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Sam Altman's Bubble Talk Bet Is 1 Year Old

blog.samaltman.com

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Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#41

Post by JonFish85 »

trsohmers wrote: post #10
projectramo wrote: post #4

Here are his three bets reproduced for comments: 1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. Seems he is on track…

Cruise (YC W14) was recently acquired by GM for $1B, so if he picked one earlier class the $3B bet would be attainable in my mind. Not to slight any W15 companies, I just haven't seen much.

I'm really curious whether that $1B is truly $1B, or if that's the sticker price based on some crazy metrics they have to hit, and the actual value of the deal is in the $150-$250m range (not that that's anything to sneeze at either), plus unlikely incentives.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#42

Post by bunkydoo »

I would not call tech industry a bubble by any means. However, since my work took me away from Silicon Valley - I have to say there are almost no startups that have really changed my life in any noticeable way. All I have watched happen is my new smartphones and laptops get thinner, and the apps on them switch to flat design language. Glass was neat, more novelty though. Cardboard was cool, also a novelty - plus I don't game so VR doesn't effect me (yet) and on top of that, neither of these were made by a startup - but a huge corporate entity. I thought back in 2010 I would be experiencing my entire tech life through Augmented reality by at least 2015. Needless to say, I am not. :(

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#43

Post by deong »

tacos wrote: post #40
sama wrote: post #24

I feel better about this now than I did a year ago. Proposition 1 is up about 50% in the first year, and proposition 2 is up about 65%. The main point remains--we spend far too much time talking about whether or not startups are in a bubble. It's boring and it gets in the way. Sometimes it will be true and sometimes it won't, but the stories claiming a huge bubble for the last 10 years have been generally wrong. It w…

I question your valuations... they're neither public market numbers nor completed acquisitions. You're using the bubble to validate your assumptions that you're not in a bubble.

Well, that's kind of what you have to do. The definition of a bubble is contingent on the burst at the end. If it never bursts, it wasn't a bubble. So you take today's valuations (which you assume are bubble-inflated) and then compare them to the valuation at some future date. If the valuations are a lot lower, then there was a burst and thus a bubble. If not, no bubble (or it's still ongoing).

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#46

Post by mrtron »

Pxtl wrote: post #33
hindsightbias wrote: post #26

Protip: Bubbles always last 18 months longer than you think they can.

I figured the Canadian real-estate bubble would pop like 5 years ago. Not so much.

If the 'bubble' pops now, prices will still be higher than they were 5 years ago. That makes your prediction extra bad.

Unless you normalize by currency, in which case its just a fairly bad prediction.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#47

Post by btown »

JonFish85 wrote: post #41
trsohmers wrote: post #10

Earlier quoted context omitted.

Cruise (YC W14) was recently acquired by GM for $1B, so if he picked one earlier class the $3B bet would be attainable in my mind. Not to slight any W15 companies, I just haven't seen much.

I'm really curious whether that $1B is truly $1B, or if that's the sticker price based on some crazy metrics they have to hit, and the actual value of the deal is in the $150-$250m range (not that that's anything to sneeze at either), plus unlikely incentives.

For readers unfamiliar with this type of term: https://en.wikipedia.org/wiki/Earnout

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#48

Post by projectramo »

raldi wrote: post #17
projectramo wrote: post #4

Here are his three bets reproduced for comments: 1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. Seems he is on track…

Another comment in this thread claims to have done the same analysis and come to the opposite conclusion. But neither of you shared your math. Could you show the analysis that led to your conclusion, so we can compare it to the other one?

I concede i didn't do a lot of math, and I agree with the points raised here:

1. That the valuation preference is more relevant than the value cap. Altman is well aware of this, and I think himself might have brought it up in an interview (with Kara Swisher?). However, for our purposes, I am using the value cap as a measure of valuation for ease of use.

2. I agree with the other comment that one or two companys in the pool are doing the heavy lifting. There is a power law distribution.

So for the first preduction, i just looked at Uber's last value (again, I didn't account for the preference so this is misleading) at $68 Billion and think yes, Uber + these other companies will probably get up to $200 in another 4 years.

Similarly, I'll just pick the top 1 or 2 companies in a pool and guess that if we get over 20% of the value in one year then I just extend linearly.

Its not detailed, its just a quick mental short cut.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#49

Post by projectramo »

vkou wrote: post #28
projectramo wrote: post #4

Here are his three bets reproduced for comments: 1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. Seems he is on track…

A single bad IPO from that list of firms (Which will likely happen in a climate of pessimism, even if we don't hit a recession) will be disastrous to their aggregate valuation, even if they stay private. I feel that the only way Sam will win the bet is if none of the firms in #1 or #2 will IPO between now and 2020.

True, but conversely, one standout that does well could alone hit the target. If you believe that the successful companies follow a power law distribution, you'd expect something like that.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#50

Post by projectramo »

jessedhillon wrote: post #19
projectramo wrote: post #4

Here are his three bets reproduced for comments: 1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. Seems he is on track…

Regarding #1, this means that all six will need to double their value, or some of them will need to grow by more than 100% to compensate for those which don't. Five years is a long time, but 100% is also a lot of growth. There aren't too many tech companies which I can think of who could provide adequate comps, but if we use GOOG as a generic "tech company": - from 2012-present they went from $350 - ~$725 - from 2005…

I don't think they will grow evenly though. So the target is $200 Billion and Uber alone is "valued" (I agree that this includes preferences) at $68B. So if Uber "just" tripled its value and everyone else went to 0, he would still hit his prediction.

You need one big standout for him to be right.

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