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The Emperor's New Clothes

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The Benchmark Capital Team outside their Silicon Valley office, wearing their uniform of jeans.
When Facebook first came into the public eye in the mid 2000s, investors scoffed at a company that had approximately 500K active users and no revenue or monetisation policy. However, Facebook was able to silence its critics through the leadership of COO Sheryl Sandberg who turned the company around and made it a profitable entity in 2010. Another important event occurred in Facebook's history in 2012 when it made its most important acquisition to date that would set it apart from other social network competitors: Israeli's facial recognition technology platform 
Most people may not be aware, but facial recognition is used by multi-national entities, governments, and private corporations to positively identify a person via photos alone. It used to be that government and law enforcement agencies needed a name to go along with a face from a video or still image before they could identify someone, but now it was possible to identify criminals and suspects from the Facebook database of faces that positively identified each individual based on unique facial characteristics.  This is why Facebook administered a rule of users being able to only use "authentic names" earlier this year to keep its database free from spammers, marketers and alter egos that might make its database less accurate and even launched their platform into the darkweb.
This is Facebook's secret sauce and why the company is so valuable to many different entities: their database of identifiable faces and authentic personae, despite the fact that most of their revenue comes from other startups that are utilising the Facebook platform to market their apps. Facebook's tagging methodology is what set it apart from other social networks of its time. Similarly, Google also acquired facial recognition technology via its acquisition of PittPatt in 2011, and integrates its platform through its database of users in Gmail, Google Hangout, Google Drive and Google Plus.
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Facebook's tagging feature used by their facial recognition technology
However, when Facebook finally became profitable before its IPO launch, this unwittingly set an alarming trend in which many other startups were being valuated and compared to in the same way without having possessing any potential viable technology. If we take a look at Instagram, Twitter, Snapchat, Tumblr, Pinterest and even companies like Yelp, Spotify, and Uber, one can see that they had reached $1billion+ valuations without having a net positive income, no viable IP, and often a high annual burn rate- something that hadn't been the norm before Facebook. 
If we were to compare SnapChat's current valuation of $15-19 billion+ with that of Facebook, we can examine a list of their patents to see if the company indeed has some sort of secret, valuable technology. A list of 9 patents show that they primarily dealing with ephermeral messaging
and another computer programme that attempts to correlate virtual persona with physical identity via ambiguous actions in the virtual world. The example that the SnapChat patent applicants used was that they could correlate an identity with a virtual user name. For example if someone wants to sell Red Sox tickets, he might use the handle "Red Sox." (ie, No chuckling please, they actually patented this). If anything, this patent shows the kind of intense pressure and desperation that SnapChat is currently facing in trying to authenticate and thus monetise its current user base to something more substantial since ephemeral messaging is not really a valuable asset and aspeople have discovered, all those messages and pics are kept on people's phones anyway
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The internet is inundated with SnapChat forums devoted to sexting and the objectification of women in an attempt to lure users to use the SnapChat app despite the fact that SnapChat has tried to change its image to be an app for "teens"
With a questionable amount of users, and utilising a tactic of fauxmentum,  it is unclear how many users SnapChat really have since they never disclosed their actual numbers vs. how many they have paid to download their app with no way of verifying if their actual demographic is indeed 18-30. For all we know, SnapChat's primary users could be comprised of Eastern European and Chinese residents who were paid 2 pence to download their app and input their age as 16-18. 
As a bit of digression, a lack of authenticity is what hurt companies such as Yelp and TripAdvisor in the US and global markets when users quickly realised that many of the reviews were being written by people who were paid to write positive reviews (what the industry refer to as "shills"- people who work for content mills and are paid between $.03-.05 cents for every post they make or paid to populate a blog, forum or website to make it seem popular and create more traffic, and even to spread disinformation during a political campaign). These kinds of ubiquitous tactics have been so common in marketing and politics that a study published on Social and Information Networks in 2011 showed that people were losing confidence in the reliability of information that is available on the internet and that an estimated 1/3 of internet traffic is considered fake.
This alarming trend has become so increasingly commonplace today that the FTC in the US finally started making guidelines preventing the spread of fake reviews, despite putting the responsibility on the individual user instead of enforcing the organisations that are paying the users to carry out their dirty work.
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The simple fact is that without full public disclosures, it is hard to say what SnapChat is projecting as their market share when they do not possess important IP such as Facebook and Google, and investors are unaware of exactly how much burn is the result of the redirection of unsavoury marketing tactics in an attempt at "growth". 
A list of these post-IPO unicorns show that startups such as Twitter, Yelp,  Zendesk,  OpenTable, and Zynga did not have a positive net income before multi-billion dollar valuations and pre-IPO unicorns such as Uber, SnapChat, Dropbox might have valuations that are highly inflated.
What is equally of fascinating interest is that Benchmark Capital has been one of the leading VC groups to have created these unprofitable unicorns, in fact, a large percentage in the group with negative net income with billion+ valuations that have had lackluster post-IPO performance are nearly all in Benchmark's portfolio. 
However, Bill Gurley, Partner at Benchmark Capital wrote in his blog earlier this year that we are not in a "valuation bubble," but that rather, we are in a "risk bubble.":
"We are not in a valuation bubble, as the mainstream media seems to think. We are in a risk bubble. Companies are taking on huge burn rates to justify spending the capital they are raising in these enormous financings, putting their long-term viability in jeopardy. Late-stage investors, desperately afraid of missing out on acquiring shareholding positions in possible “unicorn” companies, have essentially abandoned their traditional risk analysis. Traditional early-stage investors, institutional public investors, and anyone with extra millions are rushing in to the high-stakes, late-stage game."
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One has to wonder if his analysis is really indicative of his own compunction? (Mr. Gurley sits on the board of directors at Uber along with his colleague Matt Cohler, the "growth" [fauxmentum?] expert). Benchmark's methodology of unicorn-pushing objectives with companies such as Uber, SnapChat, and Dropbox, in which they have lead early investments and high valuations based on "growth" potential with a high burn rate is something that Bill Gurley has been indirectly criticising in the media within the past year. He went so far as to say that there will be some "dead unicorns" to come in the next few years. How many of us remember Aereo, Fab and Groupon? Perhaps they were not the outliers, but the beginning of a new trend.
And perhaps not surprisingly, but out of conscience, Bill Gurley's media message is really intended for his partners at Benchmark and others in Silicon Valley, whose unchecked tactics have lead to many different Silicon Valley capital firms, such as Google Ventures, Summit Partners and Menlo Ventures to take on high risk, late stage rounds in their portfolio companies. Other VC firms such as Andreessen Horowitz, even encourages these costlier, high risk, late stage, "growth" funds
In either case, "Valuation bubble" or "Risk bubble" seems to me more like an exercise in semantics- whether something is pink or fuschia. Obviously a risk bubble is going to lead to a valuation bubble and last time I checked, a Ponzi scheme is a fraudulent investment operation where where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator.
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Bernie Madoff, the respected, former Chairman of the NASDAQ and investment advisor who went down in a Ponzi scheme scandal that had lasted from the mid-1970s to 2008, when he was arrested on 11 felony charges in the US.
In the 90s unchecked high risk derivatives trading and the real estate valuation bubble lead to what we would know as the stock market crash of 2008. I hope I am wrong, but a continuation of these sorts of "risk bubble" "valuation bubble" tactics will inevitably lead to another global financial crisis. We should all heed Bill Gurley's warning of the impending deaths of those mystical creatures called unicorns, and closely examine these astronomical valuations and the paper billionaire phenomenon.