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Bubble talk (2015)

blog.samaltman.com

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Re: Bubble talk (2015)

#51

Post by zozbot234 »

MichaelApproved wrote: post #38
zozbot234 wrote: post #31

There was definitely a trade collapse that might have impacted valuations somewhat.

I would argue that Trump is the worst president in history but can we please leave names like “Cheeto-in-chief” on reddit?

I'm sorry if you took offense at any part of my comment, and I've tried to streamline it a little bit. But I think that some things should not be left unsaid - Trump has been called "the worst president in history" for all sorts of reasons, many and perhaps most of which are just about partisan bias rather than substance. Focusing on some of the actual policies he's taken credit for, and their real-world effects is probably more helpful.

Re: Bubble talk (2015)

#52

Post by wpietri »

iamsb wrote: post #4

I dont think he won the first bet did he? Airbnb, Palantir, Dropbox, Uber, Spacex, and Pinterest together are less than 200 bn and falling. All still pretty good companies (not you Uber), doing interesting things though. bet 2 - I have not done the calculation, but just stripe puts it way beyond the 27 bn figgure. bet 3 - plenty of good companies in that batch. Razorpay was valued at half a billion dollars in last ro…

Regarding the first bet, VC Fred Wilson talks about something related in item 2 of his "What Happened in the 2010s" post: https://avc.com/2019/12/what-happened-in-the-2010s/

He starts out: "The massive experiment in using capital as a moat to build startups into sustainable businesses has now played out and we can call it a failure for the most part."

That slice of startup-land is always what felt most bubbly to me, WeWork being the biggest example, where even SoftBank admits losses of something like $9 billion. In contrast, Bubble 1.0's biggest loser was WebVan, at $1.2 billion.

(And as a side note to some of the discussion: that there are successes this time around doesn't prove it's not a bubble. E.g., Amazon and Google made it through, but it was still a bubble back then.)

Re: Bubble talk (2015)

#53

Post by wpietri »

AznHisoka wrote: post #35
username90 wrote: post #20

Earlier quoted context omitted.

It checks out if you move the much larger valuations in bet 2 to bet 1 as he really underestimated the companies in bet 2. Things are a bit random, so I'd say he arguably won the bet in spirit even though he didn't do it according to his own exact rules.

Aka he lost the bet :)

Definitely. If we get to wiggle things in retrospect, then we're not talking about the bet itself, but the set of all bets that 5 years later somebody on HN would see as plausible wiggling of the terms to match current conditions. That's surely a lot of bets, among which we'd expect to find several winners.

Re: Bubble talk (2015)

#54

Post by MarkMc »

Although Sam would have lost this bet, I respect that he had the courage to make a forecast with a specific number and a specific future date.

Too many pundits make grand but imprecise predictions like "AI will become dominant in the next decade". The book 'Superforcasting' tackles this problem in detail: https://www.amazon.com/Superforecasting-Science-Prediction-P...

Re: Bubble talk (2015)

#55

Post by Alex3917 »

wpietri wrote: post #52
iamsb wrote: post #4

I dont think he won the first bet did he? Airbnb, Palantir, Dropbox, Uber, Spacex, and Pinterest together are less than 200 bn and falling. All still pretty good companies (not you Uber), doing interesting things though. bet 2 - I have not done the calculation, but just stripe puts it way beyond the 27 bn figgure. bet 3 - plenty of good companies in that batch. Razorpay was valued at half a billion dollars in last ro…

Regarding the first bet, VC Fred Wilson talks about something related in item 2 of his "What Happened in the 2010s" post: https://avc.com/2019/12/what-happened-in-the-2010s/ He starts out: "The massive experiment in using capital as a moat to build startups into sustainable businesses has now played out and we can call it a failure for the most part." That slice of startup-land is always what felt most bubbly to me,…

> The massive experiment in using capital as a moat to build startups into sustainable businesses has now played out and we can call it a failure for the most part.

The issue is that the value of money has been decreasing each year for the last decade. I don't remember anyone predicting that this was going to happen as far back as 2010, although it was already obvious that it was happening by 2013 or so.

That's why you'd be hard pressed to name a single VC-funded tech startup that was founded within the last five years, because these days VCs are just funding small businesses and not startups.

Re: Bubble talk (2015)

#56

Post by ksec »

>Of course, there could be a macro collapse in 2018 or 2019, which wouldn’t have time to recover by 2020.

Which hasn't happened...

There was another thread about bubble and calling me out. Just to point out, If you bought S&P Index in 2015 you would now have roughly 200% return.

But this is in the context of tech. We forget Apple, Microsoft, Google are not just doing fine, they are doing great. And not just in US, TSMC and Samsung representing SemiConductor industry are all doing great, thanks to those ridiculous profits from NAND and DRAM; Samsung is reinvesting everything into making DRAM NAND and Foundry more competitive. Which will hopefully fence off those State sponsored Chinese Competition.

In terms of Startup, While Sam might have loss on first proposition ( I think he won the other 2 ), but they are operating just fine with similar valuation if not more, just not meeting the 200B target. Unlike other Startup that cashes in from IPO and then devalued into nothing.

Will we see a correction? Very likely. Are we in a bubble? No, at least not yet. ( Unless you like to redefine any correction as bubble burst )

Re: Bubble talk (2015)

#57

Post by grumpy8 »

Sucks that Sam lost his bet because as far as I'm concerned he "won" his point (I.e. there was clearly not a bubble and all these 1,2,3 companies did amazing). Still, it's great that it's going to a charity

Re: Bubble talk (2015)

#58

Post by nabla9 »

glofish wrote: post #24

Datapoint for reference: if you invested in an SP500 fund during the same time you would have roughly doubled (around 180%) your money (an annualized return of 11%).

That's the proper comparison.

Investing into startups and unicorns should provide significant yield over diversified and less risky investment. Getting the same result from taking more risk is not a good investment.

from the end of March 30, 2015

+56% SP500 Price index

+70% SP500 Total return index

+83% Nasdaq price index

Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX doubling their valuations would give only +3.2% annualized return over Nasdaq. I don't see the risk/reward ratio of a good investment if the price just doubles in that period.

(FAANG is another good comparison).

Re: Bubble talk (2015)

#59

Post by jbverschoor »

virgilp wrote: post #15
iamsb wrote: post #4

I dont think he won the first bet did he? Airbnb, Palantir, Dropbox, Uber, Spacex, and Pinterest together are less than 200 bn and falling. All still pretty good companies (not you Uber), doing interesting things though. bet 2 - I have not done the calculation, but just stripe puts it way beyond the 27 bn figgure. bet 3 - plenty of good companies in that batch. Razorpay was valued at half a billion dollars in last ro…

Uber: 50.73 bln Spacex: 33.3 bln? Airbnb: 35 bln? Palantir: 26 bln ? Pinterest: 10.4Bln Dropbox: 7.44 Bln They are far from $200bln, so he certainly lost the first one. Might have won the other 3 though.

20% off. I’d say that’s a pretty decent guess in 5 years.

Re: Bubble talk (2015)

#60

Post by kmonsen »

MichaelApproved wrote: post #45
H8crilA wrote: post #44

Earlier quoted context omitted.

I suppose, yes, and this is a little scary - the world being in such a state that you can wait 10 years for a company to make profits and it is still considered OK. Cheapening money. But also how much longer can we wait? Google, Apple, Microsoft and Facebook were all turning profit before the IPO ! Find the old S-1s if you don't believe me. And back in those days IPOs happened much much earlier.

I think Amazon is one of the rare examples where it paid off. They were making losses in exchange for extreme growth in many sectors.

Amazon made very controlled losses, and it was clear the core business was good and they were investing in new ideas. Sort of like alphabet except much bigger.
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