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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

#141

Post by FormerBandmate »

MilStdJunkie wrote: post #118
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…

There's a general fear that customers eventually will realize that the Google / FB ad dollars aren't actually creating new business. These gatekeepers - the Googles/Apples/FBs/etc - can predict where consumers are about to go[1], but the total numbers don't go up. It's sort of like the difference between coupons in the local paper, versus coupons that your ad man hands out next to the front door of your business. Eve…

> The dark side of this is how your business can suddenly disappear from view if you stop buying into the Web-Ad-Hive-Mind. That's way worse than the coupon guy hanging outside the front door - that's more like someone in fake construction vests putting up cones around your parking lot.

Soooo… ads provide substantial value to businesses?

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

#142

Post by FormerBandmate »

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…

What is ChatGPT’s actual competitive advantage over search? It can’t tell you the second largest country in South America correctly, it’s an extremely cool demo but I can’t think of anything it could replace Google for. The underlying technology is extremely powerful, but it’s been powering Google for years

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

#143

Post by candiodari »

cjbgkagh wrote: post #61
fosk wrote: post #18

Earlier quoted context omitted.

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-condi…

Of course both sides have preconditions:

1) Russia: for Ukraine to accept territorial concessions (Donbas + Crimea)

2) Ukraine: for Russia to retreat from all Ukrainian territory, (maybe) except Crimea (meaning they're willing to sit down at a negotiation table without the Russians agreeing to retreat from Crimea)

So the two sides are far apart. Russia is judged weak because the prediction is that without negotiations they will lose all territory inside Ukraine. They are dependent on negotiations, and unwilling to accept the reality that they've lost the Donbas (Luhansk and Donetsk), Kherson, and Zaporizhia, and are unlikely to be able to hold Crimea in the long term.

Furthermore, Russia has consistently failed to demonstrate capabilities they threatened Ukraine with. They claimed to be able to take Ukraine "in 2 weeks, maybe less" (https://www.youtube.com/watch?v=h_RReQj7PpY), they claimed they couldn't be stopped in the Donbas. They have been stopped. They have been claiming for 40 years to have the tightest air defense network on the planet. The air defense network couldn't stop drones (which are unmanned planes, designed to fly slowly), not even with 6 WEEKS warning. They have panicked and deployed additional air defense platforms around Moscow, in other words, they're afraid they cannot protect the Kremlin from Ukraine's military, 450km from the nearest Ukrainian border whilst they cannot (effectively) hit Kiev's presidential palace, at 200km from their borders, and less than 70 from their deployed soldiers in Belarus. This is not the way to show strength.

They are known, even long before this conflict, to constantly lie about everything, to ignore agreements made before. So it's not even very clear what an agreement with Russia would even entail. If they say they won't attack, they can't be trusted to uphold the agreement. So what's the point? There must be a good military reason for them not to attack or there's no point.

Or to put it in negotiation parlance: BATNA for Ukraine is better than the conditions Putin demands to even talk. Nevertheless, these aren't small organizations: whether or not they've agreed to talk high-level, they're constantly talking.

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

#144

Post by shubb »

dimator wrote: post #112
birdymcbird wrote: post #106

Earlier quoted context omitted.

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…

Why are they in a panic over ChatGpt? Don't they have similar research and tech around these AI systems?

Something I find very curious - Google are doing the same kind of research and are in many ways futher along. They have thier own models like T5 that supposedly perform better. Are their exec unaware of their own strengths?

For that matter, wasn't Google collecting masses of GIS data and doing intense self driving car research? Where is that product?

Serious q - do google have so much money that they are doing tons of research and then just forgetting to make a product out of it?

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

#145

Post by goldenchrome »

birdymcbird wrote: post #114
goldenchrome wrote: post #110

Earlier quoted context omitted.

You underestimate the staying power of monopolies.

No, but i think you do have a point. Googles board and company execs had convinced themselves they’re an untouchable money printing machine. This year, they’ve been violently woken up.

They have tens of thousands of top engineers, billions in the bank, half a dozen products used by over a billion people and their main product is ads for people who use the internet. Companies always face existential threats but as far as moats go, Google has one a mile wide. Their downfall will be slow and obvious and even after their decline in cultural relevance they’ll still churn out billions of dollars a year.

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

#147

Post by EGreg »

FormerBandmate wrote: post #141
MilStdJunkie wrote: post #118

Earlier quoted context omitted.

There's a general fear that customers eventually will realize that the Google / FB ad dollars aren't actually creating new business. These gatekeepers - the Googles/Apples/FBs/etc - can predict where consumers are about to go[1], but the total numbers don't go up. It's sort of like the difference between coupons in the local paper, versus coupons that your ad man hands out next to the front door of your business. Eve…

> The dark side of this is how your business can suddenly disappear from view if you stop buying into the Web-Ad-Hive-Mind. That's way worse than the coupon guy hanging outside the front door - that's more like someone in fake construction vests putting up cones around your parking lot. Soooo… ads provide substantial value to businesses?

In the same way a protection racket provides substantial value to them as well. But only if the platforms mess with their rankings on organic listings and ratings depending on how they pay for ads.

Yelp likes to do that, for instance. Alternatives to ads include:

Referrals / word of mouth

Organic rankings

In a way, ads are similar to speculators pumping a token they think will eventually justify the hype by recouping the speculative spend. There are diminishing returns the bigger the ad spend gets.

The only difference is that there is no secondary market to keep reselling ads and scalping them higher — or is there? But there is certainly the element of a large supply of greater fools to try out ad spend on various speculative ventures.

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

#148

Post by anacrolix »

fragmede wrote: post #11

Has it? Capitalism is based on supply and demand, and where those two lines intersect is where the magic happens. Except that we've never adapted it to the reality of, well, computers and the Internet. The price of duplicating a pile of bits, whether it be a Linux ISO, Windows 11, or the latest Disney movie is effectively zero*. Or textbooks to spread human knowledge around. A graph of supply and demand, where supply…

I'd like to see you try to send a 10 GB file to every human on the planet through Cloudflare.

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

#149

Post by georgebarnett »

JustLurking2022 wrote: post #80
georgebarnett wrote: post #60

Earlier quoted context omitted.

Collaboration tools are some way from being systems of record and there is substantial difference between competitors. Generic chat apps are not yet useful enough (despite years of development) for most companies - IRC failing to win is evidence of this and so is the fact that companies aren’t switching en masse to run their infrastructure on whatever is the OSS flavour of the day. That doesn’t mean it won’t happen s…

Is this a ChatGPT experiment? The comment uses a few seemingly relevant terms but almost entirely incorrectly. "System of Record" had nothing to do with being commoditized.

Perhaps we are speaking about different concepts. I was referring to the pace layered architecture.

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

#150

Post by svnt »

scarface74 wrote: post #126
svnt wrote: post #104

Earlier quoted context omitted.

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…

Most of the acquisitions that happen aren’t because of fear of “disruption” which is a very overused and misunderstood term - especially when defined like Clayton Christensen. They are bought to be an accretive to an existing business or the acquiring company thinks they have scale advantage to multiply the value of the acquisition. Another way to put it, that these are “sustaining innovations”.

Im not sure how you’d quantify most here.

The highest valuations are not paid for sustaining innovations, but for market access risks, which is what this thread was about. The two can be the same thing functionally, but “sustaining innovations” sounds much better in a shareholder meeting.

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