Silicon Valley mocks Trump for saying tech industry faces a financial bubble
Republican presidential candidate Donald Trump on Tuesday warned that a dangerous financial bubble has formed in the technology industry – and Silicon Valley responded with a collective eye roll.
In a Reuters interview, the New York billionaire said technology start-ups that had never earned a profit were able to sell shares at very high prices, likening the situation to the overheated stock market in 2007.
“I’m talking about companies that have never made any money, that have a bad concept and that are valued at billions of dollars, so here we go again,” Trump said.
Many tech watchers have repeatedly warned of a tech bubble as the number of private companies valued at $1 billion or more – known as unicorns – have soared to 163, according to venture capital research firm CB Insights.
So Trump’s declaration, in the eyes of Silicon Valley’s entrepreneurs and venture capitalists, was nothing new. Investors and others took to Twitter to poke fun at Trump’s campaign slogan “Make America Great Again!” by repeating the phrase, “Make Bubbles Great Again.”
“FINALLY someone calls it out,” Marc Andreessen, a general partner at the prominent venture capital firm Andreessen Horowitz, tweeted, mocking Trump.
In the interview, Trump said the high valuations that tech start-ups are able to fetch today remind him of 2007, when an overheated housing market helped drive U.S. stocks to unsustainable valuations before the bubble burst.
“You have a stock market that is very strange,” the presumptive Republican nominee said. “You look at some of these tech stocks that are so, so weak as a concept and a company, and they’re selling for so much money. And I would have said can that ever happen again? I think that could happen again.”
Some startup founders rejected Trump’s generalization that all companies are burning cash and overvalued; certainly many of them are, and in the last several months a correction has started to rectify years of exuberant investments.
Still, other companies continue to raise money successfully and turn profits.
“So far he has been saying dumb things but they seem to be getting dumber and dumber,” Vivek Wadhwa, an entrepreneur and Stanford University fellow, told Reuters.
“I was going to tweet (the comments) while calling Peter Thiel and saying, ‘Here is your buddy.'”
Thiel, an influential investor well-known for his contrarian ideas, is one of the few Silicon Valley leaders to openly support Trump.
Thiel was not immediately available for comment.
“There is nothing in his (Trump’s) track record to show that he has been out here and met with any technology leaders and knows this industry and knows about innovation,” said Aaron Ginn, co-founder of the Lincoln Initiative, a community that promotes libertarian and technology-friendly values.
Which is ironic, Ginn said, given how much technology – especially Twitter – has helped Trump’s campaign.
“He says things and does things that are made for entertainment,” Ginn said.
(Reporting by Heather Somerville; Editing by Peter Henderson and Tiffany Wu)