Stratechery The Benefits of Bubbles
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Nov 5, 2025 
Bern Hobart, co-author of 'Boom! Bubbles and the End of Stagnation', explores the intriguing role of bubbles in tech and economy. He discusses how AI may signify an inflection bubble, and contrasts it with mean-reversion bubbles. Bern argues that bubbles foster vital innovation by coordinating investments and risk-taking. He highlights the importance of abundant power for AI growth and suggests that societal risk aversion stifles transformative change. Ultimately, he encourages embracing the bubble spirit for groundbreaking projects.
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Why Bubbles Can Be Productive
- Bubbles can enable massive coordinated investment that installs infrastructure and spurs long-term deployment.
- The money-losing investments during a bubble often create durable platforms later used cheaply by others.
Inflection Bubbles Create Coordination
- Inflection bubbles coordinate many actors around a belief that the future will be qualitatively different.
- That shared belief reduces risk for complementary investments and creates virtuous cycles across sectors.
Dot‑Com Mania Fueled Key Web Innovations
- The dot-com era both brought the U.S. population online and trained a generation of web-native workers.
- Innovations like XMLHttpRequest, born of browser competition, transformed browsers into productive platforms.
