worried about is someone like Zynga having a bad day. Imagine their next game doesn't quite take off as much. Boom: their valuation crashes. Since they are so linked to Facebook, I'd expect Facebook to crash as well. And once Facebook is not so hot, then Twitter, with abysmal revenue, will crash too.
The question is: what happens after that? Angels stop pouring money in startups, Silicon Valley goes into nuclear winter like 2003, or not?
What I'm worried about is someone like Zynga having a bad day. Imagine their next game doesn't quite take off as much. Boom: their valuation crashes. Since they are so linked to Facebook, I'd expect Facebook to crash as well. And once Facebook is not so hot, then Twitter, with abysmal revenue, will crash too.
The question is: what happens after that? Angels stop pouring money in startups, Silicon Valley goes into nuclear winter like 2003, or not?