I was reading the 37signals article on the recent bubble and I got an idea. Is it possible to deflate the bubble with enough pressure that allows it have a more sustainable growth, instead of allowing it to grow without any control?
As they point out the problem in this case has to do with supply and demand. As new and bigger valuations are made, more money enters the valley, and those investors are expecting returns for their investment. When the companies start failing because they are unable to achieve profits or facebook isn’t buying anything else, new money will be cut off. At this moment, any company that can’t make money will die out (Think twitter).
What I am proposing is having some kind of crowdsourced/automatic system to determine the social awareness of a brand/service, and can predict with some level of confidence the future for a given start up. Basically some kind of Standards & Poors for startups. As long investors did indeed trust this tool, the bubble could be maintained as long they had a risk/benefit value associated with the investment. Riskier investments should yeild greater returns.