Irony or Tragedy? The Venturescape and Bear Sterns

panic at the disco greenspan bear sterns fed jpmorgan

As I mentioned in my post yesterday, I just returned from SXSW. The atmosphere among most attendees seemed one of optimism, bordering on carefree exuberance. Companies like Facebook, Digg, Etsy and Google threw great parties and spoke about how they would ‘revolutionize’ this or that.

Many other earlier-stage startups I spoke with were confident they would soon score substantial investments at great valuations. And why not? AOL just bought Bebo and may go for Kickapps. Union Square Ventures just launched a new fund. Microsoft is buying, apparently not deterred by its Facebook investment. Even articles on the Spitzer debacle are littered with references to MySpace, Facebook, and Amie Street. Even old-guard NPR is broadcasting shows on SXSW. Hell my parents asked me what Twitter is.

It all makes me think on this the night of what will undoubtedly be a historical financial event: JPMorgan buys Bear at the 11th hour for $2/share before a bankruptcy filing would have transpired on Monday. An attempt by the Fed to bail out the markets on a Sunday night is scary stuff. Wall Street is in panic mode and no one outside of Wall Street is showing much sympathy: ‘think about the bonuses these guys have been making’ is what I keep hearing. True, the last few years have been very kind to those in high finance, but we are clearly seeing the risk that allowed for those profits was too high – now they are paying the price and we all will too. Oh, and Greenspan – nope, he had nothing to do with it, according to ah…him.

To an extent it’s ironic that the same genre of tech companies that suffered similar fates to Bear during the last bubble are now looking like the safe money. Makes me wonder if times have changed, or if history is just repeating itself among a different industry of type-A’s?


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