[dmabram]

The great irony of Sam's bet is that, win or lose, the terms themselves prove a bubble mentality. Every one of the terms is focused on valuation, with no mention of revenue, much less profit or cash flow.

In the short term the valuation of a company is a popularity contest, in the long term it is a direct reflection of the discounted value of the cash one can expect to extract or reinvest. This is true for all investments, stocks, bonds, public, private, and even unicorns.

I have no idea if Sam wins this bet. It's quite possible that within the next five years enough of these companies are acquired at inflated prices to satisfy Sam's terms.

What I do know is when industry leaders start to use valuation itself as a metric to demonstrate that we are not in a bubble, without even the most casual mention of underlying fundamentals necessary to justify valuation, then we are in a bubble.