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“A solution in search of a problem” is a low-rates phenomenon

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Re: “A solution in search of a problem” is a low-rates phenomenon

#31

Post by mberning »

PaulHoule wrote: post #18

I know interest rates have a strong effect on tech stocks but my understanding is that they have their biggest impact on boring but capital intensive businesses such as cars and buildings. For instance Facebook was said to spend $10 billion on the "metaverse" last year but spending on building construction was about $1.5 trillion https://www.zippia.com/advice/us-construction-industry-stati... that said, total spendin…

Homes and cars are simply out of control. People are getting mortgage sized loans just to buy a family car. Something which will become worthless over 10 years of use. Getting a mortgage on a home is now a non-starter for a huge swath of the population. I suppose I can somewhat understand the price of homes going up. It's a durable item that, if reasonably maintained, has an unlimited useful life. A car on the other hand, no matter how well maintained, will become worthless in a decade. Freewheeling monetary policy does not just impact which cars a person is able to buy. It more insidiously impacts that cars which manufacturers choose to design and build. Even entry level cars are packed with features and electronics and carry a near $30k price tag. It's not going to be so easy for the industry to get back to building simple and cheap cars.

Re: “A solution in search of a problem” is a low-rates phenomenon

#32

Post by Shinmon »

Solutions in search of a problem (SISP) are not necessarily tied to low interest rates.

What might be tied to them is that companies with such solutions live longer because money is cheap. However, if you never make money, noone will give you money either.

I think SISPs are a typical problem for tech-savy founders who think some kind of solution is really cool, because it solves them a problem. The problem however was never real. Engineers just tend to automate things that they have to do once a year and takes them about 1h. Automating it, is just more fun than actually doing it.

Even worse with university spin off. They almost always start with a technology that solves problem thought of in research proposals.

Re: “A solution in search of a problem” is a low-rates phenomenon

#33

Post by malfist »

sokoloff wrote: post #3
malfist wrote: post #2

I thought this article had a good rule on how to differentiate dead end "solution in search of a problem" inventions and ones that might be successful. > whether the technology does something that would be useful if everyone had it, but is relatively useless at small scale I've often told my partner a lot of his "smart home" devices are solutions in search of problems. It seems to ride this line. Probably why despite…

What about smart home devices would be useful if everyone had them but useless if only at your house? (I’m a tinkerer but still reluctant to deploy most smart home solutions because they usually fail the household acceptance factor.)

I think there's a lot to be said about smart home devices and accessibility. I could imagine voice assistants controlling devices for those with vision impairments or mobility impairments would be a huge boon.

Re: “A solution in search of a problem” is a low-rates phenomenon

#34

Post by xyzelement »

obblekk wrote: post #24

I really dislike these takes on low interest rates. As far back as the 70s (when interest rates were 8-15%), there have been random business ideas being started and shutdown (pet rocks, every airline ever, etc.). We don't remember those because they shutdown 40 years ago. Today, we only see the successful ones that survived (walmart, fedex, etc.). There's a legit question: why have long term interests declined over t…

Hang on... This sub-thread is venturing into the territory of lumping airlines with "solutions in search of a problem" and that just doesn't make any sense to me.

You can argue that airlines have not returned on the capital (it may be true, I have no idea) but there's clearly demand and utility for the product, as evidenced by nearly every flight being nearly or completely full at all times.

Re: “A solution in search of a problem” is a low-rates phenomenon

#35

Post by xyzelement »

mberning wrote: post #31
PaulHoule wrote: post #18

I know interest rates have a strong effect on tech stocks but my understanding is that they have their biggest impact on boring but capital intensive businesses such as cars and buildings. For instance Facebook was said to spend $10 billion on the "metaverse" last year but spending on building construction was about $1.5 trillion https://www.zippia.com/advice/us-construction-industry-stati... that said, total spendin…

Homes and cars are simply out of control. People are getting mortgage sized loans just to buy a family car. Something which will become worthless over 10 years of use. Getting a mortgage on a home is now a non-starter for a huge swath of the population. I suppose I can somewhat understand the price of homes going up. It's a durable item that, if reasonably maintained, has an unlimited useful life. A car on the other…

// People are getting mortgage sized loans just to buy a family car

I mean... That's insane hyperbole right? Below you are talking about $30k cars, in what universe does that approach "mortgage sized"?

Re: “A solution in search of a problem” is a low-rates phenomenon

#36

Post by makestuff »

ak_111 wrote: post #22

I am wondering how much of the excessive (even to the point of lunacy) funding of stupid ideas in tech is due to a low-rate macro environment as opposed to a spray-and-pray gold rush that naturally gets triggered whenever someone hits gold in an area. After all it is hard to argue that AdSense, iPhones and AWS are not hugely profitable paradigm-shift innovations that would thrive in even the harshest macro environmen…

I will be interested to see how much of a hit AWWS/Azure/GCP takes during this downturn. Suddenly startups are not going to be spending millions per year on cloud stuff stuff that they don't really need (ex: massive redshift cluster for your "data collection"). Furthermore, a large number of startups will cease to exist.

I would guess large customers have account for a massive portion of cloud revenue; however, they also get much better pricing due to their scale. I would guess that the startups have to be where the gravy is since you are not getting a massive discount when you are small.

Re: “A solution in search of a problem” is a low-rates phenomenon

#37

Post by ElevenLathe »

xyzelement wrote: post #34
obblekk wrote: post #24

I really dislike these takes on low interest rates. As far back as the 70s (when interest rates were 8-15%), there have been random business ideas being started and shutdown (pet rocks, every airline ever, etc.). We don't remember those because they shutdown 40 years ago. Today, we only see the successful ones that survived (walmart, fedex, etc.). There's a legit question: why have long term interests declined over t…

Hang on... This sub-thread is venturing into the territory of lumping airlines with "solutions in search of a problem" and that just doesn't make any sense to me. You can argue that airlines have not returned on the capital (it may be true, I have no idea) but there's clearly demand and utility for the product, as evidenced by nearly every flight being nearly or completely full at all times.

An industry basically can't ever make a profit is not a solution to anything.

Re: “A solution in search of a problem” is a low-rates phenomenon

#38

Post by nonrandomstring »

Shinmon wrote: post #32

Solutions in search of a problem (SISP) are not necessarily tied to low interest rates. What might be tied to them is that companies with such solutions live longer because money is cheap. However, if you never make money, noone will give you money either. I think SISPs are a typical problem for tech-savy founders who think some kind of solution is really cool, because it solves them a problem. The problem however wa…

> takes them about 1h. Automating it, is just more fun than actually doing it.

Spot on. The joy of technological skill, being a programmer and engineer is that you can customise, reconfigure and shape the world in front of you. Other people see you playing and having fun, and say; "Hey, can you do that for me?" What was just scratching an itch becomes something others want to universalise. And that doesn't always work.

> almost always start with a technology that solves problem thought of > in research proposals.

Such proposals are often desperately scraping the barrel for ideas. Anything that combines grant-worthy buzzwords in a barely coherent way is fit for the game.

> The problem however was never real.

The tragedy is that the problems become real. Otherwise intelligent people see a bunch of PhDs frobicating widgets, and a bunch of wealthy investors throwing money at them. They read the self-affirming press reports on the research and the marketing hype about how Widgifrob PLC are the hottest new thing. Suddenly everyone has a widget that needs frobnicating.

Low interest + easy capital + bloated academic research machine = new problems. It's a problem creation machine.

Re: “A solution in search of a problem” is a low-rates phenomenon

#39

Post by pm215 »

ulrikrasmussen wrote: post #7
sokoloff wrote: post #3

Earlier quoted context omitted.

What about smart home devices would be useful if everyone had them but useless if only at your house? (I’m a tinkerer but still reluctant to deploy most smart home solutions because they usually fail the household acceptance factor.)

I think it's a false dichotomy. Supposedly the GP thinks that their smart home devices are already useful, so there is no need to consider whether they would be more useful if more people had them. I think the quote from the article is a bit strange, and the example of clocks is not very good because people still had a way to tell time before clocks were invented (e.g. looking at the sun), it was just not very precis…

Yes, but it's not as useful as it is to a modern person, because if you're the only person who owns a clock then your life will have very few situations where knowing the time exactly and reliably matters -- so you only own one if you have some specific use-case where you care about exact time. The benefit of owning a precise and accurate clock becomes much greater if you are frequently interacting with other people who also have precise and accurate clocks (such as operators of railways), and at the point where most people in a society have an accurate clock then it becomes a default assumption that scheduling can be done by time and you will find it increasingly difficult to be without one. (I think the smartphone is currently going through a similar transition -- right now it is definitely still possible to live without a smartphone, but an increasing number of organizations are now starting to act on the assumption that every person they deal with does have one.)

Re: “A solution in search of a problem” is a low-rates phenomenon

#40

Post by TeMPOraL »

ulrikrasmussen wrote: post #7
sokoloff wrote: post #3

Earlier quoted context omitted.

What about smart home devices would be useful if everyone had them but useless if only at your house? (I’m a tinkerer but still reluctant to deploy most smart home solutions because they usually fail the household acceptance factor.)

I think it's a false dichotomy. Supposedly the GP thinks that their smart home devices are already useful, so there is no need to consider whether they would be more useful if more people had them. I think the quote from the article is a bit strange, and the example of clocks is not very good because people still had a way to tell time before clocks were invented (e.g. looking at the sun), it was just not very precis…

I think the point of the analogy is that a clock isn't very useful for an individual, unless enough other people around you also have one. You don't gain much from being able to accurately tell the time down to minutes or seconds, because by far the biggest non-specialist use of clocks is synchronizing with other people. You'll come by the store at 08:00 sharp, and discover it's closed, because the day is cloudy and the storeowner's rooster overslept, so he still thinks it's early.

Such fundamental technologies have also a perverse tipping point, a kind of strong network effect in disguise. Continuing with the analogy, once enough people have clocks and start coordinating with them, they'll start forcing their preference on others, and soon enough everyone has to get a clock, or else they won't be able to synchronize with the society around them.

With timekeeping, this arguably happened before most of us were alive. But a more recent example, one that's being regularly lamented in bars and in press, is cellphones (and even more recently, smartphones): they went from a rich people's toy to being ubiquitous in ~decade, and these days there's a strong social expectation that you own one, and that through it, you're accessible during waking hours. People slightly older than I am call it an invisible chain/tether. Our children will probably call it "normal", just like my generation considers clocks normal.

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