Howard Marks read about the 1720 South Sea Bubble and saw the same pattern in late-1990s tech startups: companies with no revenue, profit, or product being wildly overvalued on ideas alone. He wrote an internal memo called "Bubble.com" warning of the crash that would eventually wipe out $5 trillion.
In the fall of '99, I read a book called Devil Take the Hindmost. It talks about all these crazy things that people did, especially in something called the South Sea Bubble in 1720. People were quitting their day jobs and hanging out in alehouses to trade the shares of the South Sea Company. And I said, that's what's going on now in the tech bubble. So I wrote this memo, Bubble.com, and it said what they were doing, people are doing today. And I've tried to point out the folly of what I saw going on. Companies with no profits and no revenue revenues were being highly valued. Maybe no product, just an idea. And that is the epitome of a bubble.
