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

#151

Post by scarmig » Thu, Mar 24, 2011, 2:52 PM UTC

pclark wrote: post #51

arkitaip wrote: post #28

Earlier quoted context omitted.

What's worrying is that these guys are Bain Capital, Sequoia Capital, and Silicon Valley Bank - some of the most influential tech investors in the world. They should know better. That or they have some incredible inside info on the Color team and their product.

They obviously have incredible inside information - you think they invested based on the Techcrunch post? Is it silly day on Hacker News or something?

For real! These guys are masters of the universe. Obviously they couldn't massively overvaluate something.

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

#152

Post by cynicalkane » Thu, Mar 24, 2011, 2:54 PM UTC

trotsky wrote: post #116

cynicalkane wrote: post #109

Earlier quoted context omitted.

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 t…

The fed's version is the PCE/PI, which is the most general measure of inflation that is theoretically possible. You might have that confused with the CPI, which is a different index, the one you usually see in the news.

Finance is pretty easy to understand, relatively speaking, but the signal-to-noise ratio is far too high. The average finance news site tends to be a wretched hive of investment advice nuts and unreliable emotional opinionators.

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

#153

Post by ErrantX » Thu, Mar 24, 2011, 2:54 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…

There is also a huge (multi-Billion dollar) "industry" for corporate level software that is under serviced in many areas (i.e. the software is churned out by large development houses and is below par).

Yet very few startups seem to target these areas.

We took a product into a badly serviced industry and were wildly profitable within about a year on minimal funding. I always worry that there is a growing amount of speculation on "great teams"/social media and less focus on creating useful stuff that companies/people want/need (and, damn, there is a lot of it).

My boss always moans when I talk to him about startups and VC's, he usually says "if you give me $100,000 and 6 months I could come out with at least 5 profitable pieces of software and sales to return your investment by the end of the next year".

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

#154

Post by swlkr » Thu, Mar 24, 2011, 2:56 PM UTC

dtby wrote: post #135

haploid wrote: post #90

Earlier quoted context omitted.

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…

More to the point, people lack any domain experience. Don't get me wrong: it's cool to be an awesome hacker... but if you don't know about anything outside of hacking.. chances are some neck-beard somewhere has already solved all of the problems of which you are aware.

neck beard, that's awesome and so very true.

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

#155

Post by 18pfsmt » Thu, Mar 24, 2011, 2:56 PM UTC

blantonl wrote: post #52

MatthewPhillips wrote: post #36

Earlier quoted context omitted.

I understand that. My comment was why invest in scaling when the need to scale hasn't been established?

Bain Capital, Sequoia Capital, and Silicon Valley Bank, the ones who are funding this, see great potential in the team that is bringing color to market. They've given a long runway to Color, and if the airplane takes off those investors reap far more rewards then they would have if Color is wildly successful and other investors were able to participate in subsequent rounds of investment. I cannot emphasize enough tha…

I believe Silicon Valley Bank does debt financing rather than equity financing. On top of that, I believe all 7 co-founders are worth over $1M each and several are worth multiple $M with multiple startup exits over the last 10 years.

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

#156

Post by runevault » Thu, Mar 24, 2011, 2:58 PM UTC

ErrantX wrote: post #153

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…

There is also a huge (multi-Billion dollar) "industry" for corporate level software that is under serviced in many areas (i.e. the software is churned out by large development houses and is below par). Yet very few startups seem to target these areas. We took a product into a badly serviced industry and were wildly profitable within about a year on minimal funding. I always worry that there is a growing amount of spe…

Selling software to large corporations however requires significant support effort and bending over backwards to make the sale. I seem to recall an article about hunting elephant versus deer that covered the issues quite well.

Dealing with just the development side of it in my day job, no way does dealing with them on my own or in a small startup team appeal.

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

#157

Post by Tyrannosaurs » Thu, Mar 24, 2011, 2:59 PM UTC

dstein wrote: post #126

pclark wrote: post #35

Earlier quoted context omitted.

Why would you see what they need $40m from when you are on the outside looking in on a single product? Seriously.

There's absolutely nothing in the Techcrunch article that would suggest this company is doing anything so technologically complex that it can't be easily duplicated. They even admitted they have no concrete plan (or proof) they can monetize.

The one thing in their favour (potentially) is network effects.

If they can get everyone using their software before someone else comes along then the collaborative nature of it gives them a significant advantage in that there are more people you can collaborate with.

But even that isn't a particularly strong lock in when the apps are free or cheap and available near instantly anywhere you have a data signal. Someone using a different app? Just go grab it - it's not like convincing all your friends to leave Facebook to go somewhere else.

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

#158

Post by ErrantX » Thu, Mar 24, 2011, 3:01 PM UTC

runevault wrote: post #156

ErrantX wrote: post #153

Earlier quoted context omitted.

There is also a huge (multi-Billion dollar) "industry" for corporate level software that is under serviced in many areas (i.e. the software is churned out by large development houses and is below par). Yet very few startups seem to target these areas. We took a product into a badly serviced industry and were wildly profitable within about a year on minimal funding. I always worry that there is a growing amount of spe…

Selling software to large corporations however requires significant support effort and bending over backwards to make the sale. I seem to recall an article about hunting elephant versus deer that covered the issues quite well. Dealing with just the development side of it in my day job, no way does dealing with them on my own or in a small startup team appeal.

It depends which industry you pick - but often the problems are over-hyped. It's true; I had the same trepidation you talk about when first having to face doing sales... and at the start it can be a disaster ;) but you can soon pick up the tips & tricks needed to sell to corporates.

In fact; as hackers we are actually at an advantage selling to corporates, so long as you "get" the process, because they tend to be "attuned" to the sort of tactics employed by sales types. Often you can cut through that using feigned ignorance and a little simple social engineering :)

And at the end of the day... once you have a little traction hiring a dedicated sales guy is easy :) Many startups do exactly that when completing the first major round.

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

#159

Post by klenwell » Thu, Mar 24, 2011, 3:07 PM UTC

grellas wrote: post #134

I guess it is a matter of terminology but I have to disagree on this one. A bubble is all-pervasive and extreme. It represents a systematic investment mania where everything becomes surreal. People sell vast tracts of land for a prized tulip. Junk companies with nothing to offer but a vague concept about revolutionizing how this or that will be done owing to some new phenomenon such as the internet make serial stock…

This is a great point. To condense what you said a bit: the dot-com bubble followed the democratization of stock trading (which itself got a technological assist from the internet). Lots of people, myself included, who never bought a stock start using online trading accounts. The housing bubble followed the democratization of home buying. Lots of people who never had bought a house before (or a second or third house) start buying houses.

The question I've been asking for a while now: what's the next great financial innovation that's going to revolutionize access to some market to which average people don't currently have easy access?

I want to be on the upside of the bubble.

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

#160

Post by runevault » Thu, Mar 24, 2011, 3:19 PM UTC

ErrantX wrote: post #158

runevault wrote: post #156

Earlier quoted context omitted.

Selling software to large corporations however requires significant support effort and bending over backwards to make the sale. I seem to recall an article about hunting elephant versus deer that covered the issues quite well. Dealing with just the development side of it in my day job, no way does dealing with them on my own or in a small startup team appeal.

It depends which industry you pick - but often the problems are over-hyped. It's true; I had the same trepidation you talk about when first having to face doing sales... and at the start it can be a disaster ;) but you can soon pick up the tips & tricks needed to sell to corporates. In fact; as hackers we are actually at an advantage selling to corporates, so long as you "get" the process, because they tend to be "at…

I may well be somewhat jaded because my job is coding for the financial side of things. When you're dealing with money and banks things... suck. A lot.