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American Innovation Lies on Weak Foundation?

nytimes.com

21–30 of 66 posts

Re: American Innovation Lies on Weak Foundation?

#21

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

This is simply not true. The stock market is notoriously short sighted. Many investors are playing a game of musical chairs/the bigger fool because they know the economy works in a cyclical fashion with alternating booms and busts. So during boom times (now) investors will continue to push money into the market, pumping up PE ratios, with each investor thinking he/she is smart enough to exit before the next bust. If anything, the markets are even more short-sighted today due to the increase in popularity of arbitrage-seeking algorithmic and high-frequency trading, which is the anthesis of value investing.

I'd argue we are seeing the same mechanisms at work in the private tech investing space, and that once companies start to go under, those who have not exited from their investments are likely to get burned big time.

Re: American Innovation Lies on Weak Foundation?

#22

The iPhone in your pocket has more computing power than the Voyager spacecraft that left the solar system two years ago Sigh..people who use this example don't understand engineering. The Voyager doesn't need much power to do its job. An iPhone needs a lot of power to surf the web and play videos. An iphone also has more computing power than a Casio watch that you can buy a Walmart, because the watch doesn't need muc…

If the Voyager comparison doesn't work for you, then try the Cray-1 (or even the Cray X-MP, if your phone is a recent high-end model). "Doing its job", for most modern devices, is squandering (comparatively) enormous amounts of computational power and communications bandwidth to pretty up some pretty mundane tasks, most of which amount to reading tiny amounts of text, while showing you ads.

Re: American Innovation Lies on Weak Foundation?

#23

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

This is simply not true. The stock market is notoriously short sighted. Many investors are playing a game of musical chairs/the bigger fool because they know the economy works in a cyclical fashion with alternating booms and busts. So during boom times (now) investors will continue to push money into the market, pumping up PE ratios, with each investor thinking he/she is smart enough to exit before the next bust. If…

But PE ratios today, unlike in the late 90's, are not that high. Stocks, especially large cap technology and large-cap consumer like Nike and Disney, may still be a good value

Re: American Innovation Lies on Weak Foundation?

#24
post #12
post #2

This whole article is assuming that innovation comes from money, and specifically from the money labeled "R&D" in the budgets of nations and companies. Yet, most startups started on shoestrings. Then they got investment from VC firms. These sources of innovation don't come from NSF or Microsoft Research. And American innovation comes from far more than money. The culture of American innovation is a huge factor, which…

I don't think startups can really be considered innovative in the way that the article is talking about. Certainly startups can have very creative products, but in the end they almost always apply existing technology, whereas the article is more concerned with actually advancing science, engineering, or the arts. That's not to say that startups are unimportant, just that I don't think anyone would argue it makes sens…

Specifically, I think rifung is referring to the very high cost of fundamental research that startups don't have to incur, especially given the slow return on such investments.

Re: American Innovation Lies on Weak Foundation?

#25

The iPhone in your pocket has more computing power than the Voyager spacecraft that left the solar system two years ago Sigh..people who use this example don't understand engineering. The Voyager doesn't need much power to do its job. An iPhone needs a lot of power to surf the web and play videos. An iphone also has more computing power than a Casio watch that you can buy a Walmart, because the watch doesn't need muc…

Voyager needed computational chops to do things like error correction and starfinding and etc, I suspect that NASA stuffed as much cpu in there as they could get away with, considering the whole 'radiation' thing.

Or they went with as little as they needed. When it comes to radiation, the older/bigger circuit paths on silicon are more robust. I'd bet they used the least-powerful cpu they felt would do the job.

Re: American Innovation Lies on Weak Foundation?

#26

> Corporate executives, their compensation tied overwhelmingly to short-term gains in the market value of their companies, may be responding accordingly. I hear this all the time, and it's absurd. The high P/Es of innumerable companies (like Amazon) are compelling evidence that investors are well aware of the long game companies play and they approve of it. The charge that companies are eating their seed corn to sati…

This is simply not true. The stock market is notoriously short sighted. Many investors are playing a game of musical chairs/the bigger fool because they know the economy works in a cyclical fashion with alternating booms and busts. So during boom times (now) investors will continue to push money into the market, pumping up PE ratios, with each investor thinking he/she is smart enough to exit before the next bust. If…

Which companies do you believe are eating their seed corn, and are you shorting their stock?

Re: American Innovation Lies on Weak Foundation?

#27

Earlier quoted context omitted.

So high P/E is evidence of a "long game," and traders operate based on their best estimate of companies' fundamentals? What are you buying, because I'd like to short it.

I've had AMZN since its IPO. AMZN has regularly crushed the short investors for 20 years now.

short sellers who don't understand the subtlety between 'cash from operations' vs. 'net income '

Re: American Innovation Lies on Weak Foundation?

#28
US innovation?

Okay, Intel is now at, what, 14, 10, 7 nm?

Intel can put how many thousand cores in a single processor?

There was the Human Genome Project and Craig Venter.

The US did TCP/IP, IP and BGP routers, and the Internet.

James Simons did a lot, he won't talk about, but that resulted in a lot of money.

Can look at what is going on in fusion at Princeton, Argonne, Fermi, and LLNL.

Can see what L. Breiman did in classification and regression trees and, then, random forests.

Of course the USAF did GPS, which is accurate to one inch, and now farm tractors can plow very accurately due to GPS.

The US has done well with carbon fiber materials.

But, IMHO, relatively well informed, is that the US has powerful, valuable innovation coming like drips of a leaky faucet when it should be raging like a massive, wild river.

Why the difference? The people managing the money don't have even as much as a weak little hollow hint of a tiny clue about how to do innovative projects successfully. As soon as they see something beyond what they knew in middle school, they roll their eyes, throw up their arms, scream about blue sky, intellectual fun, games, and self-abuse, etc. That's grotesque incompetence.

The main exception is the innovation for US national security. A second exception is medical innovation, especially funded by the NIH and the research hospitals.

Silicon Valley? It has history majors with LLBs and/or MBAs who are 99 44/100% non technical looking for routine software for yet another social, mobile, sharing, membership, consumer thingy, throwing their line into their backyard above ground pool hoping to hook another Facebook.

We're talking totally clueless. Hopeless. Their ability to identify, formulate, evaluate, and pursue powerful, valuable technical innovation? Zip, zilch, or zero. Their technical competence? Even worse. Did I mention hopeless?

Instead, just got to have people running projects and allocating funds who actually understand how to innovate. E.g., need an Andrew Viterbi, Gordon Moore, Craig Venter, James Simons.

For Bill Gates, Mark Zuckerberg, go back to Harvard, complete a good education, and then try to allocate some funds effectively. Page/Brin -- back to Stanford, guys.

I've seen a lot in innovation, and what I've seen in the decision makers in Silicon Valley is the lowest, lower than I would ever have suspected could exist. And their ROI? Actually, on average, poor.

Blunt fact: Could hold a convention in a commercial airplane wash room of all the Silicon Valley venture partners and CEOs qualified for a problem sponsor position at NSF. Sorry 'bout that.

We're talking business development people? Marketing guys? Hold on while I go for a big swig of the pink stuff, Pepto Bismol. Darn, too late -- upchucked, on the sheared 100% wool carpet. Those people believe that the crucial core of the innovation they are looking for is some C++ code on Linux done by self-taught hackers.

At least when the US DoE and NSF fund fusion research, they don't look for really big breakthroughs from 10 year old naughty boys out back playing with matches.

In the past there has been innovation, also, when there was money enough involved and people ready to do something: E.g., clocks. Why? Well, in 1800 a wooden ship good for open ocean sailing was big time expensive. But on a successful voyage, such a ship could make a lot of money. But, the ship needed to know its longitude -- latitude was much easier. For longitude, ..., right, need a really accurate clock. Newton knew that, too. So, at whatever effort, ships got some quite accurate clocks. Else the ships too often ended up on the rocks.

Innovation can be done; it has been done; here in the US now we should have a raging, wild river of innovation; instead, we have a drip, drip.

Net, the people running and funding the projects are technically incompetent. E.g., they just didn't study the right stuff, long enough, hard enough in school, and, gotta tell you, now, away from graduate school, no way will they reinvent that material.

Re: American Innovation Lies on Weak Foundation?

#29
post #10

What about the people angle (as in People, Process, Technology)? I don't know how it used to be 20, 30 or 50 years ago, but if you have sat in a graduate science/technology/engineering course classroom in any US university in the last few years and surveyed the demographic profile of your fellow classmates you might notice something. The percentage of students of Asian ethnicity will probably outnumber all other grou…

Here in Canada, the post 9/11 climate in the U.S. has sent a lot of top talent our way. In general, the international perception is that the U.S. is much more hostile to foreigners than it used to be, especially muslims. This is backed up by the fact that it's so difficult to stay in the U.S. after earning a degree there. If someone is good enough to grab a spot in a top U.S. university, why would you turn them away when they want to stay?

The main thing holding Canada back is a similar increasing focus on "commercializable" research at the expense of basic science. Long-term commitment to excellence in basic science is what opens up new fields. Preferentially funding research with the latest buzz-words tends to make a country a follower of trends.

Re: American Innovation Lies on Weak Foundation?

#30

Earlier quoted context omitted.

This is simply not true. The stock market is notoriously short sighted. Many investors are playing a game of musical chairs/the bigger fool because they know the economy works in a cyclical fashion with alternating booms and busts. So during boom times (now) investors will continue to push money into the market, pumping up PE ratios, with each investor thinking he/she is smart enough to exit before the next bust. If…

But PE ratios today, unlike in the late 90's, are not that high. Stocks, especially large cap technology and large-cap consumer like Nike and Disney, may still be a good value

I'm not sure if I would call them "not that high", the CAPE is still fairly high by historical comparison. [1] Just not absolute lunacy like around 2000.

[1] http://www.multpl.com/shiller-pe/

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