The Tech Bubble Didn’t Burst This Year. Just Wait

Things were different in Silicon Valley in the distant year of 2012, when iPhone sales were skyrocketing and you could still buy a house in Palo Alto for less than $2 million. Back then, most restaurants had menus, not tasting menus. Chief executive officers could say something grandiose at a tech conference without worrying about getting mocked on HBO six months later by the Beavis and Butt-head guy. And a talented entrepreneur could walk into a venture capitalist’s office, say his startup was a mobile-first solution for pretty much any problem (payments! photos! blogging!), and walk out with a good-size seed investment. “That pitch was enough to get going,” says Roelof Botha, a partner with VC firm Sequoia Capital. “It’s not enough anymore.”

Botha should know. Over the past five years he’s been one of Silicon Valley’s most successful investors, thanks to early bets on such companies as Instagram, Tumblr, and Square, all successes owed to the mass adoption of smartphones. Now, though, smartphone growth rates are near zero in the U.S. and falling around the world. And while there are candidates to succeed the iPhone as the next revolutionary computing platform (wearable gadgets, virtual reality), none has made a compelling must-have argument to the mainstream.