When I was a pizza delivery driver I made under-the-table minimum wage, $8 per hour. It was very clear to me where that money came from. People would order an everything pizza for $20, we'd subtract the cost of ingredients (mainly cheese), absorb some profit for the business, and pay our salaries out of the remainder.
As a software engineer making upwards of $50 per hour, I question where my salary comes from. If I worked for FB, Google, or Pinterest, surely it'd be from advertising revenue. But isn't there AdBlock Plus, AdBlock, and uBlock? I install uBlock immediately after downloading a new browser. I think anyone in tech does the same.
Which makes me worry about Twitter, Reddit, and Snapchat. These apps are mostly used by people under 40 who are tech-savvy. They are all in the red (maybe Twitter is green now?), but they plan on making money through advertising. Their prime user base knows about AdBlock. What happens when ad blocking is ubiquitous?
That's one way the bubble could burst. Here's another. I work for a company that's venture-backed. My salary comes from venture capital. We've spent the past few years building a healthcare product that's finally gotten some traction. There are currently major incentives for hospitals to adopt emerging technologies. These governmental initiates have made it easier for us to approach customers. Federal funding fluctuates rapidly and while it may be advantageous to start a health tech company today, that could change depending on election outcomes and other spending.
Our investors are keenly aware of this situation. Should the environment shift, they would be unlikely to perform another investment round. Venture capital is not a sure footing to build a business on - at least not as sure as selling pizzas. And I think this defines my idea of a bubble. Too many venture-backed companies with extreme evaluations that are planning on making money someday using strategies that worked in the past (e.g. advertising), or assuming that the next round of capital will be there should their plan fail.