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All the oxygen trapped in a bubble

37signals.com

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Re: All the oxygen trapped in a bubble

#71

Post by tferris »

spitfire wrote: post #27
lmm wrote: post #17

Earlier quoted context omitted.

They're probably hung up because it's making them look small-time. What do 37Signals actually do, other than generate a steady stream of blog posts for HN? They make some sort of dropbox knockoff, right?

TODO and project management apps for small business. Unfortunately their success has gone to their heads.

Couldn't upvote this more.

Rails was groundbreaking. Yes. DHH did something great but that's now 7 or 8 (!) years ago. Rails has aged, DHH showed often how opinionated he can be and that he just isn't perfect. And the 37signals products live primarily because of DHH's and Rails' reputation and not because there are outstanding (there tons of better Basecamps out there).

Still DHH is a smart guy but a Kevin Systrom who built a company, who learned how to build a scalable backend while starting this company and then sold this company after just 2 years for 1 billion achieved something special as well and this should be appreciated instead of ranting. This is just infantile and shows once again DHH's temper and lack of self-control.

Re: All the oxygen trapped in a bubble

#72

Post by Androsynth »

cletus wrote: post #35

I've called the kneejerk "bubble" reactions "boring" [1] and I stand by that. That doesn't mean I disagree (or agree for that matter). It just means that banal perjoratives with nothing to back them up are boring . To call this a bubble, one must first describe what one means by a bubble. A bubble in my mind is a period of rapid growth in valuations followed by a massive devaluation on such a scale that it hinders in…

Just because we are not in a tech-bubble doesn't mean there is no bubble. All these crazy valuations may be secondary effects from a larger, hitherto unseen bubble.

-Credit/Money: We are currently printing money to finance our lifestyle here in the US. China currently holds around 3 trillion US dollars and the dollar is only worth something as long as they don't try to cash out.

-Education: Something bad is happening and it is fueled by cheap, govt backed credit. Everyone is rushing to invest in their children's future because of the it-can-only-help-them mindset, similar to the it-can-only-go-up mindset of the housing bubble (also fueled by cheap, govt-backed credit).

-healthcare: this is a weird case and probably only local to the US. Heres the situation: We value our health, but we don't pay out of our own pockets for much, our employers do. So naturally we keep slipping down the slope of wanting more and more done for us. A huge friction coefficient is being added to our economy due to the nature of making businesses provide healthcare, meanwhile insurance companies interests are aligned with the insured because they both want as much done as possible (provided neither of them pay for it).

Re: All the oxygen trapped in a bubble

#73

Post by izak30 »

edwinnathaniel wrote: post #36
izak30 wrote: post #15

Earlier quoted context omitted.

Agree or not, that's what DHH is saying here. It's harder for sustainable businesses to hire talent, when talent is getting paid more at places with enormous valuations. This of course falls down if the large valuation and the large pay are justified by things like large revenues, or value to those with large revenues.

Sometimes I just wonder: what "talent" are you guys talking about? It's almost as if there exist a group of fresh-grads who just completed their CS degree but can magically write a better compression engine or a revolutionary protocol that is better than TCP.

You don't get it. It's more expensive to hire any programmers when the average rate that a programmer gets is inflated by an influx of cash. It's independent of experience. You could substitute talent with "skilled labor" and everything else would stand.

Re: All the oxygen trapped in a bubble

#74

Post by grandalf »

While David's argument is interesting, how would his claims be falsified?

The economy is a noisy mess of contemporaneous booms and busts. What we typically call a "bubble" is a boom that lasts long enough that the bust is socially noteworthy.

What if the information age is simply arriving faster and faster? Parents and grandparents are now buying tablets and laptops, uploading photos, liking wall posts, etc.

There could be a huge shift toward the digital economy even if no bubble is occurring.

How many wall posts result in a greeting card not sent, paper not manufactured, trees not felled, shipped, and processed? What other efficiencies are occurring to divert so much capital to information tech?

Most of the technologies that are getting the most money are things that save people serious time/money/effort. This is equivalent to big dollars.

So not only should capital be diverted from other industries, but certain existing ones become more valuable -- photo finishing has more value when you are sending in 30 favorite pics chosen from 1000 digital photos you took, rather than sending in a roll of film and hoping that a few out of the 24 on the roll turned out as expected.

Travel has more value when you can use yelp to find great restaurants, AirBnB to find the perfect lodging at a great price, and Facebook to reconnect with old friends who it turns out live there.

Technology brings value to so many areas, both expected and unexpected. This is why capital is flowing. And it will continue to flow.

Yes there are meta factors such as monetary policy that impact the cost of credit and to some extent influence the risk-appetites of investors, but I think that's likely to be a small fraction of what we're seeing. The reason it's less obvious to us is b/c we've lived in this world of tech for at least 5-10 years before the rest of society started to arrive.

Re: All the oxygen trapped in a bubble

#75

Post by izak30 »

pg wrote: post #65
richcollins wrote: post #31

Earlier quoted context omitted.

Where is the money that's driving increased developer/designer demand coming from?

I don't think investor money is the main driver of increased demand for hackers. The biggest sources of demand are the big companies, like Google and Facebook, and they're paying the hackers' salaries out of revenues.

So conversely, more money is needed to compete with those who are already profitable.

Re: All the oxygen trapped in a bubble

#78

Post by wateverer »

cletus wrote: post #35

I've called the kneejerk "bubble" reactions "boring" [1] and I stand by that. That doesn't mean I disagree (or agree for that matter). It just means that banal perjoratives with nothing to back them up are boring . To call this a bubble, one must first describe what one means by a bubble. A bubble in my mind is a period of rapid growth in valuations followed by a massive devaluation on such a scale that it hinders in…

It's surprising that, you well educated folks do not know what inflation is.

Re: All the oxygen trapped in a bubble

#79

Post by mikeryan »

pg wrote: post #24

The pieces of this argument fit together very neatly, but the problem is that they don't correspond to reality. E.g. the cloud about increased VC fundraising. In reality VCs are having a hard time fundraising: http://nvcaccess.nvca.org/index.php/topics/research-and-tren... Thus it also isn't true that the cause of higher valuations is that VCs have more money. Valuations are certainly higher, but I think the reason i…

Even if he's wrong on that point does it invalidate the basic premise that other businesses suffer at the expense of the companies which are overvalued?

(at least thats how I read it)

Re: All the oxygen trapped in a bubble

#80

Post by aaronblohowiak »

theorique wrote: post #4

Strategically, it makes sense for a programmer to let his / her skills get bid up and use the surplus to store up some dry powder for the next recession. If you stay focused, bubbles are great times to build up your skills and do something real. Unless you're planning to play the startup lottery by creating a gamified social network for teenaged felines or something, in which case, good luck, and have fun. You can pr…

This is my strategy. Contract and stash during bubble, then try and start my own thing in the lull.
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