51–60 of 135 posts
I hope in a way this bubble would burst, I'm getting thoroughly sick of all this web2.0 bullshit. Its nothing but social networks and photo/something sharing sites. Nothing really happening and we need smart Engineers and developers getting back into some worthwhile endeavors. I blame Facebook.
Like what?
What I think we are seeing now is the Venture Capital bubble. Lots of funds have shitloads of money they MUST put to work. If they don't put money to work most firms can't raise another fund and at some point the LPs can back out of their commitment. For a while now there is a market where the only way to put large amounts of money to work is to make much larger investments at a high valuation, expecting a lower return.
9 and 10 figure valuations are being driven by too many large funds chasing too few good companies. The LPs will get burned, funds will close, but there is going to be no collapse of the venture/seed market.
If you see this Bubble "burst" it will slowly over the next 5-10 years when second tier funds can't raise more money. VC is turning to a winner-take-all game where only the top 3-5 players make sizeable returns, because their brands are the only ones who afford them access to deals.
Would it be fair to say that, until the IPO, every player in the system has an incentive to inflate the price?
And in our little world even the press doesn't usually see itself as having a critical role. Quite the contrary as with Arrington & Calcanis and their ilk.
I'm not an expert here, but is the real problem that there is no way to short a startup? You pretty much have to wait until a startup IPOs to bet against it. (Or is there some equivalent of shorting in secondary markets?) Would it be fair to say that, until the IPO, every player in the system has an incentive to inflate the price? And in our little world even the press doesn't usually see itself as having a critical…
Would it be fair to say that, until the IPO, every player
in the system has an incentive to inflate the price?
Earlier quoted context omitted.
So let's be clear about this: these kinds of startups are arbitrary containers for investment dollars. They could be corn, or property, or jelly futures. But as it happens, technology companies are where a lot of people are putting their money right now. As a result, it's not the startups with the secure bottom line that are getting investment: it's shiny startups that happen to be very popular. Because those are the…
From what I understand, bubbles bursting in the past (e.g. Tulips, Dotcom) have been triggered by a specific event rather than a new, more exciting outlet for money. In the Tulip bubble it was a failed auction in Haarlan, in the DotCom bubble it was the Fed raising interest rates, paired with the judgement in the US vs Microsoft trial. So, its interesting to hypothesize what the 'trigger' event could be in this case.…
Not sure what precise form that'd take. Anything from a major click-fraud-type scandal (would have to turn out to be significantly worse than the current assumptions about fraud, though) to a damning report about ROI from one of the more credible white-paper-issuing analysts, or one of the players themselves.
Unfortunately I'm starting to agree with the bubble 2.0. Last year I didn't believe it that much, but this year I'm starting to see crazy company evaluations, highly inflated that don't generate any revenue at all, so I don't know how can they be worth billions of dollars, but I know math and little about economics. But if bursts, it's a good thing. It brings perspective, a thing that's missing a lot these days, wher…
So let's be clear about this: these kinds of startups are arbitrary containers for investment dollars. They could be corn, or property, or jelly futures. But as it happens, technology companies are where a lot of people are putting their money right now. As a result, it's not the startups with the secure bottom line that are getting investment: it's shiny startups that happen to be very popular. Because those are the…
Bubble 1.0 created an asset class that the public could get irrationally excited about and invest into. Calling this Bubble 2.0 is misleading. The tech bubble in the late 90s could characterized by companies going public with sky-high valuations without revenue. It seems obvious the major difference is that there are still very few companies going public. And the companies that do all have meaningful revenue/profit.…
Bubble 1.0 created an asset class that the public could get irrationally excited about and invest into. Calling this Bubble 2.0 is misleading. The tech bubble in the late 90s could characterized by companies going public with sky-high valuations without revenue. It seems obvious the major difference is that there are still very few companies going public. And the companies that do all have meaningful revenue/profit.…
I agree. The fallacy of some who don't believe we're in any sort of bubble often lies in the fact that they believe it will play out like 2000. If you read some of the anti-bubble VC chatter, that's the spiel you'll often hear, "I lived through the first tech bubble, and this ain't it."
But no two bubbles are alike. I don't expect the Nasdaq to blow up, crushing people's savings. But I do expect to hear a large sucking sound as VC money dries up. I do expect that the crazy demand for engineers we are seeing will soften, drastically. I do expect to see far few incubators and poetry startups. All of this amid an ongoing global recession.
There's a lot of money, billions, that is sloshing around the system. When that disappears, the resulting effect is never nothing.
I have a theory about bubbles: It's relatively easy to spot that you're in one, but it's very hard to pinpoint what sort of bubble it is. I'll explain... During the lead up the 2008 debt crisis I saw a lot of people talking about how house prices had been going up year on year and questioning whether we were in a property bubble. There was a debate though. Demand for housing was strong (partly due to population growt…
It's a 'social, generate zero or near zero revenue bubble.' It's certainly not a tech bubble in general. There are lots of small tech companies making plenty of money right now. Some happen to be acquired so not, but even the ones that are not continue to generate profits and carve out their niche.
The other thing, is that when this bubble bursts it will mainly effect investors and the tech worker who happens to bounce from social app X to social app Y in SV. Those tech workers who are running their small profitable startup will keep on running it. Those working in BigCorp won't even know what happened other than not seeing Instagram like news anymore.
And as an aside, so what if funding dries up. The barrier to entry on the software side really has reached what Carmack mentioned years ago. A lone developer with some motivation, a computer, and a fridge of diet cokes can make a successful startup/piece of software. No rounds of financing needed.