As an ever increasing amount of money seems determined to chase an ever greater number of questionable ideas, it's perhaps not surprising that inquiring minds want to know: (1) Are we really in a tech bubble? (2) If so, when will it pop? (3) What should I do in the meantime?

I'm not sure about Question 1:  I've heard some distinguished valley wags insist we're not in a tech bubble, and that current valuations are justified, but I also know many technology journalists feel certain the end is neigh, and view the bubble as an established fact of life - see here and here.  The surge of newly-minted MBAs streaming to start-ups has been called out as a likely warning sign of the upcoming apocalypse as well.

I have the humility to avoid Question 2: as Gregory Zuckerman reviews in The Greatest Trade Ever, even if you're convinced you're in a bubble, and you're right, the real challenge is figuring out when to get out.  Isaac Newton discovered this the hard way in the South Sea Bubble, leading him to declare, "I can calculate the motions of heavenly bodies but not the madness of people."

I do have a thought about Question 3, however - what to do: reconsider digital health - serious digital health.

Here's why: Instagram and similar apps are delightful, but hardly essential; most imitators and start-ups inspired by their success are neither.  It doesn't strain credulity to imagine investors in these sorts of companies waking up one day and experiencing their own Seinfeld moment, as it occurs to them they've created a portfolio built around nothing. "It doesn't strain credulity to imagine investors in these sorts of companies waking up one day and experiencing their own Seinfeld moment, as it occurs to them they've created a portfolio built around nothing." -- David Shaywitz

I confess to believing that health is different: I'm overwhelmed by the extent of real, unmet need - by the need for meaningful innovation to impact the lives of people and patients.  The fundamental human need is there - and a market for innovative products exists; there's real money here, and real business opportunities for companies that are able to deliver and demonstrate value.

To this point, as I've previously discussed (see here and here), a lot of the activity in digital health seems to have taken inspiration (understandably) from the efforts in the tech space more broadly - there's a lot of interest in consumer tech and wellness apps, and what seems to be an ever-increasing number of incubators that have popped up to support this emerging ecosystem.

The emphasis of health entrepreneurs and incubators on what I'd describe as "small ball" is understandable; the upfront investment tends to be small, and the initial development cycle time tends to be short - you often can go from concept to prototype extremely rapidly (not a bad thing, incidently - see here).  You also avoid a lot of the complexity of healthcare, the potential need to deal with multiple stakeholders including regulators and hospital systems that seems to have frightened so many VCs.

The real challenge and exceptional opportunity here, however, is to see if digital health (which I use to encompass everything from mobile health to healthcare IT) can move from these well-intentioned but often fairly primitive efforts to something more serious, and of more enduring value.

The dilemma here is almost certainly figuring out where to start.  On the one hand, some of the initial forays seem so flimsy that it's difficult to imagine them evolving into a breakthrough offering - but presumably that's what people also used to say about thefacebook.

On the other hand, efforts that start off intending to disrupt the entire healthcare ecosystem and rebuild it anew seem destined to fail, given the entrenched and enmeshed players; my sense is this has been the experience of a lot of Sand Hill Road's tech investors to date, which is why so many are leery of this space.  Navimed Capital's Bijan Salehizadeh has a good point when he observes there are "too many outside forces."

I've got to believe there's a middle ground here - opportunities for creating (and subsequently investing in) digital health companies tackling problems serious enough to be worthwhile, but focused on an existing pain point, and grounded enough to achieve success and returns without requiring the wholescale reinvention of the entire healthcare system (at least at first....).

Castlight Health (which seeks to introduce transparency to healthcare costs) is perhaps the most advanced example of how this approach can work, addressing a significant pain point with a service it can sell immediately to business customers, while offering the possibility of profound disruption down the road.  Significantly, Castlight focuses - you might say leverages - the complexity of the healthcare system, rather than gingerly avoiding this important fact of life.  Perhaps not surprisingly, investment in Castlight has been led by several of the Valley's leading healthcare investors, including Venrock's Bryan Roberts and Maverick Capital's David Singer (I know both but have no conflicts to disclose).

If the growth of tech continues unfettered, everyone stands to do well.  But if the bubble should burst, I'd suspect investors who own companies like Castlight Health may be best positioned to weather the storm.  Unfortunately, there's doesn't seem to be nearly enough companies like Castlight Health to go around.

There should be.

David Shaywitz is an Adjunct Scholar at the American Enterprise Institute