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We are in a Bubble

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Re: We are in a Bubble

#21

Post by comicjk »

stretchwithme wrote: post #12
samstave wrote: post #3

I am not interested in any of the "we are in a bubble" posts as much as I am interested in "What the fuck will happen when this bubble bursts!" I have been in tech in SV since 1997. I was here for the build, frenzy and pop of the last bubble. In 2001 I had a BBQ at my place - 50 people came and we ate and drank by the pool. Of those 50 - all tech workers - 4 had jobs. I was out of work for 18 months (6 of which I tra…

Of more concern to me is the bursting of valuation bubble for the United States. Currently, people are undervaluing the risk of lending money to it. What happens when they realize its future revenues won't cover all of its commitments?

If the US had European tax rates, it could support its current commitments and more. The risk is political: that the US will default on debts which it has the ability to pay.

Re: We are in a Bubble

#22

Post by wtvanhest »

wtvanhest wrote: post #18

We are seeing growth in online advertising which is driving the perception of a bubble regardless of whether one exists or not. The "We are in a bubble" argument should be - Ad revenue is capped at a total # of dollars. We have seen various internet businesses take share from magazines, cable broadcasters, billboards which has led to unsustainable growth which will end soon. When it ends people will realize projectin…

I'm taking a non committal stance while explaining a framework to view bubble/no bubble. I would love to hear why people think this is such a terrible framework to down-vote it. I'm sure I could learn something.

Re: We are in a Bubble

#23

Post by edwinnathaniel »

It's time to move on from HackerNews and focus on building companies/businesses rather than talking about things that are not productive in any way or shape.

Naysayers. Pessimists. Negative thinkers. "No man". Doomsayer. So long...

Re: We are in a Bubble

#24

Post by ericd »

stretchwithme wrote: post #12
samstave wrote: post #3

I am not interested in any of the "we are in a bubble" posts as much as I am interested in "What the fuck will happen when this bubble bursts!" I have been in tech in SV since 1997. I was here for the build, frenzy and pop of the last bubble. In 2001 I had a BBQ at my place - 50 people came and we ate and drank by the pool. Of those 50 - all tech workers - 4 had jobs. I was out of work for 18 months (6 of which I tra…

Of more concern to me is the bursting of valuation bubble for the United States. Currently, people are undervaluing the risk of lending money to it. What happens when they realize its future revenues won't cover all of its commitments?

US Gross debt is currently around 16.4 trillion, its GDP in a given year is around 14.6 trillion, and its operating budget is around 2.5 trillion with a 1 trillion deficit. It seems within its capabilities to repay its debts, though it has opened up the throttle a good amount in the past couple years, and there seems to be no political will to raise taxes right now.

Re: We are in a Bubble

#25

Post by citricsquid »

This bubble will hurt the smaller startups by no-name people, people that invested everything in an idea that in a non-bubble environment would be laughed out of the room, but with companies like YC around (not that this is their fault) that are harping on about the value of ideas and people it's growing.

There are people here on HN daily that post links to their blog posts that have put all their savings into their startup that has no potential to ever be anything other than a furnace for their money, but people encourage them, they are the people who will be hurt.

How many incubated startups (through programs like yc) will ever go on to be anything other than shut down? With all this cultish behaviour around YC a lot of people are believing that making money doesn't matter any more. Just look at the startups people posted in the yc rejection day threads, some of them just make absolutely no sense.

There is so much money in the internet now that when everything goes wrong nobody outside of the startup scene will really notice because the businesses that matter, the businesses people rely on will be doing fine. There will always be room for businesses that make money, bubble or not, those businesses are the ones the "public" care about. How many "normal people" would care if Instagram disappeared tomorrow and would have their lives impacted a week later? How many would care if ebay went? I suspect the latter would be the worse for the general public, and the latter will never happen because ebay actually makes money.

Re: We are in a Bubble

#26

Post by mukaiji »

Surplus of capital is a huge factor. Got numbers?

When Peter Thiel started his class at Stanford, he spent the first couple of lectures reviewing the 90's. One of his argument to explain the dot com bubble was the influx of capital from around the world to the U.S., and ultimately to the valley. Could be the same here. not sure.

Re: We are in a Bubble

#27

Post by roguecoder »

Instagram isn't a great example: it was already useful and successful and might well have been worth more if it had held on. GroupOn is a much better indication that a bunch of non-technical people are eager to buy overvalued tech stocks.

Of course we are in a bubble. Not in the real estate bubble sense, mind you, but in the 1999 tech bubble sense. Tech and health care are the two industries actually growing.

Right now no one knows which companies are really creating value and which are just hype. The last bubble created more value than money was invested, but the investors don't discriminate well between valuable companies and those that are just taking them for a ride. That doesn't mean that all the companies are overvalued, just that some of them are.

Plenty of companies emerged successfully from the last bubble. Plenty of companies will come out of this one by creating actual value. Just don't be an idiot and invest your money, don't believe companies that tell you they'll get you rich, don't take jobs that seem to be too good to be true, and who cares what investors are doing?

Re: We are in a Bubble

#28

Post by ajross »

citricsquid wrote: post #25

This bubble will hurt the smaller startups by no-name people, people that invested everything in an idea that in a non-bubble environment would be laughed out of the room, but with companies like YC around (not that this is their fault) that are harping on about the value of ideas and people it's growing. There are people here on HN daily that post links to their blog posts that have put all their savings into their…

I'm not sure I buy that. Obviously it's true that "outsider" startups will see their funding dry up faster than YC companies and other "insider" groups will. But I don't think that's the right metric. In fact access to "big money" funding is if anything anti-correlated with success among these companies. Almost all the big YC exits so far were from the early rounds, and those happened during an era of very limited VC cash.

Re: We are in a Bubble

#29

Post by jhspaybar »

"Each incremental company, to some extent, dilutes the values of others."

I take issue with this point in the article as it assumes competition. While there is competition obviously, many start ups are actually complements for other companies. It is entirely possible that many of the start ups "competing" with each other actually thrive on the success of others and even increase the success of other companies through their existence.

As an example, think about a company like Heroku, and Amazon. Heroku makes using AWS easier, so Amazon rents more time and servers to Heroku while Heroku also makes money that otherwise wouldn't have been made. These relationships exist all throughout the business world and are good, not "bubble" influences.

Re: We are in a Bubble

#30

Post by draggnar »

jfb wrote: post #13
stcredzero wrote: post #8

Each incremental company, to some extent, dilutes the values of others. Ask yourself: Are you part of a herd? Is your company doing what the next one is doing, just slicker and faster and with a twist? If the answer is yes, and you're trying to do a startup, then you are part of the bubble that will pop. (In a bad way. Worse still, you may be part of a "reputation bubble" as in the music or fashion industry.) Also as…

For those standing off to the side: Are there an awful lot of startups doing similar looking things? Yes. EDIT : It is getting increasingly difficult to see actual technology companies through the haze of consumer internet startups, many of which are indistinguishable "the of " roadkill. EDIT 2 : Not that technology companies are the only ones that can be profitable; but many of the small startups are positioning the…

Social is a bubble. Sharing information is going to continue to get easier, and i agree that distinguishing the various services is increasingly difficult. But i do not buy the x of some market argument. The ebay of space has built a new type of marketplace.

"Startup" is a way to say an organization that does not follow the rules of the industrial revolution. Social technologies are a bubble, but there is a distinction between social technologies and technology in general, and startups aren't exclusively business models of the former.

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