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Tech Bubble? Maybe, Maybe Not

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Re: Tech Bubble? Maybe, Maybe Not

#12

Post by copsarebastards »

The main arguments against there being a bubble seem to be that things aren't as obviously a bubble as they were before the previous tech bubble. This is all a businessperson's approach to analyzing this situation.

Looking at it from a technical perspective: there are two kinds of companies out there. There are companies that do something people care about and ones that don't.

Think about Twitter for a second. If Twitter dropped off the face of the earth, would you really care? I wouldn't. Even if I used Twitter, it wouldn't be hard to just go find all the same people on Facebook or whatever and follow them there. People and companies use Twitter for self-promotion, but that puts Twitter into the same business demographic as a TV channel that runs infomercials. Some people watch infomercials, but if the entire infomercial market disappeared, nobody would really care. The problem with Twitter isn't that they can't monetize their product, it's that they don't have a product.

Then there are companies that actually have a product. They may not charge for their product, but if they did, people would pay for it. Uber and AirBNB charge for their products.

Duolingo doesn't charge language learners, but they probably could: my experience is that they are more effective for language learning than Pimsleur, which a lot of people pay for. It's an artifact of the Google age that companies don't actually charge for their product, but charge for ancilliary services around it. Google doesn't charge for search: they charge for ads. But if Google decided to start charging $10/mo for search? A lot of people would pay it.

Re: Tech Bubble? Maybe, Maybe Not

#13

Post by taurath »

ghaff wrote: post #7
DigitalSea wrote: post #3

Surprisingly this is a great article about the speculation of there being another tech bubble. I wasn't expecting there to be actual metrics and charts, I have become too used to people voicing their opinions without backing up their claims with actual data. I am still on the fence about whether or not we are entering a bubble (or if you believe some people already within one). Comparing metrics to the early 2000's i…

It also strikes me as an interesting question how much collateral damage will result from bubble deflation if it happens. Other events in 2000/2001 contributed (post-Y2K, 9/11) but dot-bomb also had a big effect upstream because all those startups were pumping crazy money into big IT suppliers like Sun, EMC, and Cisco. So the bubble bursting had huge ripple effects. I'm not sure a burst bubble that's mostly about out…

All those startups are pumping insane amounts of money into the entire region of the SF bay area, to the exclusion of nearly all other locations - no matter what, it will massively effect the economy of the bay area.

Re: Tech Bubble? Maybe, Maybe Not

#14

Post by mbrubeck »

copsarebastards wrote: post #12

The main arguments against there being a bubble seem to be that things aren't as obviously a bubble as they were before the previous tech bubble. This is all a businessperson's approach to analyzing this situation. Looking at it from a technical perspective: there are two kinds of companies out there. There are companies that do something people care about and ones that don't. Think about Twitter for a second. If Twi…

> Even if I used Twitter, it wouldn't be hard to just go find all the same people on Facebook or whatever and follow them there.

The fact that Twitter overlaps with other services like Facebook doesn't mean it's not valuable. For example, to take one of your own examples:

> If Google decided to start charging $10/mo for search? A lot of people would pay it.

"Even if I used Google, it wouldn't be hard to just go enter the same searches on Bing or DuckDuckGo and find web sites there instead."

Re: Tech Bubble? Maybe, Maybe Not

#15

Post by plaguuuuuu »

IMO the most worrying statistic in support of a bubble is that graph showing valuations outpacing fundraising. The very definition of a bubble is a positive feedback loop of overvaluation.

Fundraising being low compared to valuations is a sign that VCs' risk appetites take into account the probability that everything is hugely overvalued.

Fundraising could ultimately surge towards 2000 levels if people really start drinking the Kool-Aid. But if it pulls back then I'd expect to see valuations plummet and, accordingly, share prices.

Re: Tech Bubble? Maybe, Maybe Not

#18

Post by ghaff »

taurath wrote: post #13
ghaff wrote: post #7

Earlier quoted context omitted.

It also strikes me as an interesting question how much collateral damage will result from bubble deflation if it happens. Other events in 2000/2001 contributed (post-Y2K, 9/11) but dot-bomb also had a big effect upstream because all those startups were pumping crazy money into big IT suppliers like Sun, EMC, and Cisco. So the bubble bursting had huge ripple effects. I'm not sure a burst bubble that's mostly about out…

All those startups are pumping insane amounts of money into the entire region of the SF bay area, to the exclusion of nearly all other locations - no matter what, it will massively effect the economy of the bay area.

I'm not convinced though that the money being pumped in by those startups (as opposed to the big tech companies that are making money) are of the same order as when the first thing any startup did was to buy a few $M worth of proprietary hardware.
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