On Thursday, Twitter erupted into something of a frenzy when venture capitalist Marc Andreessen took up the issue of burn rates at Silicon Valley startups and basically screamed: We're all going to die!:

A number of prominent venture capitalists--including Fred Wilson, co-founder of Union Square Ventures, and Bill Gurley, general partner at Benchmark, have been sounding the alarm bells over cash burn rates for startups in Silicon Valley in recent weeks. They rightfully bemoan the chasing after high-rent offices, bloated employee bases and glitz that look a lot like the terminal phase of the Dotcom bubble, where companies incinerated billions of dollars of cash.

But we're not there yet, and this bubble, if it is one, still has some legs, it seems. Nevertheless, paying attention to your burn rate is critical for any company. If you spend too much, you're likely to imperil future growth and miss opportunities when times get tough.

"Spending money is a dangerous addiction if it slows down your execution," says Ross Fubini, partner at Canaan Partners in San Francisco. "I prefer to learn from the the best companies, which are watching what they are proving about product demand with every dollar."

Mixed Outlook

While the danger of a bubble is certainly present, the current potential bubble is likely to be a lot less broadbased. A quick look at two key indexes shows a decidedly mixed picture.  

The Dow Jones Internet Composite index, which tracks the most active publicly traded Internet stocks, shows that it's trading at a level roughly half of what it was in 2000, at the height of the Dotcom boom.

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By contrast, the Dow Jones Internet Commerce Index, which focuses more exclusively on Internet pureplays, is almost flipped--the current price of the index is nearly twice what it was in 2000.

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While Andreesen's point, that companies burning cash will certainly flame out during a downturn, that's not ncessarily the case for companies with a real business model. 

"A high burn rate for a very fast growing company, with an actively engaged and very big user base might work out, if there is the ability to monetize that user base down the road," says John Backus, founder and managing partner at venture capital firm New Atlantic Ventures. "A high burn rate for a rapidly growing company, with real revenue, that is buying market share, can make good sense."

Backus adds that Uber and Snapchat, with their enormous, "monetizable" user bases, are examples of when burning cash might not be a problem. Uber, which raised $1.2 billion in venture capital this summer, is the most valuable start up in history.  

It's Not 1999

Meanwhile, the startup environment now is substantially different from the one that existed in 1999. The availability of money currently, and the desire to invest, driven in part by the low-rate environment that's existed since the financial crisis, has ratcheted up the value of a small set of  "premium" late-stage companies. And these companies are staying private longer, Fubini says.  

Simultaneously, the amount of money involved now is much lower than fifteen years ago.

"We are talking about private company spending now which we can measure in the tens of billions, versus the 1990s, where public markets measured in the trillions," Fubini says, adding that there was a pervasive sense then that the Internet had changed everything, and money was poured haphazardly into companies across all industries. And that's not the case today.

For those premium companies on the receiving end of cash today, the real challenge is not being stupid with the seemingly endless supply of money that investors want to pour into them. And at the end of the day, you still have to be able to generate revenue and profit. 

Or, as Backus says: "Any idiot can sell a dollar bill for 80 cents. It takes a real entrepreneur to sell a dollar bill for $1.25."