- Some folks will say they look at the preeminence
of these handful of big tech firms today,
even given the kind of incredible dynamics
you've talked about and their minds swing back
to the late 1990s when tech led what seemed like
a bubble and then there was a bust.
Are we headed toward that now?
Or is this a different era in your view?
- I would say valuation multiples are high,
both for the market and particularly
for the internet sector.
And so I think, in the short term,
it's certainly very feasible you could see
you know, potentially a very significant correction.
That being said, I think if you look out longer term --
I would say five year or longer --
I'll be very surprised if the internet doesn't continue
to meaningfully outperform the broader market.
And I'd point out that this really is different
than the magnitude of the valuation
at the time of the dot-com bubble.
I mean, so specifically, in August of 2000, the IT sector
was 34% of the S&P 500 valuation,
whereas as of this spring, it was only 23%.
- Very different.
- Yeah, so IT makes up a third less of the market
than it did 17 years ago, and that's actually
kind of incredible when you consider that most
of these companies weren't making money 17 years ago.
And to think that the internet actually was
kind of a niche technology 17 years ago,
and it wasn't so integral to, you know,
all of our lives and the developed market.
And I think this ties in with why I believe
internet will do better than the market over the long term.
What I'm implicitly saying is I think the 23% of IT
that's in the S&P 500 today, I think that's gonna go up
closer to, maybe even ultimately above,
the 34% where it was 17 years ago.
- And that would just reflect the kind of natural evolution
of the economy and the role of the kind of
internet businesses being the intermediary for global commerce,
I guess, whatever the right phrase would be.
- I think it reflects that, in my view,
we're still relatively early innings in, you know,
the digital analog to the Industrial Revolution.
We may be one or two innings into it, in my opinion,
but I still think it's early innings,
just when you go across these verticals
and you say it's still only one of ten retail purchases
online, still only a third of ad dollars online,
still only half of travel reservations are booked online.
And it's hard for me to imagine a world
where in 15 to 20 years, the vast majority
of all the -- with the possible exception of retail --
where the vast majority of all those categories
aren't online.
That's literally going to be trillions of dollars
flowing online and in many cases at very high margins
and I think increasingly we're gonna see internet
and software companies capturing more and more
of the economic value in supply chains in all industries.
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