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I remember the dot-com bubble and how it all went really bad really quick. I still haven't heard any convincing reason why "this time it's different".
When a company is listed, the stock price better reflect the actual market value of the company (otherwise a dot-com bubble happens). However, if rich VCs like to bet on startups, that's expected to be a high-risk investment.
The real reason WhatsApp were worth so much is they started to look like an existential threat to Facebook. Similarly for Instagram and SnapChat. Uber will in the long run to Google.
One of the best get rich startup models today is to create something where it looks like you'll take away the core raison d'etre of another entrenched service, and it will radically inflate your value.
What's often missing in these discussions is that a lot of the value of the companies is based on the threat they present to actual profitable companies, like Google and Facebook, and has nothing to do with whatever revenue they currently have. The real reason WhatsApp were worth so much is they started to look like an existential threat to Facebook. Similarly for Instagram and SnapChat. Uber will in the long run to…
I remember the dot-com bubble and how it all went really bad really quick. I still haven't heard any convincing reason why "this time it's different".
It's different because this time it's VC money, not people's savings. When a company is listed, the stock price better reflect the actual market value of the company (otherwise a dot-com bubble happens). However, if rich VCs like to bet on startups, that's expected to be a high-risk investment.
Well, technically VC money is people's savings, usually parts of pension funds I believe.
The only ones loosing will be the lower end of the food chain. Everyone on top knows what's coming and is storing their assets on single state islands far away from where the water will be going dry. You really think all those SV people preaching "this is not a bubble" are 100% in and haven't at least liquidated 99% of their value from the stock market? All what's left is digits on screens and papers.
I'm very worried about the property bubble collapse in China that will happen in the near future. I'm seeing the same patterns. People from said country buying up expensive property overseas, people lose fortune when property bubble explodes. It happened with Japan (remember when Japanese yakuza were buying up property in West coast). It surely to happen with China (buying up property in west coast like crazy).
I remember the dot-com bubble and how it all went really bad really quick. I still haven't heard any convincing reason why "this time it's different".
It's different because this time it's VC money, not people's savings. When a company is listed, the stock price better reflect the actual market value of the company (otherwise a dot-com bubble happens). However, if rich VCs like to bet on startups, that's expected to be a high-risk investment.
"A parabolic rise in start ups with valuations of $1 Billion or More" or "A linear rise in startup valuations on a logrithmic scale". Amazing what happens in 10 years when worldwide smartphones go from a tens of millions a year (2004) to over a billion a year (2014). Apple has 130 billion in cash sitting overseas with nothing to spend it on. Microsoft has 90 billion. Google has at least 30 billion. Facebook has over…
>> "My rule of thumb is that if you can get 100,000,000 users you can sell for $1,000,000,000. You don't even need revenue! Crazy, but that is a shit load of users. How many 2000 dotcom companies had a hundred million users? Hell did even Google have a hundred million users back then?" You could have 6 billion users - it doesn't mean anything unless you can monetise them. And nobody can come up with a smarter way tha…
I used to run an abandonware game site when I was in high school during the first dot com bubble, and we would get paid $100-300 per month from advertisements on the site, which paid for us to run it.
After the dot com bubble crashed, we were getting paid $20-30 for the same ads and more traffic. It forced us to take the site down, as we didn't have enough revenue to fund it anymore (we kept the ring up though, it's still in operation today, probably with some of my code still under it's hood: http://abandonwarering.com).
Here's my question: Let's assume this is a second bubble for the sake of my question. After that bubble crashes, if advertising revenue tanks with it, how much does that tear into the profitability of these companies that depend exclusively on advertising?
I'm not a gold bug, but I remain highly concerned about the heavy burn rates and artificially high private valuations in the industry right now. Something I've learned from experience is that if it feels too excessive, it usually is.
Earlier quoted context omitted.
>> "My rule of thumb is that if you can get 100,000,000 users you can sell for $1,000,000,000. You don't even need revenue! Crazy, but that is a shit load of users. How many 2000 dotcom companies had a hundred million users? Hell did even Google have a hundred million users back then?" You could have 6 billion users - it doesn't mean anything unless you can monetise them. And nobody can come up with a smarter way tha…
Advertising revenue is not stable! I'm alarmed that nobody is talking about this. I used to run an abandonware game site when I was in high school during the first dot com bubble, and we would get paid $100-300 per month from advertisements on the site, which paid for us to run it. After the dot com bubble crashed, we were getting paid $20-30 for the same ads and more traffic. It forced us to take the site down, as w…
I wonder to what degree that would happen again. I think percentage wise it is likely to be less severe than last time, but it could still be significant.
We have no real data form Google on pre-bubble/post-bubble advertizing as they were not advertizing at that time. But it probably would be a horrible hit to them this time around -- even 30% correction would be severe.
What's often missing in these discussions is that a lot of the value of the companies is based on the threat they present to actual profitable companies, like Google and Facebook, and has nothing to do with whatever revenue they currently have. The real reason WhatsApp were worth so much is they started to look like an existential threat to Facebook. Similarly for Instagram and SnapChat. Uber will in the long run to…
WhatsApp, Instagram, and SnapChat are valuable because they have users. There are a million ways to monetize users once you have them, but it's hard to get them. Google, Facebook, and others are large, humming machines that squeeze money out of users, but WhatsApp, Instagram, and SnapChat are not. The latter three companies are valuable because they can be fed into the larger machines that already figured out how to monetize.
Unrelated: Uber certainly is a threat to a lot of companies (USPS, Zifty, DHL), but I can't see the Google connection. In fact, Uber and Google recently became partners.
If anything, Google is a massive, existential threat to Uber because it's working to perfect self-driving cars.