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Why This Tech Bubble Is Worse Than 2000

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Re: Why This Tech Bubble Is Worse Than 2000

#21

Post by jawns »

quinnter wrote: post #3
baldfat wrote: post #2

> Because the only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity. > In the tech bubble it was Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook, etc. Umm I think there certainly is value in Facebook and all their apps of WhatsApp, Instagram and FaceBook. Just link bait article to me.

Yeah, how does Uber not have real value?

You misunderstand.

> In a bubble there is always someone with a “great” idea pitching an investor the dream of a billion dollar payout with a comparison to an existing success story. In the tech bubble it was Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook, etc.

He's not saying that Uber, Twitter, and Facebook have no value. He's saying that today's startups that are comparing themselves to these success stories are drastically overvalued.

Re: Why This Tech Bubble Is Worse Than 2000

#22

Post by Yhippa »

Let's say what he says is true; the valuations are zero. The decreased valuation of these companies have a chain effect but this time the contagion is contained to the investors themselves. They took on all of the risk and assuming they are private then they will take the hit as opposed to say CALPERS customers.

Unless they got that money to invest from public sources.

Re: Why This Tech Bubble Is Worse Than 2000

#23

Post by rm_-rf_slash »

jonnathanson wrote: post #10

Let's say, for the sake of argument, that the 225,000 angel investors the author counts are all going bust. Their investments are illiquid and effectively worthless. How is this scenario worse than that of the late '90s, when the bubble affected the public market, and millions of people's investments evaporated overnight?

Back in the dotcom days the IPO was the finish line, but recently the fashion seems to be raising greater and greater sums in private investment rounds, particularly for "businesses" that build up an audience first and figure out monetization later.

So instead of the many stock market investors (individuals, pension funds, hedge funds, banks, etc) getting burned, it is the much smaller pool of angels and VCs who would pass the credit/equity crunch to startups. The loss of wealth wouldn't be as widespread as before, but it would throw a wrench into one of the few genuinely competitive industries in the U.S. today.

There is reason to be concerned, but I think the author's fears are somewhat overblown.

Re: Why This Tech Bubble Is Worse Than 2000

#24

Post by fweespeech »

chaos_monkey wrote: post #12

Isn't it kind of ironic that he says that people don't know what they're getting into when they invest in small apps and tech startups, and then plugs his own app startup at the end of the article?

Yeah. He shouldn't have done that if he wanted to be taken seriously.

Re: Why This Tech Bubble Is Worse Than 2000

#25

Post by ThomPete »

I still stand by my assertion that tech in general is undervalued but the VC and angel investments are overvalued.

I think it's true that a lot of the so called startups are "just" app ideas chasing user growth not actually businesses chasing profits.

The market only works if there is a constant liquidation of these startups which means a way to check whether they are actually going to stand a chance as independent companies making real money and sustaining it's own growth.

It doesn't work when the ponzi scheme that a lot of this looks like doesn't have a way to do that but is purely based on the ability to secure next round of funding.

The irony is that the world is filled with actual problems to solve, yet money are getting thrown after young founders who might know how to get a lot of followers but are really just tricksters finding ways to "growth hack" their way to popularity.

Clayton Christensen was right after all. "Be patient for growth, not for profit"

Re: Why This Tech Bubble Is Worse Than 2000

#26

Post by shkkmo »

This guy has no idea what is he talking about:

> there is no reason to believe that the SEC will be smart enough to create some form of liquidity for all those widows and orphans who will put their $5k into the dream only to realize they can’t get any cash back when they need money to fix their car

The current requirements for equity crowd funding include either 1 Million in non-residential assets, or a reliable 200k annual income (based on 2 years of income, and it's 300k if you have a spouse).

This is fear mongering plain and simple. Atleast until the SEC proposes removing these requirements.

Re: Why This Tech Bubble Is Worse Than 2000

#27

Post by fredkbloggs »

valarauca1 wrote: post #6

>You couldn’t go anywhere without people talking about the stock market. Everyone was in or new someone who was in. There were hundreds of companies that were coming public and could easily be bought and sold. You just pick a stock and buy it. Then you pray it goes up. Which most days it did. So people trading stocks without understanding the business or how the valuation of that stock was related to a core business.…

The link between an asset's intrinsic value and its market value is elastic, and the elasticity depends on how quickly the money supply grows and the available rate of real returns elsewhere in the economy. In theory, a fiat-based monetary system can have unbounded monetary growth; in such a system, there is always a "greater fool" and the link to intrinsic value is broken entirely. Not saying this is actually happening, only that it can; it's simply the degenerate case of what we actually observe.

Re: Why This Tech Bubble Is Worse Than 2000

#28

Post by valarauca1 »

fredkbloggs wrote: post #27
valarauca1 wrote: post #6

>You couldn’t go anywhere without people talking about the stock market. Everyone was in or new someone who was in. There were hundreds of companies that were coming public and could easily be bought and sold. You just pick a stock and buy it. Then you pray it goes up. Which most days it did. So people trading stocks without understanding the business or how the valuation of that stock was related to a core business.…

The link between an asset's intrinsic value and its market value is elastic, and the elasticity depends on how quickly the money supply grows and the available rate of real returns elsewhere in the economy. In theory, a fiat-based monetary system can have unbounded monetary growth; in such a system, there is always a "greater fool" and the link to intrinsic value is broken entirely. Not saying this is actually happen…

Your assertion requires an unbounded number of consumers, which last time a check the population of the earth was still finite.

You can fool all of the people most of the time, and you can fool some of the people all of the time, but you cannot fool all of the people all of the time - A. Lincoln

Re: Why This Tech Bubble Is Worse Than 2000

#30

Post by bigtunacan »

bigtunacan wrote: post #17

With the kind of money he has, Cuban should know that Angel investing is nothing new. I was part of a startup in the late 90s that was entirely funded by angel investments. These private investments are just business as usual. The only new thing is the organization of micro investment angels to allow investment from people with less money. Personally I think those are a bad idea and smart people would be better putti…

Not sure what I said that got me a down vote, but just on the off chance it is because I used the word "Cuban" and someone thought I was being racial... The article was authored by Mavericks owner Mark Cuban.

Maybe it was something else I said, just not sure what.

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