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Today’s correction isn’t much like the dot-com bubble

theatlantic.com

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Re: Today’s correction isn’t much like the dot-com bubble

#11

Post by corporateslave5 »

mtts wrote: post #3

“ The problem with tech today isn’t so much that software failed to eat the world, but that the most celebrated unicorns weren’t actually software companies. They have struggled to achieve liftoff because their feet are stuck in the mud of the physical world” This sums it up nicely. Investors got deluded enough to think that if they threw enough money at a non-software company it would magically start making software…

The thing is I don’t think investors got deluded, I think investors new exactly what they’re doing. They were hoping some greater fool would take the investment off their hands

Re: Today’s correction isn’t much like the dot-com bubble

#12

Post by easytiger »

puranjay wrote: post #7

It's an incredible mix of hubris (on the startup's part) and delusion (on the investors part) to call some of these "tech companies". Like WeWork. It's a real estate company that should be valued like a real estate company. But somehow everyone concurred that it is, indeed, a tech company. How or why, no one bothered to ask.

To be more specific it's a real estate company, that started out with a low asset ownership position.

Then it got into the asset game leveraging their revenue, but mostly leveraging some meaningless sociological/technological gibberish to skewer an investor.

I think this speaks to the state of the kind of people making decisions about things they don't even try to understand.

Re: Today’s correction isn’t much like the dot-com bubble

#13

Post by cptskippy »

muglug wrote: post #4

The obvious counter-example to this is Slack, a "pure-tech" company whose value has halved since IPO, and there's a similar story with Snapchat (though its value has recovered somewhat in the past year).

I don't think Slack counts, Slack's IPO was just a cash out because they saw the writing on the wall.

Re: Today’s correction isn’t much like the dot-com bubble

#14

Post by agumonkey »

WhyNotThough wrote: post #6
jacquesm wrote: post #5

Earlier quoted context omitted.

SpaceX is real. Uber, AirBnB, WeWork and all the other 'lawbreaking as a service' and 'subsidizing transactions with massive VC' companies are not.

Taxi and hotel businesses deserved a little punch in the gut.

Be gentle please, I understand and agree that these industries got complacent but these are people. I think our societies should integrate this 'kick' phases to make them smoother and more respectable rather than have toxic competitors attack them.

Re: Today’s correction isn’t much like the dot-com bubble

#15

Post by Slartie »

muglug wrote: post #4

The obvious counter-example to this is Slack, a "pure-tech" company whose value has halved since IPO, and there's a similar story with Snapchat (though its value has recovered somewhat in the past year).

Well, nobody said that being a "pure" tech company automatically guarantees sky-high valuations, a hockeystick growth curve and the successful capture of a winner-takes-all market. Of course there must still be failures in that space, some which fail early and some which fail late.

It's just that the described path to success is close to impossible in any other space except for pure tech companies, preferably with a software-only product, which means that any company not fitting that description, but boasting absurd high valuations justified by assuming the company will go the path described above does most likely mislead investors.

Re: Today’s correction isn’t much like the dot-com bubble

#16

Post by ivanche »

corporateslave5 wrote: post #11
mtts wrote: post #3

“ The problem with tech today isn’t so much that software failed to eat the world, but that the most celebrated unicorns weren’t actually software companies. They have struggled to achieve liftoff because their feet are stuck in the mud of the physical world” This sums it up nicely. Investors got deluded enough to think that if they threw enough money at a non-software company it would magically start making software…

The thing is I don’t think investors got deluded, I think investors new exactly what they’re doing. They were hoping some greater fool would take the investment off their hands

That's not investing, that's speculation.

Re: Today’s correction isn’t much like the dot-com bubble

#17

Post by buboard »

puranjay wrote: post #7

It's an incredible mix of hubris (on the startup's part) and delusion (on the investors part) to call some of these "tech companies". Like WeWork. It's a real estate company that should be valued like a real estate company. But somehow everyone concurred that it is, indeed, a tech company. How or why, no one bothered to ask.

Did the company call itself such? Or was she invited to the party for her renowned riches?

Re: Today’s correction isn’t much like the dot-com bubble

#18

Post by NeedMoreTea »

wisty wrote: post #8
jacquesm wrote: post #5

Earlier quoted context omitted.

SpaceX is real. Uber, AirBnB, WeWork and all the other 'lawbreaking as a service' and 'subsidizing transactions with massive VC' companies are not.

Uber has a market cap of like 50 billion. It's real. It's no Apple or Google though.

That makes it a large bubble. Market cap in and of itself is useless. How long do you see customers staying loyal after VC money stops subsidising every ride?

Re: Today’s correction isn’t much like the dot-com bubble

#19

Post by oarsinsync »

firasd wrote: post #9
jacquesm wrote: post #5

Earlier quoted context omitted.

SpaceX is real. Uber, AirBnB, WeWork and all the other 'lawbreaking as a service' and 'subsidizing transactions with massive VC' companies are not.

I think the word 'subsidy' is kinda questionable here. (This writer's previous article used the same word to discover many companies[1]) If a company is not losing money on gross margins--if they are losing money in total 'unit economics' because the customer acquisition cost is high--does it really mean they are subsidizing usage? An example is Casper, the mattress company. They are still selling mattresses to consu…

If the money is going on tangental customer acquisition costs (ie marketing), it's probably not a subsidy.

If the money is going directly either to the supplier or the customer (subsidizing the customer's costs directly or indirectly), then it's probably a subsidy.

Re: Today’s correction isn’t much like the dot-com bubble

#20

Post by matwood »

corporateslave5 wrote: post #11
mtts wrote: post #3

“ The problem with tech today isn’t so much that software failed to eat the world, but that the most celebrated unicorns weren’t actually software companies. They have struggled to achieve liftoff because their feet are stuck in the mud of the physical world” This sums it up nicely. Investors got deluded enough to think that if they threw enough money at a non-software company it would magically start making software…

The thing is I don’t think investors got deluded, I think investors new exactly what they’re doing. They were hoping some greater fool would take the investment off their hands

The greater fools in the case of We being the public market. The rejection of the We IPO was a win against this ridiculousness.
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