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

jacquesmattheij.com

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

#121

Post by kovar »

goatforce5 wrote: post #110
Tyrannosaurs wrote: post #98

Earlier quoted context omitted.

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?

I'm trying to ignore the market as it really has little significant impact on what I'm doing. The effects it has on me are:

- It is creating a scarcity in developer resources. This just forces me to relearn how to write good software, definitely not a bad thing. - It is generating a lot of interest and investment in various tools that I can build, saving me effort and producing a better product.

Those are the good impacts.

It does create a sour grapes type of emotion that I try to put aside. $41M would go a long way towards funding a lot of small startups, or supporting animal shelters that are swamped due to people no longer being able to afford their pets, or building companies that would employ people that lack high tech skills or the opportunity to employ those skills if they could acquire them.

(And if you think "Oh, anyone can refocus themselves and get in the game, come live in the rural midwest for awhile and then tell me that.)

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

#122

Post by danenania »

wat55 wrote: post #101
danenania wrote: post #94

Earlier quoted context omitted.

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.

"We were headed toward a deflation without the QEs, which would've been a disaster in a highly illiquid economy."

Right, this according to the brilliant minds who created the crisis in the first place.

Clearly the financial situation is bad. Your 'good, gradual inflation rate' is WHY we're on the precipice of disaster. It's not like we now have a choice between an economic meltdown and a land full of unicorns and rainbows if only we keep stamping more paint on more pieces of paper. Our only option is damage control, but you'd rather keep piling on the damage.

Google some of the predictions made by Bernanke and his colleagues in the years and months leading up to the crisis. They've been dead wrong every step of the way. Yet now we are supposed to believe that inflation is no concern when food and commodity prices are at all time highs and causing revolts around the world? Talk about absurd.

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

#123

Post by bhousel »

notahacker wrote: post #120
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.

I'd say it's the opposite, it's made them very expensive to acquire. It's not inconceivable that with the right team and a very impressive tech demo Facebook might have been prepared to sink >$41 million into a strategic aqui-hire at a very early stage. Now to give the VCs a return on their investment they're probably expected to exit at north of a billion, which means they're going to have to show Facebook something…

You don't think the investors would be happy with $400MM in pre-ipo Facebook shares?

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

#124

Post by cma »

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…

Who would take pleasure in reading Hacker News if it became about almost any of that customer stuff? All that stuff could be getting submitted and just not upvoted, because it is boring.

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

#125

Post by patio11 »

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…

To add, approximately one half of people in the real world share a common demographic category with a sliver of HN users and a fraction of a sliver of what we create.

Women have money. Go take it. Nobody else wants it in tech. (Well, aside from Groupon, Zynga, and a few other companies that missed the opportunity to make an iPhone app that you could wiggle to share photos.)

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

#126

Post by dstein »

pclark wrote: post #35
Tyrannosaurs wrote: post #33

Earlier quoted context omitted.

Yes but knowing what you'd do with it and that being a good thing to do with it are different things. I don't see what they need $40m for that's going to deliver real value.

Why would you see what they need $40m from when you are on the outside looking in on a single product? Seriously.

There's absolutely nothing in the Techcrunch article that would suggest this company is doing anything so technologically complex that it can't be easily duplicated. They even admitted they have no concrete plan (or proof) they can monetize.

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

#127

Post by [deleted] »

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…

[deleted]

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

#128

Post by chernevik »

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…

These are all good points, and I think you will eventually be right. But choosing which interest rate forecast is reliable is almost as hard as making a reliable forecast in the first place. If your strategy depends on easy access to capital, then perhaps it isn't such a good strategy.

I also think this overlooks some real changes in the technology space. Mobile device prevalence is new, and the devices are still developing. We're still working out the implications of social media. The industry leaders in those spaces have controversial business models, and those controversies may yet lead to still more changes. And many incumbent industries are grappling with adaptation to these changes. There would be effort to make the most of these changes in any capital raising environment.

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

#129

Post by danenania »

api wrote: post #100
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…

I personally think that the fed now has no choice but to pump money at zero (to effectively negative) interest forever. There's a number of reasons for this: demographics, peak oil, the massively deflationary effect of certain technologies, etc. The west really looks a lot like Japan, which has pumped cheap money since their economy went through a similar cycle of stock bubble, real estate bubble, and crash. So expec…

The question is what happens if/when inflation gets out of hand. Raising rates causes deflationary collapse, mass unemployment, and default on government debt. Keeping them low risks crippling inflation which could lead to social instability even in the US. What's a Fed Chairman to do?

Deflationary collapse is the only path back to a sustainable model, but it's extremely painful in the short term and so nearly unthinkable that a politician would choose it unless all but forced. Are you thinking things just won't get bad enough to bring the situation to a head?

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