Contrary to the belief that bubbles are based on hype, Gurley asserts they are a byproduct of a real technological breakthrough. The initial, genuine value attracts talent and capital, which then draws in speculators and 'fools' who create the bubble. The underlying technology's reality is the catalyst.

Citing theorist Carlotta Perez, Gurley argues that only genuinely transformative technologies create bubbles. The rapid wealth creation from the real innovation attracts speculators and charlatans, which inflates the bubble. Therefore, a bubble is evidence of a real shift, not a sign the technology is fake.

History shows that transformative technologies like railroads and the internet often create market bubbles. Investors can lose tremendous amounts of capital on overpriced assets, even while the technology itself fundamentally rewires the economy and creates massive societal value. The two outcomes are not mutually exclusive.

Venture capitalist Seth Levine argues that bubbles are an inevitable, and even productive, part of the innovation cycle. While many investments will fail, the frenzy ensures massive capital flows into transformational technologies like AI, allowing the market to eventually find the winning companies and ideas.

History shows that revolutionary technologies like AI require massive, often debt-fueled, infrastructure buildouts. The revenue from these technologies frequently lags the debt obligations, causing the first generation of investors to go bust. Real wealth is often captured by later investors who buy in after the initial collapse.

A genuine technological wave, like AI, creates rapid wealth, which inherently attracts speculators. Therefore, bubble-like behavior is a predictable side effect of a real revolution, not proof that the underlying technology is fake. The two phenomena come together as a pair.

Contrary to popular belief, the most dangerous speculative bubbles aren't con jobs. They are built on universally recognized, transformative ideas like railroads, the internet, or AI. Widespread belief in their world-changing potential is precisely what fuels the speculative mania and subsequent crash, as everyone wants a piece of the future.

Gurley posits that a bubble isn't a sign that a technology is fake. Citing economist Carlotta Perez, he argues that if a tech wave is real and generates wealth quickly, it will inevitably attract speculators and charlatans, making a bubble an expected consequence of its success.

Howard Marks distinguishes between two bubble types. "Mean reversion" bubbles (e.g., subprime mortgages) create no lasting value. In contrast, "inflection bubbles" (e.g., railroads, internet, AI) fund the necessary, often money-losing, infrastructure that accelerates technological progress for society, even as they destroy investor wealth.