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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

#81

Post by matwood »

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.

Put simply, people who can and do build stuff. Notice the emphasis on do. There are lots of smart people out there. Some percentage work at large companies in a relatively stress free job doing lots of things with maybe some building. Some other percentage get by just by being smart.

When talking about talent what all these companies want are the person who is smart, experienced, and can execute. That person who can build something from nothing. That person who actually works.

If you can get 2-3-4-5 of these kinds of people together on the same project amazing things can happen. It's very hard to hire these people because they are usually off building something...for their own startup.

Re: All the oxygen trapped in a bubble

#82

Post by ErikRogneby »

jsprinkles wrote: post #49
stcredzero wrote: post #47

Earlier quoted context omitted.

To call this a bubble, one must first describe what one means by a bubble...Please, I beg of you, if you're going to jump and down and yell "bubble" at least add something to the conversation or back it up with something. Is there something broken about the hiring market? 37signals might be closer to that than Google.

The only recruiting mail I get aggressively is from startups and Google. That's it. I hear all the time that there is a significant talent shortage, but part of me wonders whether that's a combination of people that don't want to work at Google for whatever reason and developers with families that don't want to bet on a startup. My colleagues in big iron, however, are much choosier about who they hire.

Up here in Seattle the glut of open tech/programmer positions are at Amazon. I don't know if it's growth or their "bar raiser" policy slowing down their hiring.

Re: All the oxygen trapped in a bubble

#83

Post by crusso »

zackzackzack wrote: post #9

It's a shame that all of that talent is working on things the author doesn't think are worthwhile. I mean, everyone should work on what everyone can agree on is worth their time, right? Yet, I don't think everybody can really agree on what is worthwhile for a person's time. I can point at people working on things like Linux and Khan Academy and say "Their efforts are worthwhile!" but then Microsoft and that one guy,…

> So, who decides what's worthwhile?

If only we had a method whereby members of our society on their own and through businesses could express how much they value products and services being offered by others.

Hmm... I think I'll invent such a system as my next project. Like with any cool project, I should give it a name first and maybe churn out some T-Shirts before I get going on the details.

For a name, I think I'll call it "CapITal1sm!". I still need to come up with all the rules of how it should work. I'll set up a blog and let you all know how it goes. ;)

Re: All the oxygen trapped in a bubble

#84

Post by eevilspock »

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…

"Firstly, I too find it depressing what a lot of us are working on [2] [3]. The fact that SpaceX can revolutionize launch costs for less money than was spent on Instagram is sobering and depressing."

This is what resonates with me most. Whether or not we are in a bubble, there certainly is more air than substance.

Re: All the oxygen trapped in a bubble

#85

Post by mhartl »

tferris wrote: post #66
mhartl wrote: post #45

Earlier quoted context omitted.

The benchmark is profits. "Instapintora" might work out well for its founders, but DHH argues that grabbing a ton of users and hoping for the best isn't a good general strategy for building a business. I'd amend that slightly by saying that companies with a huge number of users are valuable, either as eventual cash cows or as strategic acquisitions, but at best following that route is a risky strategy. Sure, you migh…

> ... grabbing a ton of users and hoping for the best isn't a good general strategy for building a business. Everyone has their own way and why do people judge about others? Some grab a ton of users and hoping for the best and others write online tutorials for aged technologies. Let people just do what they like and appreciate if they are successful (grabbing a ton of users is as hard as it is to write good online tu…

You're criticizing my paraphrase of DHH, not my actual point. That point was "companies with a huge number of users are valuable, either as eventual cash cows or as strategic acquisitions, but at best following that route is a risky strategy." So you can see that I'm not judging at all: I have no problem with the high valuations of Instagram, Pinterest, etc. Growth companies with millions of users are hugely valuable even if they aren't currently making any money. (This is a point on which DHH and I respectfully disagree.)

If you want to follow a high-variance strategy, there's nothing wrong with that. What is wrong is expecting that your new startup has a reasonable chance of being the next Instapintora. If you want to build a sustainable business, lower-variance strategies (which typically aim to become profitable quickly) are a better bet. I dealt with these issues explicitly in a talk I gave at LA RubyConf in 2011, which you can find here: http://youtu.be/j0jT98ZXh5M

P.S. My tutorial for an "aged" technology is only step 1 in a four-step plan for world domination; steps 2-4 are much higher-variance. Stayed tuned.

Re: All the oxygen trapped in a bubble

#86

Post by raganwald »

crusso wrote: post #83
zackzackzack wrote: post #9

It's a shame that all of that talent is working on things the author doesn't think are worthwhile. I mean, everyone should work on what everyone can agree on is worth their time, right? Yet, I don't think everybody can really agree on what is worthwhile for a person's time. I can point at people working on things like Linux and Khan Academy and say "Their efforts are worthwhile!" but then Microsoft and that one guy,…

> So, who decides what's worthwhile? If only we had a method whereby members of our society on their own and through businesses could express how much they value products and services being offered by others. Hmm... I think I'll invent such a system as my next project. Like with any cool project, I should give it a name first and maybe churn out some T-Shirts before I get going on the details. For a name, I think I'l…

I really like this idea! i just worry about unintended consequences. Is it possible that some of the people in this CapITal1sm thingy will create products and services that provide short-term temporary value at the expense of long-term value?

Just to give a hypothetical example, could someone create a product that, when consumed, confers temporary euphoria but poisons the user with tar and carbon monoxide, eventually creating lung cancer?

How do we “value” such a product/ If it generates billions of dollars worth of “value,” is it worthwhile?

Re: All the oxygen trapped in a bubble

#87

Post by redthrowaway »

eande wrote: post #50
borism wrote: post #42

Earlier quoted context omitted.

It won't last a year with several parallel bubbles (one on the other side of Atlantic, another on the other side of Pacific) imploding.

strong pointers without back up info

The Euro faces, if not demise, then a near-certain restructuring that will ripple through global financial markets. China is also showing blemishes on its shiny economy, which was entirely foreseeable given their rather suspicious pegging at an 8% growth in GDP year on year. It won't collapse, but it will definitely cool considerably as even the politburo can't continue to justify building cities with no one in them just to pad GDP.

Re: All the oxygen trapped in a bubble

#88

Post by crusso »

Really, all these bubbles are just an economic manifestation of the hyper-information processing problem that our society has yet to learn to deal with.

Just like it took quite a while for my Dad to learn to stop passing around "Bill Gates pays you for every email forwarded" email, members of our society have to learn to ignore all the internet marketing and media-generated hype.

Just like snopes.com was a valuable piece of infrastructure in weeding out the urban legends and reducing our forwarded crap email -- other societal/internet support is going to need to come into place to help investors weed through all the media and marketing hype.

The sad part is that change like this always produces victims who didn't catch on quickly enough. Given the magnitude of the changes brought on by this stage of the "Information Age", there's a lot of learning to be done and it's going to take another generation to develop the infrastructure and mind share needed so that typical members of society aren't so easily fooled by the falseness of the latest investment bubbles.

The genie is out of the bottle now, though. We need to get to learning, informing, and building solutions to the bubble problems. My biggest fear is that governments will [continue to] use this time of change as a power-grabbing excuse to drastically curtail our liberties and destroy many of the advantages of the Free Market.

Re: All the oxygen trapped in a bubble

#89

Post by randomdata »

billybob wrote: post #61
edwinnathaniel wrote: post #36

Earlier quoted context omitted.

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.

Why does "talent" have to mean "incredible geniuses"? Lots of companies need programmers who are "pretty good," whatever that means to you.

Or do they? If you look at the big industries of the past, they came with real time constraints. In agriculture, for instance, if the work wasn't completed in time, the food would spoil. While skilled farmhands are more valued, in the absence of them, anyone off the street will be given the job simply because it has to be done one way or another.

What are the consequences to not building on your technology by a certain date? Maybe your competition will beat you to the punch. Maybe the costs that could be saved by implementing the software will continue to be expensed. Beyond that, not a whole lot.

This leads us to a situation where just having anyone on the job is not viable. It is prudent, in many, cases for a business to simply wait until someone who is "top talent" is freed up to do the work. Simply knowing how to program isn't going to be enough.

Re: All the oxygen trapped in a bubble

#90

Post by wtvanhest »

mbesto wrote: post #69
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…

> he subprime collapse was a bubble. No, that was a bubble bursting. The act of excessive lending was the bubble. Bubbles are only boring until they pop. But they are interesting to identify because we know they do pop eventually. I think the general argument is that people are trying to head warning to those who are less fortunate about seeing the bubble begin to pop. If we all (and we don't) agree there is a bubble…

I think the general argument is that people are trying to head warning to those who are less fortunate about seeing the bubble begin to pop.

I think people are trying to be the next "big short" without knowing enough about finance to actually predict anything. Most of the conversations are boring because the arguments that are brought up show a clear lack of understanding and are based on huge incorrect assumptions about the entire world of finance.

In general institutional investors are seeing a trend of other institutional investors worried about bubbles. To me, the contrarian that I am, this says that there is probably no bubble and that the risk of said bubble is way overblown. The assumption that institutional investors are not intelligent and did not watch the same news you did about the 2001 bubble and housing bubble is a very dangerous assumption to make.

My suggestion would be to think a little before jumping to conclusions on this. I do not know whether there is a bubble or not, but assuming one is forming, it hasn’t hit external markets yet and is largely captured in the SV echo chamber. Facebook will be the first big company to IPO from this. Whether they are a dud or not will have very limited impact on public markets since they make up such a small amount of money compared to the rest of world of finance.

If a single investor isn’t investing $500m in a single deal, it is relatively a nonissue. You may want to be worried if you see multibillion dollar investments by single entities. The top 3 asset managers manage over $5 trillion dollars. That means that 50 Facebooks could fit in just that number. That means that Instagram is a rounding error.

The world in SV seems big to you, but has yet to even remotely impact the outside world.

The big secular trend you should be looking at is the fact that everything will be automated. Everything. That will cause job loss for most, but for the hackers here, you can bet there will be a multitude of areas to save big companies and individuals both time and money. There may be a bubble in social, but there is probably not any bubble outside of that.

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