Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Tech bubbles are bursting all over the place

economist.com

Post reply on HN
Print view View original

21–30 of 774 posts

Re: Tech bubbles are bursting all over the place

#21

Post by prohobo »

People said this was the "best time ever to get funding" for a startup. I disagree. In my view, it was the best time ever if you played a particular game and had the right connections.

I pitched an idea to a VC, which I had a prototype for, looking for $100k. He liked it but wouldn't fund because I didn't have a solid business plan. Fair enough, I need to find a business partner. But then he told me something about how I have to imagine that it's $100k of my money. I need to respect it properly and ask myself: would I give someone this money so easily? Meanwhile he had his hands in various bullshit crypto (not hating on crypto, just the projects) defi startups.

I thought it was absurd, of course I don't respect your money: VC firms throw $250k+ around like candy to people who happen to give a specific quasi-Silicon Valley impression or are in crypto. You're telling me you can't spare $100k? Also, I haven't seen a single "promising" startup actually be profitable, except those ones made without major funding.

This has all been some kind of weird ass circus for years, I'm glad the bubbles are bursting.

Re: Tech bubbles are bursting all over the place

#22

Post by cyral »

qeternity wrote: post #11
freeqaz wrote: post #6

A lot of these companies have very reasonable P/E ratios now. Microsoft is sitting at around 27, Apple 25, and Facebook 15. None of those strike me as "inflated". Those are normal values for the stock market (20-25). Are investors just panicking?

> Those are normal values for the stock market (20-25). Presuming your experience in equities markets is within the last decade... Historical average is more like 15 for SPX.

Here’s a chart of the historical average: https://www.multpl.com/s-p-500-pe-ratio

Re: Tech bubbles are bursting all over the place

#24

Post by crate_barre »

freeqaz wrote: post #6

A lot of these companies have very reasonable P/E ratios now. Microsoft is sitting at around 27, Apple 25, and Facebook 15. None of those strike me as "inflated". Those are normal values for the stock market (20-25). Are investors just panicking?

The issue is that when tech companies look reasonable, everyone and their mother buys in until they look unreasonable.

There is nothing else to believe in. We have one growth industry in this world and it’s tech. It’s not a bubble, it’s the economy running on one lung. You can deflate it and hold your breath, but once you need oxygen, you are going to fill it up rapidly from holding your breath that long.

The same is true for housing. We need other viable industries.

Re: Tech bubbles are bursting all over the place

#25

Post by epgui »

ben_w wrote: post #13
freeqaz wrote: post #6

A lot of these companies have very reasonable P/E ratios now. Microsoft is sitting at around 27, Apple 25, and Facebook 15. None of those strike me as "inflated". Those are normal values for the stock market (20-25). Are investors just panicking?

Is 20-25 really normal? I thought it was more like 5-15?

It completely depends on the expected rate of growth of the company. Even 100x can be fair for a very high growth company. For companies that don't have such great prospects, "PE should be close to X or between A and B" was always an extremely rough and imprecise heuristic, and it is no substitute for a real analysis with a DCF model.

Re: Tech bubbles are bursting all over the place

#26

Post by olivermarks »

The problem I have with the Economist these days - they've changed a lot recently as has the Financial Times - is that they are one of the big cheerleaders for creating bubbles out of tech they clearly don't understand. This starves the startups that have compelling and reachable business models and goals because the funding goes to (quite possibly financially scammy) moonshots with vague goals somewhere over the horizon.

Uber is a good example of this:

https://www.gobankingrates.com/money/business/famous-compani....

But because the scam worked and they managed to get publicly listed (how did that happen?! Publications like the Economist should have provided more cautions...) the gravy train rolls on.

The sooner we get back to a 'Web 2.0' era like 2008> on the sooner genuine innovation will be funded again.

Re: Tech bubbles are bursting all over the place

#29

Post by csallen »

prohobo wrote: post #21

People said this was the "best time ever to get funding" for a startup. I disagree. In my view, it was the best time ever if you played a particular game and had the right connections. I pitched an idea to a VC, which I had a prototype for, looking for $100k. He liked it but wouldn't fund because I didn't have a solid business plan. Fair enough, I need to find a business partner. But then he told me something about h…

> You're telling me you can't spare $100k?

That's not how it works. You're not the only person asking this VC for $100k. A thousand other people are, too. A policy where he spares it for (what he considers) a bad investment like yours means sparing it for all the other bad investments, too. That would cost a lot more than just one check.

Re: Tech bubbles are bursting all over the place

#30

Post by gowld »

prohobo wrote: post #21

People said this was the "best time ever to get funding" for a startup. I disagree. In my view, it was the best time ever if you played a particular game and had the right connections. I pitched an idea to a VC, which I had a prototype for, looking for $100k. He liked it but wouldn't fund because I didn't have a solid business plan. Fair enough, I need to find a business partner. But then he told me something about h…

> Meanwhile he had his hands in various bullshit crypto (not hating on crypto, just the projects) defi startups.

Your confusion is assuming that "bullshit" means "unprofitable". Plenty of projects turn profit for their owners.

Post reply on HN