Schmidt: You Don't Know It's a Bubble Until the Bubble Ends

At the Allen & Co conference in Sun Valley, Idaho, on Thursday, July 7th, Google's former CEO and now Executive Chairman Eric Schmidt gave an over 70 minute long talk to press. Towards the end of the talk, when asked by a reporter, whether he, like many in the media world, thinks we are presently […]

At the Allen & Co conference in Sun Valley, Idaho, on Thursday, July 7th, Google's former CEO and now Executive Chairman Eric Schmidt gave an over 70 minute long talk to press. Towards the end of the talk, when asked by a reporter, whether he, like many in the media world, thinks we are presently in a tech bubble and what Google's $1.67 billion 2004 IPO at a $23 billion valuation (Google's current valuation is 171.43 billion) means in light of today's IPO valuations.

"Oh we were underpriced," Schmidt joked, before remarking that he didn't actually know whether or not we are presently in a bubble.

"On the general question of bubble, in the first place you don't know it's a bubble until the bubble ends, by definition. The rule I set for myself 10 years ago was that if the press calls it a bubble then I'd pay attention, and let me report that the New York Times, the Wall Street Journal and the Economist have all written articles saying that it's a bubble.

On what effect if any the seven years of market experience have had on his perspective on Google's IPO, Schmidt said, "Google went public at a very different time, at what people thought was an unbelievably high valuation, and let me point out that we've never traded below our opening price."

When a reporter pressed for a "yes or no answer," Schmidt replied,"

I don't think it's my job to call the market. It's a mistake for me to say what the market should think … I'm not a brilliant investor. If I were a brilliant investor then maybe I'd have some status. I'm a computer scientist." … A computer scientist with a $7 billion net worth.

You can watch the full interview below:

[Via: TechCrunch]