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Today’s correction isn’t much like the dot-com bubble

theatlantic.com

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Re: Today’s correction isn’t much like the dot-com bubble

#71

Post by wool_gather »

janoc wrote: post #64

That article seems to harp on the fact that it is "not-com bubble", basically that the companies are getting punished because they are not "pure tech/software companies". Quite a way to miss the point, IMO. As if delivering pure software was a sign that the company is worth investing in. Just look at all the cryptocurrency/blockchain startups from about two years ago. Most of them literally didn't have anything else…

> This is about investors finally wising up

Well, this generation of investors, at least. ;) We had much the same thing happening 20 years ago, and I have no doubt that we will again.

Re: Today’s correction isn’t much like the dot-com bubble

#72

Post by karmakaze »

lordleft wrote: post #54

Something I've been wrestling with is the perceived 'unsexiness' of certain technologies, like C#. When I joined this industry, I thought that anything that wasn't powered by Rust or Python or Haskell was irredeemable, that C# was a dinosaur not long for this world, and that tech unicorns would be set the tone of our industry going forward. Now that I'm a bit older I've begun to see that something like C# isn't going…

The difference between a company that benefits from 'tech' and one that doesn't is how their tech is used. If they use off the shelf tech to directly build their business, it isn't so much a tech company as it is app development, IT, or whatever you name it.

If however, you use whatever good or average off the shelf tech and build tools that leverage the tech then apply it to your business then you're a tech company. You can't just make the app you have to build tech to build the company. This is your advantage. The tech you build can be software or it can be patents or it can be proprietary processes but it has to be leveraged. My way to estimate this is to count the number of employees that build product or tools. The size of sales/marketing can vary but excessive numbers of devs isn't a good sign for a tech company and might just be a consultancy.

Re: Today’s correction isn’t much like the dot-com bubble

#73

Post by countryqt30 »

sfilipov wrote: post #61
jeremydeanlakey wrote: post #48

One perspective that I gained much later than I should have: Suppose you have a small software company, Reinvest Software with big margins and lots of opportunities to expand. You can take home that profit and pay taxes. Or you can invest in growth. That investment in growth is an investment in intangible assets with insanely good tax treatment. But it looks bad on the financial statements. Suppose an investor, Smart…

What are good examples of Reinvest Software? My guess would be Amazon, but what others?

@sifilpov: Most high-growth startups are like this, and a fair share of "growth companies". Differentiating the two is exactly the difficult part ;).

Re: Today’s correction isn’t much like the dot-com bubble

#74

Post by [deleted] »

rubicon33 wrote: post #66
code4tee wrote: post #44

There’s another often unwritten element here around companies basing their valuation on false markets. For example, if I sell $2 for $1 that’s a false market. Of course I can grow like crazy and gobble up lots of customers. I could even “disrupt” existing players like those stodgy old companies (banks) that sell $2 for $2.15 (a loan). The VC subsidies for some of these companies are so high that they are basically se…

That's not an uncommon nor unheard of tactic in business. Fuel growth, and capture the market for your brand, by selling at a loss. The trick is always the transition to profitability. Generally, this comes through layoffs and maybe price increases.

[deleted]

Re: Today’s correction isn’t much like the dot-com bubble

#75

Post by GhettoMaestro »

code4tee wrote: post #44

There’s another often unwritten element here around companies basing their valuation on false markets. For example, if I sell $2 for $1 that’s a false market. Of course I can grow like crazy and gobble up lots of customers. I could even “disrupt” existing players like those stodgy old companies (banks) that sell $2 for $2.15 (a loan). The VC subsidies for some of these companies are so high that they are basically se…

I never understood the "grow fast at any cost" mentality.

If you can't make your shit break-even or near-profitable at small scale, there is a big chance you will not be able to make it work at large scale.

Re: Today’s correction isn’t much like the dot-com bubble

#76

Post by lotsofpulp »

chubot wrote: post #45
lotsofpulp wrote: post #25

Earlier quoted context omitted.

Why hotel businesses? There are many different hotel brands to choose from, pricing is transparent, photos/reviews are available on many websites, customer service at the chains take care of complaints pretty well, and there has been a ton of new hotel room supply added.

I started staying in AirBNB's around 2013 because I could get a kitchen, e.g. for a week-long stay. I like drinking water and not eating out 2-3 times a day, every day, for a week! I was staying by myself, but I've heard from traveling families that hotels are a big hassle for them because they lack a kitchen. Imagine feeding a couple kids while staying for a week. That cost will really add up if you're eating out 3…

> Also, the prices for AirBNB's were significantly more varied.

As expected, since complying with fire and other safety codes, taxes, zoning rules, brand standards, and other business costs exist.

Kitchens are offered in various brands by Hilton/Marriott/IHG. I haven’t had Airport hotel land issues in big cities, but most other places restrict hotels from being in areas by restricting zoning... since residents in these places don’t want to be near hotels.

My point though, was that the hotel market seems to be operating pretty efficiently, with plenty of good choices available for consumers. Price might be higher, but most societies have decided it’s worth it to enforce certain standards upon them. This is different from how the taxi market was, where online booking, payment, and rating vastly raised the standards for everyone.

Re: Today’s correction isn’t much like the dot-com bubble

#77

Post by np_tedious »

oldmanhorton wrote: post #56
lordleft wrote: post #54

Something I've been wrestling with is the perceived 'unsexiness' of certain technologies, like C#. When I joined this industry, I thought that anything that wasn't powered by Rust or Python or Haskell was irredeemable, that C# was a dinosaur not long for this world, and that tech unicorns would be set the tone of our industry going forward. Now that I'm a bit older I've begun to see that something like C# isn't going…

Dont forget that even if C# feels old and stodgy, F# gives a very fresh and "cool" experience on top of .NET

Agreed. Also the recent C# language developments are themselves pretty good, as are the runtime / SDK improvements in dotnet core.

With mostly a Linux, python / slightly FP background I "should" be the skeptic. But a recent project had me on a dotnet core app developed mostly on OSX and deployed on Linux. It was honestly pretty neat and while I no longer work on it, I am bullish on this space.

Re: Today’s correction isn’t much like the dot-com bubble

#78

Post by NotSammyHagar »

empath75 wrote: post #68
muglug wrote: post #4

The obvious counter-example to this is Slack, a "pure-tech" company whose value has halved since IPO, and there's a similar story with Snapchat (though its value has recovered somewhat in the past year).

I don’t think there’s fundamentally anything wrong with slack though. Investors just don’t understand it, I don’t think. I’ve read so many articles about how Microsoft is going to crush it with teams and it’s so obvious to anyone who has had to work with both of them that they simply are not competitors — really the only thing close to it is Discord and it’s not going after the enterprise market.

The barrier to entry to compete with slack is fairly low. And Discord can just decide to start focusing on enterprises. Microsoft is just one company with the leading office suite that happens to be really kludgy. Slack has its pluses and minuses. So just because slack works great and is fun to use, and has lots of companies giving them money, doesn't mean they are worth their huge valuation. They aren't getting enough money, and another hipchat like competitor can come along and do even better. The best thing slack has is they are the default safe choice.

I say this as a slack stock holder who lost money, so I clearly know what I'm talking about ;-)

Re: Today’s correction isn’t much like the dot-com bubble

#79

Post by vidarh »

NeedMoreTea wrote: post #18
wisty wrote: post #8

Earlier quoted context omitted.

Uber has a market cap of like 50 billion. It's real. It's no Apple or Google though.

That makes it a large bubble. Market cap in and of itself is useless. How long do you see customers staying loyal after VC money stops subsidising every ride?

I think that's very hard to predict. Just 5 minutes ago I had a conversation with my ex about how I always use Uber for ad hoc travel despite the fact it's often significantly more expensive than the local minicab companies, because they can get someone here much faster. Often it's a 3 minute wait, while I otherwise might wait 10+ minutes. Their app also gives me more reliable feedback.

If I schedule in advance, or need more flexibility in car type, then the minicab companies win, but it's very rare for me to pick them because of price, even though they're often much cheaper.

But of course not everyone can afford the luxury of paying extra, and will just factor in longer waits instead.

Re: Today’s correction isn’t much like the dot-com bubble

#80

Post by pembrook »

puranjay wrote: post #7

It's an incredible mix of hubris (on the startup's part) and delusion (on the investors part) to call some of these "tech companies". Like WeWork. It's a real estate company that should be valued like a real estate company. But somehow everyone concurred that it is, indeed, a tech company. How or why, no one bothered to ask.

Everyone? Virtually nobody thinks or thought WeWork was a high margin software company. Your comment is a narrative that has been regurgitated over and over again, yet who are these magical people who think WeWork is akin to Facebook?

Look at any article written about WeWork in the last 4 years. Every single article will regurgitate the Real Estate company pretending to be a tech company thing.

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