Ireland needs to be be wary of bubble trouble

Another day, another technology jobs announcement from an IDA Ireland client company. Airbnb, an accommodation rentals website, has announced it will double its Irish workforce to 200 by the end of the year.

It opened its European HQ in Dublin only six months ago, with the promise of 100 jobs. So after just half a year, it has decided to rewrite its entire European strategy and will now grow at twice the rate it had originally planned.

This is good news for Ireland, right? It sounds like it. Airbnb, however, is one of the tech companies that these days often gets mentioned in the same sentence as the word “bubble”.

There is a fierce debate raging over whether unsustainable valuations are endemic in the tech, and more specifically the online, industry.

This matters, because the sector is one upon which Ireland has pinned its recovery hopes. Google, Facebook, Twitter, LinkedIn, eBay, Indeed. com, Airbnb – they're all here. If there's a bubble, there'll be a bust, with inevitably savage repercussions for employment and investment in this country.

So is there a bubble or not? The experts cannot agree. In 2012, Airbnb did a fund- raising that reportedly valued it at $2.5 billion. It is now reportedly gearing up for a $10 billion flotation. This for a business that has never released its financial performance. You may not have heard of it, but apparently it is worth three Paddy Powers.

Meanwhile Just-Eat, the online restaurant ordering service, floated in London this week at £1.6 billion. It doesn't even have any proprietary technology – it is just a listings website – and its valuation led the Financial Times to muse about the risks.

When the last dotcom bubble burst at the turn of the millennium, Ireland rode it out because we had a property bubble, a consumer-spending bubble and a government-spending bubble to take up the slack. Now, we have none of those. If there really is a tech bubble and it bursts, this time Ireland is far, far more vulnerable.