:00:08. > :00:11.investigating her. More on those stories at the top of
:00:12. > :00:13.the hour. Now on BBC News. It's time for Talking Business, with Linda
:00:14. > :00:16.Yeuh. The US tech stock market is climbing
:00:17. > :00:19.rapidly with some of the biggest share sales since the dot`com bubble
:00:20. > :00:22.burst in 2000. It is not just US firms like Facebook but global
:00:23. > :00:24.companies have also announced public offerings such as Chinese e`commerce
:00:25. > :00:28.giant Alibaba. Are these signs another bubble could be forming? In
:00:29. > :00:49.Singapore, I am Linda Yueh, and we are Talking Business.
:00:50. > :00:56.Welcome to the programme. Before we hear from my guests, US stocks have
:00:57. > :01:05.soared on the back of tech companies and continue to hit new heights.
:01:06. > :01:11.2013 saw the most initial sale of shares to the public since 2000. At
:01:12. > :01:25.the last peak of American markets, 222 companies went public, 45 of
:01:26. > :01:29.them were tech companies. This month the US tech stock index, the NASDAQ,
:01:30. > :01:33.has hit the highest level since the dot com bubble over a decade ago in
:01:34. > :01:36.2000. When the bubble burst, within a year, the NASDAQ lost more than
:01:37. > :01:38.half its value, plunging the US economy into recession. As markets
:01:39. > :01:41.are nearing those dizzy heights, is there a tech bubble, or are there
:01:42. > :01:46.fundamental differences in these companies now? Joining me today to
:01:47. > :01:48.debate this are two experts specialising in technology firms,
:01:49. > :01:50.Andrew Milroy, vice president of information, communications and
:01:51. > :01:53.technology research at Frost and Sullivan and Naveen Menon, head of
:01:54. > :02:00.communications, media and technology at AT Kearney. Welcome. We start
:02:01. > :02:04.with you. Is there a tech bubble? I fundamentally do not believe there
:02:05. > :02:07.is a tech bubble. Things are fundamentally different from 2000
:02:08. > :02:11.and today business models are different. The environment is
:02:12. > :02:17.different. What about you? Right now, no, but I think it is a risk.
:02:18. > :02:24.Some of these stocks are currently overvalued. Some companies are very
:02:25. > :02:26.highly valued at the minute. They are overdependent on one source of
:02:27. > :02:32.revenue, namely advertising, so I think a lot of the social media
:02:33. > :02:44.stocks are currently overvalued. As more of them go public, there is a
:02:45. > :02:47.risk of getting into bubble. `` getting into a bubble. You do not
:02:48. > :02:50.agree with that, do you? Broadly classifying social media as a
:02:51. > :02:52.sector, and saying they are overvalued is possibly inaccurate.
:02:53. > :03:01.What you're looking at is tech companies that have very diversified
:03:02. > :03:04.businesses. You have companies like Square that are looking at mobile
:03:05. > :03:08.payments, you have companies like Alibaba that are more e`commerce
:03:09. > :03:11.businesses. I think people look at the Facebook`WhatsApp deal and say,
:03:12. > :03:15.that was really expensive so we have to be in a bubble now. I do not
:03:16. > :03:19.think that is the case. Is that what you're saying? I think the point is
:03:20. > :03:22.right. A lot of the tech companies that have gone public now have more
:03:23. > :03:27.to diversified business models. You cannot argue with those valuations.
:03:28. > :03:30.But if you look at Facebook alone and its valuation, which is greater
:03:31. > :03:33.than the GDP of Vietnam, a country 90 million people, it seems a bit
:03:34. > :03:36.much for a company that is dependent on advertising. As more of these
:03:37. > :03:45.companies go public, that slice of the advertising pie is fragmented.
:03:46. > :03:50.Twitter is there as well. It is being diluted. Is this sustainable?
:03:51. > :03:59.How much advertising spend is out there? You might remember, in 2000,
:04:00. > :04:07.and in 1998, my mother and my father and my grandparents were looking at
:04:08. > :04:11.IPOs and trying to buy stock. I do not see that kind of phenomenon.
:04:12. > :04:13.Definitely there are some cases of companies that are trying to raise
:04:14. > :04:17.money through public markets, but you do not see it turning into a
:04:18. > :04:28.frenzy of activity around possibly not so well`educated consumers going
:04:29. > :04:31.and buying stocks. If you look at venture financing companies that are
:04:32. > :04:35.funding new ventures, in the late 90s and in early 2000, there was a
:04:36. > :04:38.lot of money around, cheap money, which could be used to fund
:04:39. > :04:45.ventures. Nowadays, people do not fund ventures unless the company is
:04:46. > :04:48.making real profits. I think it is a little bit overstated to say, maybe
:04:49. > :04:53.they are going to collapse and we are in a bubble. The fundamentals
:04:54. > :04:56.have changed. Sure, but I think there are sectors of the market
:04:57. > :05:01.where this is happening. The fundamentals were not in place for
:05:02. > :05:03.Twitter. It was not making a profit and huge amounts of money were
:05:04. > :05:12.invested. With Facebook it was similar. It is making profits, but
:05:13. > :05:16.not huge ones. I would even go so far as to argue that Google, to make
:05:17. > :05:19.a comparison that an ordinary person might understand, it is valued at
:05:20. > :05:34.greater than the gross domestic product of Malaysia. Again, it seems
:05:35. > :05:36.to be overvalued, given that prematurely generates revenue from
:05:37. > :05:39.advertising. We assume it will have other successful revenue streams put
:05:40. > :05:42.in place as it makes a variety of acquisitions. That is a pretty
:05:43. > :05:46.strong argument. It sounds a lot like 2000. Companies that have not
:05:47. > :05:49.made a profit are being highly valued in the market and investors
:05:50. > :05:53.are piling in and buying their stocks. It sounds like the dot`com
:05:54. > :05:57.bubble to me. Let's take Alibaba. It is going for a public offering soon,
:05:58. > :06:09.trying to raise money from people like us. They are making $230
:06:10. > :06:12.million of profit now. Back in 2000, we had pets.com. That was one of my
:06:13. > :06:15.personal favourites. There was no business behind that but it raised
:06:16. > :06:18.about $600 million. During the Super Bowl, the biggest show in America,
:06:19. > :06:21.prime`time TV, pets.com paid $2 million for an advertisement on
:06:22. > :06:31.prime`time TV and it had no money to pay for it. These are signs of
:06:32. > :06:37.bubbles. We do not see that happening now. I know you dismissed
:06:38. > :06:41.the acquisition of WhatsApp, but for me, that is the sign of a risk of a
:06:42. > :06:44.bubble, valuing the company that is making a relatively low amount of
:06:45. > :06:48.revenue. I understand the logic, it is strategic, it is to stop Google
:06:49. > :06:57.getting its hands on it, but that premium seems phenomenal. WhatsApp
:06:58. > :06:59.was valued at $35 per user. In the bubble days, companies like
:07:00. > :07:10.Geocities, they were valued at $640 per user. YouTube was bought by
:07:11. > :07:14.Google at about $55 per user. In the dot`com boom, you had companies that
:07:15. > :07:25.had $500 per user on the hope that they would turn profitable. I am not
:07:26. > :07:28.convinced. Finally, we disagree on whether or not there is a risk of a
:07:29. > :07:33.bubble, but if it bursts, will it drag down the US and the world
:07:34. > :07:36.economy? Like it did in 2000? If there is a bubble, and if it bursts,
:07:37. > :07:56.it depends if it deflates slowly or if it bursts quickly. It could have
:07:57. > :08:01.an effect on global markets. I think I know where your concern is. It
:08:02. > :08:04.could be that in the past, like in the 2000s, this bubble was largely
:08:05. > :08:07.contained within a single market. I looked at some of the research on
:08:08. > :08:11.this and there were quite a few Japanese businesses caught up in the
:08:12. > :08:15.bubble last time around. You look at some of the companies. But it was
:08:16. > :08:17.not as global as it is today? It was not as global. There is a more
:08:18. > :08:21.global element today, particularly involving large Chinese companies. I
:08:22. > :08:24.think there could be a worse situation, because the governments
:08:25. > :08:29.have less to play with than they did now. Interest rates are phenomenally
:08:30. > :08:35.low, so if this happens, the economy could be in serious trouble. We are
:08:36. > :08:40.not there yet. There is a risk of that, that is my point. Policymakers
:08:41. > :08:49.need to be aware of that and do their best to make sure it does not
:08:50. > :09:00.happen. A great set of points. Thank you both very much. But what do
:09:01. > :09:02.entrepreneurs themselves think? Singapore and Silicon Valley`based
:09:03. > :09:05.start`up Viki streams videos and asks its community to translate
:09:06. > :09:07.movies and TV shows from around the world. It was recently acquired by
:09:08. > :09:13.Japanese e`commerce giant Rakuten for an estimated $200 million.
:09:14. > :09:16.Earlier I caught up with its fouder, in San Francisco, and asked him what
:09:17. > :09:22.makes this company innovative in a crowded field? I think about us as
:09:23. > :09:26.global TV but powered by fans, and that means content from 100
:09:27. > :09:31.different countries. Prime`time high`quality content that we
:09:32. > :09:34.license. When you get the fans on it, all of sudden the market
:09:35. > :09:45.opportunities for the content owners gets four times bigger. You get
:09:46. > :09:48.Spanish on Japanese anime, you open up Latin America, you get Arabic on
:09:49. > :09:52.Scandinavian movies. That is the concept. We are a global TV site,
:09:53. > :09:56.but it is for the fans and by the fans. At the same time, it is great
:09:57. > :10:00.for the content owners. They start growing in markets they did not know
:10:01. > :10:04.existed. With the stock market rising, is this fueling incentives
:10:05. > :10:08.for start` ups to be started just so they can list, make a big buck and a
:10:09. > :10:12.quick exit? If they are starting for the wrong reasons it will be hard.
:10:13. > :10:15.You have to be crazy enough to do a start`up to start with and to stay
:10:16. > :10:25.the course gets harder and harder. It has to be a great idea. In our
:10:26. > :10:30.case, it was not about a quick buck. There is a premium you have got to
:10:31. > :10:34.give up to raise from the Valley. At the end of the day, you want to be
:10:35. > :10:40.able to play the longevity game and keep going, and have staying power.
:10:41. > :10:43.I think there could be opportunities for people to find a very specific
:10:44. > :10:50.niche and there will be exit opportunities there. It is hard to
:10:51. > :10:54.go to people like Facebook and say, did you know you were going to be
:10:55. > :11:08.where you are today when you started? I'm not worried about that
:11:09. > :11:12.aspect. Are you worried that when you look at what is happening with
:11:13. > :11:14.stock prices for other Internet companies, you see them soaring
:11:15. > :11:18.ahead, and remember a decade ago, when the dot`com bubble burst, it
:11:19. > :11:21.did not hurt the companies that were listed, it dented the money going in
:11:22. > :11:35.the tech companies? Does it worry you that it could happen again? What
:11:36. > :11:43.worries me is that people might think it is a bubble. From the
:11:44. > :11:56.company's perspective, there could be a defensive move. The
:11:57. > :12:04.fundamentals of it might look solid but it might mean that people think
:12:05. > :12:10.every other company is the same. I worry that people might think the
:12:11. > :12:14.problems apply to everyone else. Is there a reason why you haven't
:12:15. > :12:26.decided to go public and list, as you decided to be acquired? It was a
:12:27. > :12:30.click with the opportunity. We were building the company we wanted ``
:12:31. > :12:37.the way we wanted to build it. And to have somebody coming in with that
:12:38. > :12:42.vision it was a special moment. It aligned. It gave me the opportunity
:12:43. > :12:50.not to worry about fundraising. I felt like I was always fund raising.
:12:51. > :12:56.So this was a chance to really go big.
:12:57. > :13:00.Technology permeates our lives and the companies that are emerging in
:13:01. > :13:08.the markets are offering a diverse set of online tools and gadgets
:13:09. > :13:18.ranging from how we download music to everything else. It is changing
:13:19. > :13:24.how we live our lives. How far and fast can an electric car drive. A
:13:25. > :13:32.manufacturing company of a car can look like the tech firms. Can all
:13:33. > :13:54.companies look like tech firms. Joining the our Mike two guess. ``
:13:55. > :14:01.my two guests. Let me start with you. Tech companies seem to
:14:02. > :14:05.transform the way that we live. Do you think that is an accurate
:14:06. > :14:13.description of how tech companies are today? That is the goal and that
:14:14. > :14:18.is why tech companies should exist, to make life easier. To make life
:14:19. > :14:28.easier. They should make things that we do everyday much easier. It just
:14:29. > :14:39.not be tech for itself, they should play a part in everyday lives. We
:14:40. > :14:46.hear this term, digital economy. A sceptic might say, it sounds like
:14:47. > :14:52.another term to me. One can actually ask the question, is it possible to
:14:53. > :15:00.be in business from a tech company. Your own employees use technology
:15:01. > :15:09.all the time. Your processes are all on computers. In many cases, your
:15:10. > :15:15.systems use technology. Where do their `` where do the boundaries
:15:16. > :15:23.lie? Are all companies just tech companies in some ways. Any company
:15:24. > :15:28.needs to be founded in technology. I certainly agree with our friend in
:15:29. > :15:33.Shanghai that companies need to look towards the purpose of technology.
:15:34. > :15:36.The consumer. Ultimately, it is about delivering a product or
:15:37. > :15:44.process of service that services a client or consume a in a more
:15:45. > :15:50.efficient and effective manner. I know what your answer is going to
:15:51. > :15:57.be. But there is a downside. To have technology pervading your life side,
:15:58. > :16:04.there are still issues in terms of how much we become addicted to
:16:05. > :16:12.technology. Absolutely. I built one of the first services in 1997, 1998,
:16:13. > :16:15.for e`mail notifications to be delivered to SMS. I was the one is
:16:16. > :16:21.the first people to use my technology but after a while I was
:16:22. > :16:25.frustrated because I was becoming bombarded. I switched the
:16:26. > :16:29.notifications. What is more important is that we have the
:16:30. > :16:32.ability to do things but we all have to go through the process of knowing
:16:33. > :16:38.that this option is available, but we have to know when to switch it
:16:39. > :16:46.off. There is information overload. I would prefer that information be
:16:47. > :16:50.made available and I guess going through a process of learning what
:16:51. > :16:55.is important in life. Communications and notifications during mealtimes
:16:56. > :17:00.and family times, when people want an immediate response, that is not
:17:01. > :17:05.good. We need to train ourselves. It seems to me that the panel is in
:17:06. > :17:10.broad agreement, technology pervades our lives. What does that mean for
:17:11. > :17:15.the business model going ahead, how'd you future proof your
:17:16. > :17:22.business? It is a big challenge for organisations. Not just tech
:17:23. > :17:27.start`ups. If you look at companies by and large, they are falling
:17:28. > :17:32.behind their customers who are adopting technology has a faster
:17:33. > :17:36.pace than they can. They are falling in line because of technology
:17:37. > :17:43.itself. What is happening today, organisations are being challenged
:17:44. > :17:46.to keep up. It is a constant challenge to keep up with the
:17:47. > :17:50.customers and they are not able to think creatively about what the
:17:51. > :18:00.technology can do for the business model. In my view, the fraiche
:18:01. > :18:09.disruptive technology should `` is a misnomer. It should be enhancing
:18:10. > :18:16.technology. Henry Ford said, if he had listened to people, they would
:18:17. > :18:22.have got a faster horse. Technology is all about foresee where the
:18:23. > :18:26.consumer demand is coming from. Constant connectivity and
:18:27. > :18:28.pervasiveness of technology and the availability of feedback data is
:18:29. > :18:34.crucial to business understanding where its market is going to go. I
:18:35. > :18:42.will put you on the spot, you are in this field, if you are looking into
:18:43. > :18:45.the future, what would be the disruptive technology, all the
:18:46. > :18:54.enhancing technology that we should be aware of coming up? I couldn't
:18:55. > :18:58.resist putting in a quote. It is important not to look too far into
:18:59. > :19:05.the future. The difference between a rich entrepreneur and a poor one is
:19:06. > :19:11.that a rich one is two months ahead of time, a poor one is two years
:19:12. > :19:15.ahead of time. So don't look too far into the future. There has to be a
:19:16. > :19:21.business desire or a consumer desire. Just be a head of the curve,
:19:22. > :19:28.not too far ahead. You don't have to look ten or 15 years into the
:19:29. > :19:31.future. Only six months to one year. That is happening right now. The
:19:32. > :19:36.start`ups happening right now and the one that will be successful,
:19:37. > :19:42.right now. Transport, making travel so much easier. The taxi booking
:19:43. > :19:49.applications, value shopper close, how you shop for books. There are so
:19:50. > :19:55.many things going on. `` how you shop for clothes. That is really
:19:56. > :20:02.what is going to change the world in terms of moving forward. What about
:20:03. > :20:06.you, what is your pick? I agree in many ways that technology has a very
:20:07. > :20:11.important role in making life easy for us. But I think it has a role
:20:12. > :20:18.even beyond that. That is giving us hope. Hope for the less fortunate
:20:19. > :20:24.mass of people around the world. Hope for the young people of the
:20:25. > :20:27.world. I think technology has a very important role in helping people
:20:28. > :20:38.create better futures for themselves in their society. Andrew? My bet
:20:39. > :20:43.would be on the quantified itself. Only your own data and using that to
:20:44. > :20:47.adopt lifestyle products `` adapt lifestyle products to what people
:20:48. > :21:00.demand. He knew of the data owned the future. That is a lot to chew
:21:01. > :21:08.on. Those were my guests. It is not just Internet companies like Chinese
:21:09. > :21:16.e`commerce giant Ali Bala all Swedish company Spotify that are
:21:17. > :21:20.generating interest. Here are some tech companies and gadgets. Wearable
:21:21. > :21:26.tech is finding its way into our wardrobes. The company that makes
:21:27. > :21:33.3`D headsets for gaming was bought by Facebook for $3 million. What
:21:34. > :21:37.about iron man? And exoskeleton is being developed in Italy which is a
:21:38. > :21:42.wearable robot that could not only transform lives but could help with
:21:43. > :21:45.evacuation during earthquakes. And Allah is on says it is testing
:21:46. > :21:53.drones for deliveries to customers. We will have to wait for that
:21:54. > :21:59.service for permission from US regulators. `` and is on says it is
:22:00. > :22:04.testing drones. Perhaps all companies are judged on
:22:05. > :22:07.the basis of their technology and they are integrated into our lives
:22:08. > :22:13.so it is different to the dot`com bubble. The answer certainly matters
:22:14. > :22:16.certainly for investors and for all of us because another bubble
:22:17. > :22:21.bursting could drag down the economy. That is all we have time
:22:22. > :22:29.for. Check out our website and check out me, Linda Yueh, on the website.
:22:30. > :22:43.That is Talking Business. The evenings are getting wetter and
:22:44. > :22:44.wetter for some of you. Clear conditions in the