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How tech’s defiance of economic gravity came to an abrupt end

economist.com

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Re: How tech’s defiance of economic gravity came to an abrupt end

#111

Post by fallingknife »

ianai wrote: post #73

Here’s a Fed analyst policy briefing on market valuations today and going forward: https://www.federalreserve.gov//econres/notes/feds-notes/the... It’s an insight into how they’re thinking for one. For two, the conditions that led to the current economic situation are unlikely to be present in the future. In many cases those situations can’t be reproduced because they would require highly unlikely situations (another…

Population growth is great for GDP growth, but not necessarily quality of life.

Re: How tech’s defiance of economic gravity came to an abrupt end

#112

Post by dimator »

birdymcbird wrote: post #106
screye wrote: post #86

I believe the doom-n-gloom around all of tech is rather overblown. There are sectors of tech that will absolutely struggle. Gig-economy companies won't ever meet their valuation. Negative PE ratio startups are realizing that hyper-scaling is not as infinite as they believed, and that means their earnings might never catch up to their price. Social media companies are finally facing stiff non-American competition (Tik…

Overly rosy take on big tech. I’ll use Google as example. Their execs are in full panic right now over OpenGPT. What was last major innovation at Google.. chrome? 20% of company drives profits while 80% is a decorated R&D lab chock full of benefits, upset about cutbacks in their free oatmilk lattes, even though they’re not coming to office anyway. these guys will double their attrition targets if not have full blown…

Why are they in a panic over ChatGpt? Don't they have similar research and tech around these AI systems?

Re: How tech’s defiance of economic gravity came to an abrupt end

#113

Post by danaris »

cjbgkagh wrote: post #61
fosk wrote: post #18

Earlier quoted context omitted.

Contrarian signal, for the sake of having a conversation: - I think we will experience a massive deflationary bust. The inflation narrative is over, it’s all about a potential recession now. - By Summer 2023 we will experience YoY deflation and the Fed will cut then, or even sooner in anticipation to that. - We may see hikes pausing as soon as February, and cuts starting in the summer as a result of rapid disinflatio…

Putin was always willing to negotiate and there have been attempts at negotiation before and during the conflict, what matters are the pre-conditions to negotiations. If the pre-conditions are too strong then in effect it blocks negotiations and it means the overtures to negotiate are simply done for political reasons. We’re being told that only now Putin is ready to negotiate so I’m assuming that means the pre-condi…

Putin's version of "negotiations" has always been "give me what I want, and I might not kill thousands of you."

If Ukraine is "pressing its advantage", it's to take back the territory that Russia has illegally attempted to annex.

Please stop spreading Russian propaganda.

Re: How tech’s defiance of economic gravity came to an abrupt end

#114

Post by birdymcbird »

goldenchrome wrote: post #110
birdymcbird wrote: post #106

Earlier quoted context omitted.

Overly rosy take on big tech. I’ll use Google as example. Their execs are in full panic right now over OpenGPT. What was last major innovation at Google.. chrome? 20% of company drives profits while 80% is a decorated R&D lab chock full of benefits, upset about cutbacks in their free oatmilk lattes, even though they’re not coming to office anyway. these guys will double their attrition targets if not have full blown…

You underestimate the staying power of monopolies.

No, but i think you do have a point. Googles board and company execs had convinced themselves they’re an untouchable money printing machine. This year, they’ve been violently woken up.

Re: How tech’s defiance of economic gravity came to an abrupt end

#115

Post by fallingknife »

Apocryphon wrote: post #95
nugget wrote: post #90

Earlier quoted context omitted.

Google acquired YouTube and Facebook acquired Instagram. Both for what seemed like insane valuations at the time. Both were brilliant defensive acquisitions in hindsight. Both fueled tech valuations by illustrating the opportunity for rapid disruption.

Wonder how it’d go if the DoJ actually practiced antitrust towards tech again. The EU Commission does, at least.

Both of those acquisitions were tiny $1 billion buys. They only grew into massive entities under their new corporate parents. Antitrust doesn't apply to such a situation. They could only be seen as critical acquisitions in hindsight.

Re: How tech’s defiance of economic gravity came to an abrupt end

#116

Post by EGreg »

haliskerbas wrote: post #102
EGreg wrote: post #94

Earlier quoted context omitted.

You forgot the biggest one. Advertising revenue. That’s what Facebook and Google were supported by. And it has been a zero sum game in a race to the bottom for years. They just didn’t diversify much, same as Russia or Venezuela with their oil economies. Most companies built around zero-sum games are eventually going to stop growing as you run out of other people’s money. But that’s OK — they are already HUGE! The rea…

Search ads and social ads are two different games I would say.

Either way, it’s a zero sum game. The productive sectors of society (businesses with goods and services) spend on advertising to attract customers away from each other. The majority who don’t have massive budgets for optimizing soon realize the ROI is negative on ad spend, and stop. Same as traders who get liquidated after trying futures.

Re: How tech’s defiance of economic gravity came to an abrupt end

#117

Post by starkd »

givemeethekeys wrote: post #2

When the DotCom bubble burst, and after 2009, traffic in the Bay Area cleared up. Commuting time got cut by half. Homes in many neighborhoods, apart from the very best school districts, became attainable. This has yet to happen. Unemployment is still quite low. The music is just starting.

Is unemployment still really low?

Job growth was less than it was originaly reported. By a lot. From 1M to just 10K.

https://nypost.com/2022/12/22/biden-administration-overstate...

Re: How tech’s defiance of economic gravity came to an abrupt end

#118

Post by MilStdJunkie »

EGreg wrote: post #94
screye wrote: post #86

I believe the doom-n-gloom around all of tech is rather overblown. There are sectors of tech that will absolutely struggle. Gig-economy companies won't ever meet their valuation. Negative PE ratio startups are realizing that hyper-scaling is not as infinite as they believed, and that means their earnings might never catch up to their price. Social media companies are finally facing stiff non-American competition (Tik…

You forgot the biggest one. Advertising revenue. That’s what Facebook and Google were supported by. And it has been a zero sum game in a race to the bottom for years. They just didn’t diversify much, same as Russia or Venezuela with their oil economies. Most companies built around zero-sum games are eventually going to stop growing as you run out of other people’s money. But that’s OK — they are already HUGE! The rea…

There's a general fear that customers eventually will realize that the Google / FB ad dollars aren't actually creating new business. These gatekeepers - the Googles/Apples/FBs/etc - can predict where consumers are about to go[1], but the total numbers don't go up.

It's sort of like the difference between coupons in the local paper, versus coupons that your ad man hands out next to the front door of your business. Everyone who gets a coupon was coming here anyway.

The dark side of this is how your business can suddenly disappear from view if you stop buying into the Web-Ad-Hive-Mind. That's way worse than the coupon guy hanging outside the front door - that's more like someone in fake construction vests putting up cones around your parking lot.

[1] Giving them something that looks like magic powers to individual businesses, particularly those that aren't particularly computer savvy. "Holy smokes!! 95% of the people who Google reaches went to my pizza place! They must be soooooo good at convincing people my pizza's the best!"

Re: How tech’s defiance of economic gravity came to an abrupt end

#119

Post by fallingknife »

ramesh31 wrote: post #82
ehnto wrote: post #69

Earlier quoted context omitted.

Another fun example of looking at valuations versus actual real world production and output (real value delivered?): Tesla for a period was valued at a higher market cap than Toyota, the largest auto manufacturer in the world. Consider the real world infrastructure and output of Tesla, and the real world infrastructure and output of Toyota. Toyota is an order of magnitude larger operation. So for Telsa's valuation to…

>Tesla for a period was valued at a higher market cap than Toyota, the largest auto manufacturer in the world. Tesla is still valued higher than Toyota, Honda, GM, and Ford combined . Something is broken.

That's not true. You are looking at market cap when you should be looking at enterprise value. Toyota is $350 billion and TSLA is $380 billion.

Re: How tech’s defiance of economic gravity came to an abrupt end

#120

Post by birdymcbird »

dimator wrote: post #112
birdymcbird wrote: post #106

Earlier quoted context omitted.

Overly rosy take on big tech. I’ll use Google as example. Their execs are in full panic right now over OpenGPT. What was last major innovation at Google.. chrome? 20% of company drives profits while 80% is a decorated R&D lab chock full of benefits, upset about cutbacks in their free oatmilk lattes, even though they’re not coming to office anyway. these guys will double their attrition targets if not have full blown…

Why are they in a panic over ChatGpt? Don't they have similar research and tech around these AI systems?

80% of their revenue comes from ads, which is google search. Chatgpt and any other startup who invests in something like chatgpt can upend googles core business model.

and no, google doesn’t have anything significant in this space. “Innovation” behind search was to slowly increase no. if paid ads in your results, driven by need to increase revenue and keep the rest of the 80% of biz afloat.

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