Diller on tech bubble: 'We're puffing it up pretty nicely'
The IAC founder and chairman was a relatively cynical, curmudgeonly presence at the SXSW conference, which is better known for dreamy futurists and wacky big ideas.
AUSTIN, Texas--Is there a little bit of madness to the sky-high tech company valuations that are all over the place right now? Yes, says IAC founder and former entertainment mogul Barry Diller, who gave a talk at the South by Southwest Interactive Festival (SXSW) this morning to provide a bit of blunt, curmudgeonly insight for a conference best-known as a hub.
It was one of Diller's first high-profile appearances since he; he remains chairman.
So is there a tech bubble, as evidenced by the paper valuations of companies like Facebook, Groupon, and Twitter? "Well, we're puffing it up pretty nicely," Diller said, calling the multibillion-dollar valuations of companies with high user engagement but unproven long-term revenue "mathematically insane." But maybe that's just how it works: "And the thing is, money chases things, and in this world right now the most interesting place in the world to be is in the invention of things, and the reason for that is that it's now possible." He mentioned recent revolutions in online video and mobile technology, among other things. "The fact that money chases it isn't really that interesting. What is interesting is how much sheer invention is going on. The result of it is that valuations, for a period of time, get absurd."
He had more to say: "All the money that's going to be lost is money that can be lost by people who can lose money, so who cares?"
Not all of his own projects have been wild triumphs, of course. IAC, the parent company of brands ranging from Match.com to Evite to CollegeHumor, has goneamid recession woes, changing market forces, and the contrasting outlooks of big-time shareholders. It's given him a certain cynicism even as he continues to push for innovation in media and technology. On his current priorities, which include the merger of The Daily Beast, a publication he co-founded, with storied but flagging magazine Newsweek, he says he just isn't sure of the likelihood of success yet. He'll know "in six to eight months," he said.
Diller was also skeptical about the high levels of venture capital activity, particularly in private-market stock trading. "It's just nothing that interests me," he said, and implied that he sees some sheep-like activity in the number of people rushing to get a stake in what they think might be the next Twitter or Facebook. "What interests me is starting businesses on our own, finding ideas that we can support, and simply investing in invention or ideas, and not in chasing crowds."
He had some harsh words for fellow media-turned-tech baron Rupert Murdoch of News Corp., suggesting that itswas too much too soon. "They promoted it enormously and spent a lot of money, and it's impossible to download," he said. "Everyone I have talked to (says) in order to download it you actually have to go to your PC and download it there...That does not seem to me like a contemporary product."
But it's not just in the tech industry that he sees a world bogged down in bureaucracy, absurdity, and hype. He had quite a bit to say about the U.S. government, too, particularly about Net neutrality--of which he is a fierce proponent--the lukewarm federal moves to promote entrepreneurship as a way to infuse the economy with new life, and the IRS.
Entrepreneurship was not a top priority for the Obama administration, he said, and hinted that the tech world shouldn't have expected it to be. "Their priority was to get us out of the recession, and their priority was health, so they didn't think or care about this and then they enacted new financial rules that I don't think make any sense to anybody...they have hundreds of commissions and panels and things that will drive medium and large businesses crazy."
But Net neutrality should be a priority, he said. "We need an unambiguous rule, law, that nobody will step between the publisher and the consumer, full-stop," he said. "What I find really surprising...(is) the lack of essentially screaming on the part of all of the people who are in various ways in various parts of the vineyard of creating, thinking, using...this free Internet."
In contrast to ever-tightly controlled mediums like telephones and televisions, he said that the Internet is "ours, and we've got it, and it is, I think, a miracle."
But as he said that he hopes the government will push for Net neutrality, he expressed concern that lawmakers are just hopelessly bad at getting things done, given how the federal government sometimes seems to be pathologically obsessed with elections. "Isn't it really heinous that we've just finished this thing about the midterms and now we're in the next election?"
Regardless, he didn't see anything wrong with the entrepreneurial energy that floods Austin every year for SXSW. "The environment here is great because it is an environment that is dominated by nobody. and the result of that is you really get a lot of cooking and that is pretty good," he said, in what was likely a thinly veiled jab at Silicon Valley's domination by massive technology companies or the major media companies' grip on New York.
And in spite of his overall cynicism, he said that not even a failure in the Net neutrality movement will curb innovation. "I don't think anything's going to be the death of entrepreneurship," he said. "Ever."
To the entrepreneurs and their fledgling companies, his advice: "Get enough money, only enough money. Get it started. Give away as little as possible...Keep your head down. Do not listen or talk to anybody; when it gets out there, listen to your audience to the extent they make sense...Keep going on your path. It will either work out gloriously, or it will be another failure. In which case, thankfully, you get to do it all over again."