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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

#101

Post by cgh »

ramesh31 wrote: post #82
ehnto wrote: post #69

Earlier quoted context omitted.

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…

>Tesla for a period was valued at a higher market cap than Toyota, the largest auto manufacturer in the world. Tesla is still valued higher than Toyota, Honda, GM, and Ford combined . Something is broken.

Some post-Christmas humour: the other day, Cathie Wood said Tesla will go to $7000/share within five years. I am not making this up.

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

#102

Post by haliskerbas »

EGreg wrote: post #94
screye wrote: post #86

I believe the doom-n-gloom around all of tech is rather overblown. There are sectors of tech that will absolutely struggle. Gig-economy companies won't ever meet their valuation. Negative PE ratio startups are realizing that hyper-scaling is not as infinite as they believed, and that means their earnings might never catch up to their price. Social media companies are finally facing stiff non-American competition (Tik…

You forgot the biggest one. Advertising revenue. That’s what Facebook and Google were supported by. And it has been a zero sum game in a race to the bottom for years. They just didn’t diversify much, same as Russia or Venezuela with their oil economies. Most companies built around zero-sum games are eventually going to stop growing as you run out of other people’s money. But that’s OK — they are already HUGE! The rea…

Search ads and social ads are two different games I would say.

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

#103

Post by birdymcbird »

bee_rider wrote: post #91
cjbgkagh wrote: post #79

Earlier quoted context omitted.

The US is funding the Ukraine defense and has a enormous influence on negotiation. They are effectively a first party. If people don’t want to negotiate that’s their prerogative. I’m more interested in the difference between what I’m told by media and reality, and more precisely if there has been a softening of Russias stance I want to see where.

In order to negotiate, both parties need to be able to offer concessions. What concessions could Russia possibly offer the US, related to the Ukraine situation, that the US would be motivated to take? Our people aren’t dying and our territory isn’t threatened. Because we’re, as you pointed out, not paying the price for the conflict, we don’t have any incentive to try and stop it… we can’t negotiate in good faith beca…

> we don’t have any incentive to try and stop it

Inaccurate. Russia is getting backed into a corner, where they believe the wests goal has been to destabilize and break Russia all along. The more desserts they get more likely they are to use a thermonuclear weapon in Ukraine.

The increasing probability of nuclear war should be sufficient motivation for america to broker a peace deal. Instead we’re sending more weapons to Ukraine.

The media narrative has removed the 20 decades of context on how we got here. Focusing only on what’s happening now, the narrative is that Russia is motivated by some strategy to conquer Europe and any different perspective means the person is stupid or a Putin shill.

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

#104

Post by svnt »

scarface74 wrote: post #78
nugget wrote: post #63

Earlier quoted context omitted.

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…

Everyone says this narrative. But 10 years ago. - Google was the most popular search engine. Had a dominant position in adTech and YouTube was popular - Apple became the most valuable company in the US and the iPhone was sucking up most industry profits. - Amazon was by far the most dominant electric retailer and AWS was taking off (disclaimer: my current employer) - Microsoft had been the dominant operating system f…

Disruption can happen but it is the exception that feeds the narrative.

In order for these acquisitions to have high valuations, big companies must fear being replaced. It is in VC’s interest to stoke that fear. They do this by the threat of replacement at least as much as through funding for actual replacement.

VCs don’t have to care whether disruption happens, but they do have to care about their IRR, and will say or do anything they feel will with high probability increase their rates of return.

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

#105

Post by asah »

haliskerbas wrote: post #102
EGreg wrote: post #94

Earlier quoted context omitted.

You forgot the biggest one. Advertising revenue. That’s what Facebook and Google were supported by. And it has been a zero sum game in a race to the bottom for years. They just didn’t diversify much, same as Russia or Venezuela with their oil economies. Most companies built around zero-sum games are eventually going to stop growing as you run out of other people’s money. But that’s OK — they are already HUGE! The rea…

Search ads and social ads are two different games I would say.

And google didn't fail to diversify for a lack of trying !!! It's just that ads continued growing faster than anything else could catch up.

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

#106

Post by birdymcbird »

screye wrote: post #86

I believe the doom-n-gloom around all of tech is rather overblown. There are sectors of tech that will absolutely struggle. Gig-economy companies won't ever meet their valuation. Negative PE ratio startups are realizing that hyper-scaling is not as infinite as they believed, and that means their earnings might never catch up to their price. Social media companies are finally facing stiff non-American competition (Tik…

Overly rosy take on big tech. I’ll use Google as example. Their execs are in full panic right now over OpenGPT.

What was last major innovation at Google.. chrome? 20% of company drives profits while 80% is a decorated R&D lab chock full of benefits, upset about cutbacks in their free oatmilk lattes, even though they’re not coming to office anyway.

these guys will double their attrition targets if not have full blown layoffs. ads drives their profits, but search has been in decline for years now.

google right now is a bloated bureaucratic whale that needs to hit the gym and get in shape. Step 1 is to get off the damn couch.

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

#107

Post by birdymcbird »

Pasorrijer wrote: post #89

I really hope this drives "My tech delivers value!" instead of the asinine "We're going to burn money until we're a monopoly!" strategies.

Latter statement you quoted accurately describes VC and start up world.

Big tech was even worse than this. Monopoly? That implies a vision and proper focus to achieve business goals.

My take is far less generous. This was one of the biggest grifts in recent times. the professional managerial class obsessed not with their products or services but instead on increasing headcount, building empires, and getting promotions. Office politics and political games played by people who produced little to no economic value.

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

#109

Post by danaris »

spaceman_2020 wrote: post #59
willcipriano wrote: post #46

Earlier quoted context omitted.

Right after the election, we learned that the employment numbers turned out to be cooked ( https://www.cnbc.com/video/2022/12/22/philadelphia-fed-sugge... ) that was in large part the justification for the rate hikes, I think they end in the next few months and start to decline this year.

My belief is that the moment rates start going down, there's going to be another massive asset bubble which will create tremendous inflationary pressure. Historically, inflation has never come down so fast or so easily anywhere. So much of inflation is about belief and psychology. If a "good times are here again" belief takes hold, it's entirely possible that inflation will run amok, again.

A significant chunk of current inflation is flat-out corporate greed.

This can be seen from the fact that companies are posting record profits...while also saying "but we have to raise prices 20%, because of 7% inflation!"

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

#110

Post by goldenchrome »

birdymcbird wrote: post #106
screye wrote: post #86

I believe the doom-n-gloom around all of tech is rather overblown. There are sectors of tech that will absolutely struggle. Gig-economy companies won't ever meet their valuation. Negative PE ratio startups are realizing that hyper-scaling is not as infinite as they believed, and that means their earnings might never catch up to their price. Social media companies are finally facing stiff non-American competition (Tik…

Overly rosy take on big tech. I’ll use Google as example. Their execs are in full panic right now over OpenGPT. What was last major innovation at Google.. chrome? 20% of company drives profits while 80% is a decorated R&D lab chock full of benefits, upset about cutbacks in their free oatmilk lattes, even though they’re not coming to office anyway. these guys will double their attrition targets if not have full blown…

You underestimate the staying power of monopolies.
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