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How tech’s defiance of economic gravity came to an abrupt end

economist.com

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Re: How tech’s defiance of economic gravity came to an abrupt end

#61

Post by cjbgkagh »

fosk wrote: post #18
birdymcbird wrote: post #8

Earlier quoted context omitted.

“Soon” is mid 2024 at the earliest. The start ups haven’t really even begun to trim fat. Big tech like amazon, meta, google will increase attrition targets in addition to actual layoffs. I could turn out to be wrong but id bet there’s many more waves of cascading pain before before things turn other way. Turning other way doesnt mean we immediately go back to excess hiring, empire building, lack of focus, free uber r…

Contrarian signal, for the sake of having a conversation: - I think we will experience a massive deflationary bust. The inflation narrative is over, it’s all about a potential recession now. - By Summer 2023 we will experience YoY deflation and the Fed will cut then, or even sooner in anticipation to that. - We may see hikes pausing as soon as February, and cuts starting in the summer as a result of rapid disinflatio…

Putin was always willing to negotiate and there have been attempts at negotiation before and during the conflict, what matters are the pre-conditions to negotiations. If the pre-conditions are too strong then in effect it blocks negotiations and it means the overtures to negotiate are simply done for political reasons. We’re being told that only now Putin is ready to negotiate so I’m assuming that means the pre-conditions have weakened but I’m having a hard time finding out what that change is. Maybe they’ve given up their demand for a de-militarized Ukraine? The ban from entry to NATO?

We’re also being told that this willingness to negotiate is a sign of weakness and eminent failure for the Russians so Ukraine shouldn’t negotiate and should instead press their advantage.

In effect we should not negotiate with people who are not-willing to negotiate nor with people who are… which only makes sense if we never intend to negotiate - a position that’s much easier to hold when we’re not paying the price of the failure to negotiate.

Re: How tech’s defiance of economic gravity came to an abrupt end

#62

Post by grog454 »

plaguepilled wrote: post #48
georgebarnett wrote: post #33

Earlier quoted context omitted.

I disagree - tech _is_ software and it’s so ubiquitous that it’s essentially invisible.

As yes, CPUs, those things famously bought because of the software that runs it. Certainly not because of any fabrication advances by a given company, hohoho. All tech is software!

> As yes, CPUs, those things famously bought because of the software that runs it.

They are bought because of the software that runs on it.

Re: How tech’s defiance of economic gravity came to an abrupt end

#63

Post by nugget »

pigsty wrote: post #40
georgebarnett wrote: post #27

With all industries are converting to software and every person on the planet moving towards owning a smartphone it surprises me that there’s an ongoing narrative that tech is collapsing.

The fact everything uses software doesn’t mean Slack, a generic chat platform with dozens of absolutely identical products, being acquired for 27.7 billion dollars ever made sense. That generic software company was valued higher than entire industries that supply components that all hardware depends on. Tech isn’t collapsing. But valuations were and continue to be fuckin nuts for a lot of companies and are coming dow…

Tech seems somewhat unique because you can start a new company and within a relatively short period of time (<10 years) you can threaten the eventual existence of Fortune 500 incumbents. The entire venture capital/startup ecosystem exists to identify these upstarts and help them obtain unstoppable momentum as quickly as possible. If the incumbents want to survive, they usually have to pay up, and the longer they wait, the more expensive it will be. This is why Adobe pays $20 billion for Figma. Greed is good, but fear is better - for the startup looking to be acquired. There are a handful of other Figmas out there (and more will be started) and that is part of why tech has so much value.

Re: How tech’s defiance of economic gravity came to an abrupt end

#64

Post by crazygringo »

georgebarnett wrote: post #27

With all industries are converting to software and every person on the planet moving towards owning a smartphone it surprises me that there’s an ongoing narrative that tech is collapsing.

Obviously tech itself isn't collapsing -- it's the astronomical growth that's collapsing, and much of valuation is based on growth. Now it's turning into merely "normal" growth. But that's all investor-side.

Consumer-side, it's really more about tech maturing. If we take your example of owning a smartphone, it means that most people already have smartphones, and since the yearly upgrades are much more incremental now, people don't need to upgrade as often.

Re: How tech’s defiance of economic gravity came to an abrupt end

#66

Post by ghaff »

Kye wrote: post #24
oldgradstudent wrote: post #21

Earlier quoted context omitted.

Hmm, how did I miss that?

I think those of us who lived through the 90s and 00s have a hard time counterdiscombobulating all the stuff that went down. People who experienced the 60s and 70s probably have similar difficulty.

The worst downturns tend to be at least somewhat sector dependent. There has been at least one aerospace downturn when PhDs were driving cabs in Seattle.

In the dot-com crash, a lot of people in software especially left the industry and many never really got their careers back on track or recovered financially. On the other hand in 2008/9, there was belt tightening in the software industry but overall the impact didn't end up being all that great. Remains to be seen if this period will be the former or latter. Of course, individuals can still be very affected even if the overall impact isn't huge.

Re: How tech’s defiance of economic gravity came to an abrupt end

#67

Post by candiodari »

sharemywin wrote: post #44
georgebarnett wrote: post #27

With all industries are converting to software and every person on the planet moving towards owning a smartphone it surprises me that there’s an ongoing narrative that tech is collapsing.

Tech stock prices are based on extreme growth numbers. the problem is the denominator, it's so big for most tech companies they can't continue to grow at 20-50% a year. so if your P/E goes from 30+ to 10 or worse 3-5even if your E is still strong but flat alot of wealth disappears. if people feel broke they don't spend money on things. the new phone isn't as important as say eating. also alot of tech didn't have to c…

I've often thought this too, but there are several huge exceptions to this, whilst outside of tech there are plenty of similar examples.

First and foremost, there's the Exceptions:

Google: P/E is more or less 20, decades already

Microsoft: P/E is more or less 20, for a very long time

There are not actually that high. Compare to BABA (P/E is >200), IBM (P/E >100), JD (P/E >600)

And the reverse exceptions, non-tech with absurd P/E:

Tesla: P/E is 40 (down from ~500 I might add)

Boston Scientific: P/E is >100

and let's just shut up about crypto, because ... there's is a theme. Overwhelmingly the ridiculous valuations are financial companies and "semi-"government companies (meaning protected by government, but not benefitting the people of the country that government governs. Like BABA for example, or before their downfall, Theranos). If Tech becomes the P/E champion instead of "almost-but-not-quite" corruption companies that tend to dominate that, I feel that's a very good thing indeed.

Re: How tech’s defiance of economic gravity came to an abrupt end

#68

Post by marssaxman »

Avicebron wrote: post #34
georgebarnett wrote: post #33

Earlier quoted context omitted.

I disagree - tech _is_ software and it’s so ubiquitous that it’s essentially invisible.

Planes, trains, and automobiles are tech. Software is a specific subset, software is a subset of tolling and techniques that's applied to "tech" no more than circuit boards, wires, or the wheel. It doesn't have a special elevated status. The more people understand that the faster people will stop hero worshipping it.

> Planes, trains, and automobiles are tech.

Reading and writing are "tech", if you insist on going down this pedantic road; but that's not what most people mean by that term in this context.

Re: How tech’s defiance of economic gravity came to an abrupt end

#69

Post by ehnto »

pigsty wrote: post #40
georgebarnett wrote: post #27

With all industries are converting to software and every person on the planet moving towards owning a smartphone it surprises me that there’s an ongoing narrative that tech is collapsing.

The fact everything uses software doesn’t mean Slack, a generic chat platform with dozens of absolutely identical products, being acquired for 27.7 billion dollars ever made sense. That generic software company was valued higher than entire industries that supply components that all hardware depends on. Tech isn’t collapsing. But valuations were and continue to be fuckin nuts for a lot of companies and are coming dow…

Another fun example of looking at valuations versus actual real world production and output (real value delivered?): Tesla for a period was valued at a higher market cap than Toyota, the largest auto manufacturer in the world. Consider the real world infrastructure and output of Tesla, and the real world infrastructure and output of Toyota. Toyota is an order of magnitude larger operation.

So for Telsa's valuation to mate with it's real world ambition, it has be aiming to have it's operations as big as Toyota's, great! Being as big as Toyota would put it's market cap at... oh. Less than it currently is.

Re: How tech’s defiance of economic gravity came to an abrupt end

#70

Post by kalimanzaro »

crazygringo wrote: post #64
georgebarnett wrote: post #27

With all industries are converting to software and every person on the planet moving towards owning a smartphone it surprises me that there’s an ongoing narrative that tech is collapsing.

Obviously tech itself isn't collapsing -- it's the astronomical growth that's collapsing, and much of valuation is based on growth. Now it's turning into merely "normal" growth. But that's all investor-side. Consumer-side, it's really more about tech maturing . If we take your example of owning a smartphone, it means that most people already have smartphones, and since the yearly upgrades are much more incremental no…

If by tech we mean everything touched by Moore's law, all this degrowth seems also to be a consequence of the lengthening of the doubling time in flops and words. Ultimately what you mean by normal growth would then be the replacement rate of your old computer by a new but not more powerful computer.
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