51–60 of 144 posts
I wonder how this works, is it necessary for Sam to acknowledge the bet? What happens if more than one person wants to take the same bet?
If there's enough demand, it might make sense to make a site/app and pick a side (maybe use Stripe to put money into some sort of escrow account).
Earlier quoted context omitted.
$100k is going to a charity one way or another. That's a good thing no matter how you cut it.
It doesn't serve the main purpose of the bet which is to find someone with a strong enough conviction about the specific terms to risk $100k.
If you believe the person will not follow through that's one thing, maybe both parties should put $100K in escrow, talking about the purpose of the bet is weak.
I have no idea how this bet will come out but I was not pursuaded by Sam's argument because he did not address the root cause of the bubble. Put another way, he's sitting on the surface of a bubble and pointing out that there's not a bubble rising from that surface. He's saying that there's innovation and the innovation makes these companies more valuable-- on that we can all agree. Whether VC investments are correct…
It would be a bubble if everyone believed that loose monetary policy was going to last forever. The Fed is well aware of the trillions of dollars they've created and they have the ability to make it go away, once the economy is moving again to their satisfaction.
Planet Money did a segment on this last week.[1] The problem is, a lot of that money never made it out into the regular economy -- when the Fed creates money, it's really creating it for banks which are supposed to have incentives to loan it out. But mostly, according to that show, the banks aren't lending it out. At the very least, this shows they don't have the requisite irrational exuberance for it to be a bubble.
One thing for sure: it seems that banks have less incentive to make productive investments than the Fed thinks they do. A possible reason why: "manager capitalism"[2] yields higher incentives for short term speculation, bonuses, etc. Maybe a trickle of that money has made it into VC but I have no idea how to determine that.
[1] http://www.npr.org/blogs/money/2015/03/20/394274484/episode-...
Pretty confident Sam will win, given the current track record, and baring a complete market collapse.
That's the nature of bubbles. This is a bet about whether there's a bubble or not. IF there is a bubble, of course it's going to look like Sam has a slam dunk win here-- until the bubble pops and then it looks obvious that Sam could not have won. This is irrespective of the bubble popping in 2019 and thus Sam losing the bet and 2021 - where Sam wins the bet but loses the point. The problem with bubbles is that when y…
But, I also think that although there is a lot of optimism a lot of it rightfully there. Technology has been creating a revolution in communication, media, entertainment and just about every other industry. The internet finally arrived for the masses in the mid-2000's followed by the smart phone revolution followed by tablets and smart devices. There's simply a lot of opportunity out there.
I don't think we are in a bubble so much as in the middle of a rare technological revolution. So many things are happening at once between computer systems becoming so powerful and networks becoming so large and fast, etc. Old industries are dying while new, more profitable companies take over.
2. Palantir: I have some experience with working with Palantir FDEs who were marketed to BigCo as 'gift from god to solve all problems'. They were pretty useless.
I think Palantir is basically shit. Wait and watch.
Earlier quoted context omitted.
Ironically a basic statistics class indicates that cherry picking companies that deliver 2x, 3x and ... whatever the fuck that third pick is ... as a guaranteed return over 5 years is indicative of the overenthusiastic hype that historically surrounds bubble valuations. #3 is a die roll. #2 is the killer. And I might take the bet on just #1.
#3 isn't just a die roll, it's the entire basis of early stage investment. If he loses on #3, YC will either be a shadow of its former self, or Sam will have given himself enough rope to hang himself (as president of YC). This is exactly the sort of thing that everyone making press about investment capital should be willing to do. Sam isn't making a bet about money here, he's making a bet about his reputation as a fo…
A number of reasonably likely events could cause #3 to be false without any catastrophic loss to YC.
1. Dropbox: NPV is less than 10B. Will probably get brought for 3-4B by bigco if bigco can transcend internal politics. Not sure who will buy them - most probably Microsoft under Ndella. 2. Palantir: I have some experience with working with Palantir FDEs who were marketed to BigCo as 'gift from god to solve all problems'. They were pretty useless. I think Palantir is basically shit. Wait and watch.
Earlier quoted context omitted.
$100k is going to a charity one way or another. That's a good thing no matter how you cut it.
It doesn't serve the main purpose of the bet which is to find someone with a strong enough conviction about the specific terms to risk $100k.
Hi Michael, would you mind explaining your rationale? In particular, why would you believe his bet and still be a VC?