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Sam Altman's Bubble Talk Bet Is 1 Year Old

blog.samaltman.com

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Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#51

Post by gjem97 »

reitzensteinm wrote: post #29
NumberCruncher wrote: post #22

Earlier quoted context omitted.

Basecamp is now a $100 billion dollar company, according to a group of investors who have agreed to purchase 0.000000001% of the company in exchange for $1. Source: https://m.signalvnoise.com/press-release-basecamp-valuation-...

This is a trite complaint, and in my view, misses what is often bogus about the lofty valuations - liquidation preferences provide a lot of downside protection. For instance, if I invest $1bn in Uber at a $10bn post and a 1x preference, I get the first $1bn of any sale. Yes, I invested at a $10b valuation, but I don't actually lose any money unless the valuation sinks below $1bn. This is a much better deal than simpl…

You're right on, and there may in fact be a half dozen more material economic terms which also adjust down the implied $10bn number. Add into that the fact that each round often has it's own set of terms, and you begin to realize that the "valuation" numbers thrown around mean absolutely nothing.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#52

Post by vkou »

projectramo wrote: post #49
vkou wrote: post #28

Earlier quoted context omitted.

A single bad IPO from that list of firms (Which will likely happen in a climate of pessimism, even if we don't hit a recession) will be disastrous to their aggregate valuation, even if they stay private. I feel that the only way Sam will win the bet is if none of the firms in #1 or #2 will IPO between now and 2020.

True, but conversely, one standout that does well could alone hit the target. If you believe that the successful companies follow a power law distribution, you'd expect something like that.

That would be the case if valuations were independent of each-other (Which is a bit of a stretch even in a truly efficient market, like the NYSE.)

On the other hand if, say, AirBnB and Palantir have a dismal IPO in 2018, that will likely bring valuations down across the board.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#53

Post by pj_mukh »

"The gleeful anticipation of a correction by investors and pundits is not helping the world get better in any meaningful way."

Probably the most important line of the post. Hate that someone invested $ M in an app that just sends "Yo" to other people? Great, don't use it, don't invest your money in it. Yelling on the sidelines about how crappy it all is, seems counter-productive. Writing self-fulfilling prophecies to get clicks seems even more egregious.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#54

Post by smt88 »

mikeryan wrote: post #23
projectramo wrote: post #4

Here are his three bets reproduced for comments: 1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. Seems he is on track…

I think #1 is actually the toughest bet. I can see Palantir, Dropbox and Pinterest either remaining static or even dropping from their current valuations. Even Uber and Airbnb don't have a clear path to huge growth in front of them, Airbnb is the safer bet for growth because of the lack of competition. Uber still seems a strong business but I'm not sure how well they continue to grow. X-factor for Uber is how it well…

> Uber and Airbnb

Imagine a world in which any object (human, animal, package, food) can be moved from one place in a city to any other place in the city using a smartphone. An electric, self-driving vehicle picks it up and drops it off.

That world is very nearly possible, and Uber is on the tip of the spear that's creating it. There's an absolutely massive upside. Uber is probably very under-valued.

Airbnb is less world-changing, but they still have the rest of the hospitality industry to replace. I personally never stay at hotels anymore, and I don't understand why anyone would. People will continue to use hotels less and Airbnb more.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#56

Post by ssharp »

mikeryan wrote: post #23
projectramo wrote: post #4

Here are his three bets reproduced for comments: 1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. Seems he is on track…

I think #1 is actually the toughest bet. I can see Palantir, Dropbox and Pinterest either remaining static or even dropping from their current valuations. Even Uber and Airbnb don't have a clear path to huge growth in front of them, Airbnb is the safer bet for growth because of the lack of competition. Uber still seems a strong business but I'm not sure how well they continue to grow. X-factor for Uber is how it well…

> Airbnb is the safer bet for growth because of the lack of competition

Airbnb may not face huge direct competition like Uber does with Lyft, but there are still lots of alternative products going against Airbnb.

I look at Airbnb as the eBay for short-term rentals. It's a big marketplace with a lot of inventory and has a huge network effect helping it, but it's hard to serve every niche perfectly. So, just like companies like Reverb have flanked business from eBay, I think specialty companies can flank business from Airbnb as well.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#57

Post by clock_tower »

smt88 wrote: post #54
mikeryan wrote: post #23

Earlier quoted context omitted.

I think #1 is actually the toughest bet. I can see Palantir, Dropbox and Pinterest either remaining static or even dropping from their current valuations. Even Uber and Airbnb don't have a clear path to huge growth in front of them, Airbnb is the safer bet for growth because of the lack of competition. Uber still seems a strong business but I'm not sure how well they continue to grow. X-factor for Uber is how it well…

> Uber and Airbnb Imagine a world in which any object (human, animal, package, food) can be moved from one place in a city to any other place in the city using a smartphone. An electric, self-driving vehicle picks it up and drops it off. That world is very nearly possible, and Uber is on the tip of the spear that's creating it. There's an absolutely massive upside. Uber is probably very under-valued. Airbnb is less w…

I wouldn't bet on Uber based on self-driving cars. See https://en.wikipedia.org/wiki/Autonomous_car: most auto companies and most big tech companies are working on them, and I wouldn't bet that Uber can beat everyone from Audi to Google to the punch. It's more likely that they'll buy self-driving cars from whoever develops them first -- or that whoever develops them will create an app cheaper to use than Uber. (It's not like Uber would be particularly hard to replicate, at least not if you're Google.)

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#58

Post by dnautics »

projectramo wrote: post #4

Here are his three bets reproduced for comments: 1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. Seems he is on track…

I think sam's predictions will hold even if we are in a bubble, because those companies (not sure about uber and palantir) seem likely to survive bubbles. There's also enough diversity (zenefits has died, e.g.) that there's some cushioning.

Nonetheless, if you think we're in a bubble you should be prepared to liquidate everything and start from scratch at the bottom.

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#59

Post by ssharp »

smt88 wrote: post #54
mikeryan wrote: post #23

Earlier quoted context omitted.

I think #1 is actually the toughest bet. I can see Palantir, Dropbox and Pinterest either remaining static or even dropping from their current valuations. Even Uber and Airbnb don't have a clear path to huge growth in front of them, Airbnb is the safer bet for growth because of the lack of competition. Uber still seems a strong business but I'm not sure how well they continue to grow. X-factor for Uber is how it well…

> Uber and Airbnb Imagine a world in which any object (human, animal, package, food) can be moved from one place in a city to any other place in the city using a smartphone. An electric, self-driving vehicle picks it up and drops it off. That world is very nearly possible, and Uber is on the tip of the spear that's creating it. There's an absolutely massive upside. Uber is probably very under-valued. Airbnb is less w…

I hear that argument in favor of Uber a lot, but what barriers to entry exist for potential competitors when there are autonomous vehicles?

Currently, you can argue that Uber's competitive advantage and big barrier to entry is the driver network. When you don't need a pool of humans and software that makes the human's job easier, why would Uber be better suited than another company to utilize self-driving vehicles?

Re: Sam Altman's Bubble Talk Bet Is 1 Year Old

#60

Post by EdHominem »

mikeryan wrote: post #23
projectramo wrote: post #4

Here are his three bets reproduced for comments: 1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate. Seems he is on track…

I think #1 is actually the toughest bet. I can see Palantir, Dropbox and Pinterest either remaining static or even dropping from their current valuations. Even Uber and Airbnb don't have a clear path to huge growth in front of them, Airbnb is the safer bet for growth because of the lack of competition. Uber still seems a strong business but I'm not sure how well they continue to grow. X-factor for Uber is how it well…

Uber has zero stickiness outside retail car hailing. Their easy and seamless transactions are great compared to taxis, but are par-for-the-course in deliveries, etc.

And the only thing Uber has going for it is being the only choice in most areas. When there's a competitor (as in SF) everyone has all the apps on their phone and shops around.

Also, Uber's huge innovation is zero-capital rollouts. They use your car. When they have to buy a self-driving car they're back to square one and will also own all the liability.

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