41,000,006 reasons why I think we're in a bubble • Hacker News Board

Re: 41,000,006 reasons why I think we're in a bubble

#111

Post by frederickcook » Thu, Mar 24, 2011, 1:52 PM UTC

Best summary of bubble/non-bubble debate I've read yet:

[Are we in a bubble?]

“Maybe,” says Naval, “Certainly valuations are creepy up quickly in all stages of deals. On the other hand, 10 years ago when we all felt like this last time the total market size for any company was at maximum 100 million potential users. Now we’re in the billions of users. Facebook connections alone bring 500 million, Twitter 200 million. 10 years ago we only connected for brief periods of time when we were at our PCs. Now we’re connected to apps all the time, everywhere we go. So maybe there’s a bubble. It’s hard to say. But we’re also looking at unprecedented opportunity.”

- http://www.bothsidesofthetable.com/2011/03/22/the-magic-midn...

Re: 41,000,006 reasons why I think we're in a bubble

#112

Post by brown9-2 » Thu, Mar 24, 2011, 1:52 PM UTC

pclark wrote: post #8

Hmph. If nothing else, posts like this are terribly offensive to the entrepreneurs that dedicate their lives to products like Color. Did anyone consider that maybe Sequoia, who have invested in companies that make up over 10% of the NASDAQ know what they are doing? Companies like Color, AdKeeper and Flipboard have "crazy" valuations based on the founders having ridiculous resumes. They have all created billions of do…

The idea that criticism is insulting, or that we should implicitly trust investors because they have been successful in the past is a bit ludicrous.

I'd prefer to see evidence of success before assuming it will happen.

Re: 41,000,006 reasons why I think we're in a bubble

#113

Post by danenania » Thu, Mar 24, 2011, 1:54 PM UTC

api wrote: post #107

danenania wrote: post #94

Earlier quoted context omitted.

Good post. It seems common for participants in an industry undergoing a bubble to concoct elaborate industry-specific theories to explain a sudden influx of new money when the real cause is, well, exactly that: a sudden influx of new money. Unfortunately, we've been trained to correlate the numbers in our bank accounts with actual value, but the link has been all but severed for a long time. It seems unbelievable tha…

I don't think anyone is really being fooled anymore. They just get the game, and understand that cheap-money bubbles are a normal part of that game.

Well, a bubble is the result of people being fooled on an industry or economy-wide scale, so I think the fact that we still have them shows that plenty are fooled. I agree that many savvy players will participate with full knowledge of what's happening, but this only works for them because of all the suckers waiting in line.

Re: 41,000,006 reasons why I think we're in a bubble

#114

Post by Keyframe » Thu, Mar 24, 2011, 1:55 PM UTC

edw519 wrote: post #30

I don't know about the rest of the world, but we sure are in a bubble here at Hacker News. There seems to be a real disconnect between what people want to build/invest in and what people in the real world actually need and want to pay for. Just as sample of what I've witnessed in the past few years: Ask HN: How do you like my file sharing app? Ask HN: How do you like my social app for niche ? Ask HN: How do you like…

I'm fairly often here, but I've never, even once, saw "How do you like my game?" except for that little airplanes game (but it was mentioned in the comments, not a post)... care to provide me with some links to those games? I'm interested to see those.

Re: 41,000,006 reasons why I think we're in a bubble

#115

Post by tyng » Thu, Mar 24, 2011, 1:57 PM UTC

wat55 wrote: post #96

tyng wrote: post #44

The $41m injection might well kill the company. I've never seen startups with too much capital early on to become the next Google/Facebook/Twitter - you lose your chance to become "relentlessly resourceful"!

Sorry, but your company dies when you have no more cash. The $41 million will help them survive for a long time.

But the point of the $41m from an investor's perspective is to get them to scale, not survive.

Re: 41,000,006 reasons why I think we're in a bubble

#116

Post by trotsky » Thu, Mar 24, 2011, 1:57 PM UTC

cynicalkane wrote: post #109

danenania wrote: post #94

Earlier quoted context omitted.

Good post. It seems common for participants in an industry undergoing a bubble to concoct elaborate industry-specific theories to explain a sudden influx of new money when the real cause is, well, exactly that: a sudden influx of new money. Unfortunately, we've been trained to correlate the numbers in our bank accounts with actual value, but the link has been all but severed for a long time. It seems unbelievable tha…

The current inflation rate suggests that the supply and demand for cash is in balance. This might not be true, but you won't disprove it with unsourced conspiracy theories.

There are a quite a number of ways to measure inflation, the fed's version of it is quite narrow. If you look at wholesale commodities there has been a dramatic increase over the past year.

Here is an interesting article that appeared in the WSJ opinion section a few weeks ago. I found it to be quite insightful, and it presents a workable explanation about why we might currently be causing inflation and not wanting to admit it.

The Federal Reserve Is Causing Turmoil Abroad: http://www.marketwatch.com/story/george-melloan-the-federal-...

Re: 41,000,006 reasons why I think we're in a bubble

#117

Post by tyng » Thu, Mar 24, 2011, 1:58 PM UTC

yannickmahe wrote: post #73

What I don't get, economically speaking, is how we can both be in a bubble and in a barely recovering economy. In other words, how do these angels and VCs still have that much money to invest in such companies?

Ever heard of the term "two-speed economy"? It's happening right now on a much larger scale in Australia.

Re: 41,000,006 reasons why I think we're in a bubble

#118

Post by reason » Thu, Mar 24, 2011, 2:00 PM UTC

haploid wrote: post #90

reason wrote: post #43

Earlier quoted context omitted.

That's really unfair. Whilst I agree there's a disconnect, I wouldn't say it's specific to HN, but rather to the entire industry. The reason why you see those Ask HN posts is because people are looking around and realizing that those types of services have been getting tons of funding and attention. There's a disconnect, but it's in the social web world, not just HN. And I would say HNers are trying to capitalize on…

I disagree. I think the reason you see those kind of posts is that those kind of applications are low-hanging fruit. The development of Yet Another File-Sharing App or Social Media Service can be accomplished by anyone with a "Learn Rails In 21 Days" book and a credit card. Companies that are also getting tons of funding right now are biotechnology and solar energy startups, but I have never seen anything along the l…

Yeah, really good point – I agree for the most part and would say that it's really a combination of both.

Re: 41,000,006 reasons why I think we're in a bubble

#119

Post by svrocks » Thu, Mar 24, 2011, 2:02 PM UTC

We're not really in a bubble until Color.com (NSDQ: COLR) IPOs at a $500MM valuation and quadruples on its first day of trading.

And then we're not REALLY in a bubble until Air.com, the leader in the social breathing space IPOs at twice that.

Re: 41,000,006 reasons why I think we're in a bubble

#120

Post by notahacker » Thu, Mar 24, 2011, 2:03 PM UTC

bhousel wrote: post #80

toddmorey wrote: post #70

As someone else commented, Facebook could easily add a feature to show pictures from friends geotagged with your current location. (Not a perfect replacement but a lot of the magic.) Apple also appears to be getting aggressive in this space with the new version of mobile me. Color has an interesting vision, but I think traction as a photo sharing add-on is going to be tough once the social network and the mobile devi…

What is far more likely is for Color to try to get themselves acquired by Facebook. If this is their real company strategy, the $41M investment actually makes sense.

I'd say it's the opposite, it's made them very expensive to acquire. It's not inconceivable that with the right team and a very impressive tech demo Facebook might have been prepared to sink >$41 million into a strategic aqui-hire at a very early stage.

Now to give the VCs a return on their investment they're probably expected to exit at north of a billion, which means they're going to have to show Facebook something special in terms of revenue or user-interaction generation or targeting they can't get from any of the many other smart developers who've taken less funding for their location startups.