Not a bubble
I'll probably regret arguing against The Economist but I have to say I agree with Marc Andreessen here. There isn't a bubble as such, it's just a simple matter of economy 101: price is defined by supply and demand. There's a big demand for investing in the new "social media" technology companies but there's almost no supply. High demand + low supply = high price.
But don't get me wrong here: LinkedIn trading at several thousand times earning is still over-valued. Facebook is trading at several hundred times earnings but chances are still high they will "pop" at the IPO and probably increase in value several times. Does that mean I would invest my own money in these companies? Hell no, I'm coming in way too late. All the capital that wants to invest in this strong new technology trend needs to go somewhere and so far LinkedIn is the only stock it can go. At some point more companies will be going on the market and it will start getting easier to invest, supply is starting to meet demand and the valuations of these companies will start going down.
What about all these startups with crazy valuations? Same thing. There is no big company there to mop up all the surplus capital which means that early investment rounds is getting over subscribed. Start ups can ask for higher valuations and still get the capital they need.
I still don't think this is a bubble. A few over-valued companies is not enough to create a bubble in the same sense as the one in the late 90ies (I was there). These sort of bubbles have a very significant impact on the world economy. I doubt this will happen now.
In fact, I am investing myself. I left a huge salary and a lot of unvested shares on the table when I left Google to start Triposo. I have no salary and no idea whether it's going to work out.
Why invest? I think we are at a flexion point in this industry where a lot of interesting things will happen. It's not only about technological developments: what we're seeing now is mainstream adoption of things that's been around for quite some time. At Triposo we're primarily betting on powerful mobile devices and high quality open content. As technologies these things aren't exactly new but have significantly disrupted the industry by going mainstream (via the iPhone and Wikipedia).