41,000,006 reasons why I think we're in a bubble • Hacker News Board

Re: 41,000,006 reasons why I think we're in a bubble

#101

Post by wat55 » Thu, Mar 24, 2011, 1:42 PM UTC

danenania wrote: post #94

trotsky wrote: post #76

Make no mistake, a big factor in the creation / encouragement of recent bubbles has been super easy monetary policy that provides cheap and easy credit. In '00 we had a market crash after a dramatic run up of stocks in general and tech in specific. In 1998-1999 rates were low and credit was easily available [1]. As we led up to the millennium changeover ("Y2K") unprecedented amounts of short term capital were made av…

Good post. It seems common for participants in an industry undergoing a bubble to concoct elaborate industry-specific theories to explain a sudden influx of new money when the real cause is, well, exactly that: a sudden influx of new money. Unfortunately, we've been trained to correlate the numbers in our bank accounts with actual value, but the link has been all but severed for a long time. It seems unbelievable tha…

This is completely wrong and absurd. We've had a gradual inflation rate since the beginning of the U.S. Dollar. We were headed toward a deflation without the QEs, which would've been a disaster in a highly illiquid economy. The QEs simply brought the inflation back to a good, gradual rate, and put more liquidity into the economy so businesses can start hiring again.

Re: 41,000,006 reasons why I think we're in a bubble

#102

Post by bhousel » Thu, Mar 24, 2011, 1:42 PM UTC

jamesmcintyre wrote: post #88

bhousel wrote: post #80

Earlier quoted context omitted.

What is far more likely is for Color to try to get themselves acquired by Facebook. If this is their real company strategy, the $41M investment actually makes sense.

that's exactly what I was thinking. I see this as being a very novel concept that if reaches a certain threshold of brand-awareness and good design could be a perfect acquisition target because merely replicating the feature-set would be like Google Video before Google acquired YouTube (it wouldn't be about the technical capability as much as the culture and community around the novel concept).

Perhaps we're seeing the start of something new..

  B2C = Business to consumer
  B2B = Business to business
  B2A = Business to acquisition?

Re: 41,000,006 reasons why I think we're in a bubble

#103

Post by joelhooks » Thu, Mar 24, 2011, 1:42 PM UTC

This is a typical business cycle[1]. Easy credit, low interests rates, no incentive to save.

[1] http://en.wikipedia.org/wiki/Austrian_business_cycle_theory

Re: 41,000,006 reasons why I think we're in a bubble

#104

Post by euroclydon » Thu, Mar 24, 2011, 1:43 PM UTC

edw519 wrote: post #30

I don't know about the rest of the world, but we sure are in a bubble here at Hacker News. There seems to be a real disconnect between what people want to build/invest in and what people in the real world actually need and want to pay for. Just as sample of what I've witnessed in the past few years: Ask HN: How do you like my file sharing app? Ask HN: How do you like my social app for niche ? Ask HN: How do you like…

Q1) How can we increase conversion from 2% to 4%?

A1) Well, this [file sharing/social/twitter/facebook/iphone/game/photo/video] application sure has people's attention. Their developers are wicked smart and have a plan for monetization by utilizing the geo/demographic/taste data of their customers to make it easier for you, the b2c business to target them with advertisements.

Q2) How can we increase revenue?

A2) See A1.

Q3) How can we increase profitability?

A3) See A1.

See also: why should anyone publish this magazine, TV show, blog?

Re: 41,000,006 reasons why I think we're in a bubble

#105

Post by kovar » Thu, Mar 24, 2011, 1:44 PM UTC

mendable wrote: post #92

Asking the wrong question? What about asking, "How has taking this amount of funding helped this business?" Strategically, this much funding through all of the controversy it has generated, will guarantee this company/brand gets in front of nearly every early adopter over the next couple of weeks. It will drive hundreds of thousands of people to try it out. And that's before they've spent a penny of it. Loads of Post…

So, of the $41M, $3M goes to technologists and $38M goes to ad agencies? Hmmmm....

Re: 41,000,006 reasons why I think we're in a bubble

#106

Post by jamesmcintyre » Thu, Mar 24, 2011, 1:44 PM UTC

jamesmcintyre wrote: post #88

bhousel wrote: post #80

Earlier quoted context omitted.

What is far more likely is for Color to try to get themselves acquired by Facebook. If this is their real company strategy, the $41M investment actually makes sense.

that's exactly what I was thinking. I see this as being a very novel concept that if reaches a certain threshold of brand-awareness and good design could be a perfect acquisition target because merely replicating the feature-set would be like Google Video before Google acquired YouTube (it wouldn't be about the technical capability as much as the culture and community around the novel concept).

the other scenario is that they have a tiny bluetooth camera pendant/lanyard (like microsoft's sensecam) that would allow people to literally immerse themselves in their friends' surroundings. having this bluetooth device and the platform would allow for a much higher valuation.

Re: 41,000,006 reasons why I think we're in a bubble

#107

Post by api » Thu, Mar 24, 2011, 1:44 PM UTC

danenania wrote: post #94

trotsky wrote: post #76

Make no mistake, a big factor in the creation / encouragement of recent bubbles has been super easy monetary policy that provides cheap and easy credit. In '00 we had a market crash after a dramatic run up of stocks in general and tech in specific. In 1998-1999 rates were low and credit was easily available [1]. As we led up to the millennium changeover ("Y2K") unprecedented amounts of short term capital were made av…

Good post. It seems common for participants in an industry undergoing a bubble to concoct elaborate industry-specific theories to explain a sudden influx of new money when the real cause is, well, exactly that: a sudden influx of new money. Unfortunately, we've been trained to correlate the numbers in our bank accounts with actual value, but the link has been all but severed for a long time. It seems unbelievable tha…

I don't think anyone is really being fooled anymore. They just get the game, and understand that cheap-money bubbles are a normal part of that game.

Re: 41,000,006 reasons why I think we're in a bubble

#108

Post by fastviper » Thu, Mar 24, 2011, 1:49 PM UTC

TL;DR: bubble is intentionally blown, so that certain people earn more money

Pumping bubble is intentional. Financial world knows and uses this technique for years. They KNOW we have a bubble and THEY pump it up.

They earn money on stocks rising while bubble rises.

The more they invest, the more people come to them with the money (for investment). They earn money on those people (commissions, investment credits, accounts, personal advisory). And as more and more money pours from the sky, the market rises. And they earn on stock rising.

Suckers (commoners like we) believe that they can catch a train with next Facebook and sell houses or use life savings in hope for a fortune. And financial world earns.

At the proper moment leaders of this mess bail out and we have a "crisis".

Most people decide to invest too late (for example now it's much too late) and also bail out MUCH too late (after few hours or days from bubble blowout).

But those managers and capital owners.. People cry, media report suicides and they just are buying another Ferrari and houses in the Canarian/Carribean. They smoke a cigar, drink whiskey and looking at the sky think: 'suckers, so long till next bubble'.

Works like charm for years. So sad that for example my country's currency ex ratio and stock exchange is so vulnerable to this.

Financial managers are not stupid. They are pragmatically cynical.

Re: 41,000,006 reasons why I think we're in a bubble

#109

Post by cynicalkane » Thu, Mar 24, 2011, 1:49 PM UTC

danenania wrote: post #94

trotsky wrote: post #76

Make no mistake, a big factor in the creation / encouragement of recent bubbles has been super easy monetary policy that provides cheap and easy credit. In '00 we had a market crash after a dramatic run up of stocks in general and tech in specific. In 1998-1999 rates were low and credit was easily available [1]. As we led up to the millennium changeover ("Y2K") unprecedented amounts of short term capital were made av…

Good post. It seems common for participants in an industry undergoing a bubble to concoct elaborate industry-specific theories to explain a sudden influx of new money when the real cause is, well, exactly that: a sudden influx of new money. Unfortunately, we've been trained to correlate the numbers in our bank accounts with actual value, but the link has been all but severed for a long time. It seems unbelievable tha…

The current inflation rate suggests that the supply and demand for cash is in balance. This might not be true, but you won't disprove it with unsourced conspiracy theories.

Re: 41,000,006 reasons why I think we're in a bubble

#110

Post by goatforce5 » Thu, Mar 24, 2011, 1:51 PM UTC

Tyrannosaurs wrote: post #98

goatforce5 wrote: post #77

Earlier quoted context omitted.

The would appear to have a coherent story as to why they need $40m, and they found some VCs who agree with them and think they'll make some money (normally 10x, right?) at the end of it all. More power to 'em.

I recall that being the justification for a lot of VC stuff around 1999/2000.

But what's the answer? Regulate the size of investments in early stage companies? Point and laugh at seemingly crazy valuations? Ignore the market and concentrate on building our own things?