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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

#91

Post by crusso »

raganwald wrote: post #86
crusso wrote: post #83

Earlier quoted context omitted.

> 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…

> 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?

Good question. We'll need some sort of legal framework whereby it's punishable for the creators of products/services... (I'll call them $ellers (never knew what that "$" key was good for, but it looks like an "S")) to make claims that just aren't true about their products/services. We'll also need to give victims a means to collect some sort of compensation when they're hurt by a $eller... particularly when it's the result of a false claim. Families of victims could also get compensation when the victim croaks. Croak? Funny. I think when a $eller lies I'll call it "Frog".

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

What are dollars? Is that how people vote for their favorite products? I was thinking "voting tickets" or simply "vickets". I'm open to ideas, though, so sure... let's use your dopey "dollars" term.

Anyway, the answer is -- No, because victims will be able to charge $ellers with frog. We can make it a crime punishable with jail time as well. That should discourage it heavily.

But otherwise for $ellers that don't violate these new laws that I'm drafting, we DO associate with billions of "dollars" with value. I think that's a great idea.

Next question?

Re: All the oxygen trapped in a bubble

#92

Post by theorique »

aaronblohowiak wrote: post #80
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.

If you can time it right, it is probably best to start your own thing right before the peak - get funded, and have a nice Series A war chest just as the lean times hit and the water turns red.

Although to truly weather the lean times, this would have to be a real business - ideally with customers cash flow - not a fluffy built-to-flip eyeball monetizing engine.

Re: All the oxygen trapped in a bubble

#93

Post by mbesto »

wtvanhest wrote: post #90
mbesto wrote: post #69

Earlier quoted context omitted.

> 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 a…

> 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.

How so? The only dangerous assumption I see is the constant "but it'll be better this time" that the general public irrationally believes. Are the institutional investors not aware of the impending education (lending) bubble as well? Of course they are, because they stand to make money off someone else's loss. It's the Greater Fool Theory at play.[1] Financiers make their money off predictability, and bubbles are much easier to predict (and manipulate) than straight-line growth, with much higher profit potential.

[1] - http://en.wikipedia.org/wiki/Greater_fool_theory

Re: All the oxygen trapped in a bubble

#94

Post by crusso »

lmm wrote: post #17
dave1619 wrote: post #5

I know the guys at 37Signals are a smart pack, but I don't understand their hangup with Instagram and Pinterest... and apparently FB (esp. their older posts). FB has proven to be able to make $billions of revenue and substantial profit, and is only growing. Isn't that proof that an ad-based model can work if it's large enough? Instagram was FB's biggest competitor... huge growth and huge adoption amongst young groups…

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?

Yeah, DHH invented Rails and has shepherded the project to be a dominant player in the web framework world. Really, you could credit him with all the copycat frameworks like Django as well and a good percentage of the other frameworks that reproduced significant innovations introduced in Rails. He's no Linus, but he was a huge force for technological innovation back in the mid-to-late 200x years and maybe a few weeks ago.

But what has he done for us haters lately? I say we hang him. Maybe we should pluck his fingernails out first for making HN members up-vote his blog post.

Re: All the oxygen trapped in a bubble

#95

Post by wtvanhest »

mbesto wrote: post #93
wtvanhest wrote: post #90

Earlier quoted context omitted.

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 a…

> 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. How so? The only dangerous assumption I see is the constant "but it'll be better this time" that the general public irrationally believes. Are the institutional investors not aware of the impending education (lending) bubble as well?…

Most large institutional investors use fundamental analysis which is not impacted by the Greater Fool Theory. (see your own wiki article).

Also, I'm not seeing a lot of, "but it'll be better/different this time". If I were, I would be considerably more worried.

Re: All the oxygen trapped in a bubble

#96

Post by smacktoward »

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…

Those data read like they're limited to VC firms big enough to join the NVCA, which requires funds to have at least one full-time employee to qualify for membership (see http://nvca.org/index.php?option=com_content&view=articl...). So angel investment wouldn't be included, and (anecdotally, I know) it feels like angel investment is where a lot of the big recent money has come from.

Re: All the oxygen trapped in a bubble

#97

Post by ereckers »

3pt14159 wrote: post #2

I'm finally coming around to thinking that it is starting. About three years ago people were screaming bubble because YC companies were getting $4m or $5m valuations and I wrote the following: "The truth is this: Bubbles don't exist without my aunt's mutual fund getting involved or my next door neighbor getting told to mortgage his house to invest by his financial advisor. Web 1.0 was all about IPOing on the nasdaq a…

I agree with the "next door neighbor" allegory. There's only a "bubble" when we can identify a bag holder. That almost inevitably winds up being the plebs, whether it be the general population or via government bailout (still the people). I'm not sure if anyone has yet identified who would be the bagholders in this "bubble", because a bunch of rich guys at Andreesen or Sequoia sure aren't it.

You need a vehicle for the commoner to piss away their money. I don't see that yet. Maybe in a couple years, when your local community KickStarter has you pulling money from your 401K to invest in corporate backed internet startups will they have a way to start to attract Joe the Plumber's wealth.

And with that, a "bubble" comes with it the psychological idea that it's RISK FREE money. That you can borrow money now, sell later and cash out the gains as your investment surely grows. Add to that the real actual feeling that you'd be stupid not to do it (because everywhere you look people are making money off this). That's when we've got a bubble.

When someone can point out a large, wide, gullible, set of people with no access to real fundamental information willing to give up their money through a simple mechanism (stock markets, housing, etc..) then folks, we've got a bubble.

Re: All the oxygen trapped in a bubble

#98

Post by cletus »

joering2 wrote: post #63
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…

Good post, thank you. Now: > Pinterest: [...] - how do you see them dealing with copyrights of content? I don't think they will make much of profit if are willing to share $ with photography owners. The majority of value in Pinterest's user experience is that its fresh and content is created (pinned) by other users, NOT by corporations. The moment you will see every other picture a picture of an Ikea Kettle (or desk,…

> Pinterest: [...]

Pinterest is not without risk but the potential is huge and it has many obvious monetization options. Risks include:

- clones and insufficient network effect;

- spammers/marketers creating noise;

- someone does recommendation better than they do.

I suspect Pinterest will either need to or should adopt a revenue sharing model with "pinners", copyright holders, etc with revenue coming from affiliate or affiliate-like sources (ie from driving traffic to a site in the case where the same item is sold from multiple sources).

I see the wedding market being particularly huge for this. Wedding planning essentially comes down to selecting a huge number of different things (clothing, where to have the ceremony/reception, food, decorations, etc etc etc) and this could be a really great platform for hosting that sort of thing and tying it in with recommendations.

Twitter as a counterexample I view as ultimately doomed. IMHO within 5 years it will be bought by one of the big players. They haven't come up with a good way to monetize it yet because there isn't one.

> Youtube: [...]

> ... owners had amazing amount of luck ...

Every man and his dog, prior to Youtube, had been trying to do VoD (video on demand) for years. 1-2 new startups appeared every month. I certainly agree there was a timing element in play but Youtube was also the most accessible and easiest to use. Everyone else was terrified of the bandwidth costs. Youtube had the courage to burn through an incredible amount of money to become "the" place for online video-sharing. That could easily have become a disaster instead.

As far as rightsholder issues go, I think Youtube is the poster-child for "it's easier to beg for forgiveness than ask for permission".

As much as people (myself included) have criticized Facebook's privacy blunders I do agree with Zuck on one point: you need to drag people kicking and screaming into the future. What people jump up and down about today they won't blink an eyelid at 5 years from now. Innovation is brinkmanship.

Re: All the oxygen trapped in a bubble

#99

Post by rpwilcox »

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.

Probably a combination of people who don't want to work for Google, developers with families that don't want to bet, and developers who don't want to/can't live in SF (or Austin, or NYC, or...)
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