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We are in a Bubble

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Re: We are in a Bubble

#71

Post by mdda »

sopooneo wrote: post #62
hooande wrote: post #46

The third point explains the first two. Something has to be done with the billions of dollars fleeing real estate and the general stock market. You get billion dollar valuations when people are saying "I have a billion dollars and I really need a place to invest it" The startup community needs to get over the idea that "valuations" are based in reality. Rich people need ways to get richer. They could choose tech star…

Yes, but the rich only get rich on a bubble if they know it is a bubble and get out soon enough. So we are to assume that the rich are getting the tech train moving, letting the Hoi polloi add some rule coal to the fire, then hopping off before the thing crashes off a cliff? That is possible, but every part of my forced analogy is necessary for the idea to hold water.

Grammar trivia : "the Hoi polloi" contains redundancy, since "Hoi" duplicates the "the".

Re: We are in a Bubble

#72

Post by neilk »

R_Symtex_II wrote: post #64
sopooneo wrote: post #62

Earlier quoted context omitted.

Yes, but the rich only get rich on a bubble if they know it is a bubble and get out soon enough. So we are to assume that the rich are getting the tech train moving, letting the Hoi polloi add some rule coal to the fire, then hopping off before the thing crashes off a cliff? That is possible, but every part of my forced analogy is necessary for the idea to hold water.

I think the term you're looking for is Ponzi scheme. Much like Bernie Made-off... err Madoff operated. Or perhaps more recently: Groupon. A classic pump and dump, take a look at the charts. Your 'train analogy' is merely painting a glib picture of what is clearly insider trading by the likes of Goldman Sachs in a different, albeit obvious, guise.

You are conflating completely different kinds of stock scams.

Re: We are in a Bubble

#74

Post by sabat »

citricsquid wrote: post #25

This bubble will hurt the smaller startups by no-name people, people that invested everything in an idea that in a non-bubble environment would be laughed out of the room, but with companies like YC around (not that this is their fault) that are harping on about the value of ideas and people it's growing. There are people here on HN daily that post links to their blog posts that have put all their savings into their…

There is no bubble. 2000: THAT was a bubble. This is not a bubble. No evidence. Just Chicken Littles.

Re: We are in a Bubble

#75

Post by sabat »

nextparadigms wrote: post #38
OzzyB wrote: post #32

As a personal exercise please go and watch this documentary: Startup.com http://www.imdb.com/title/tt0256408/ And then ask yourself if what happened then is anyway similiar to what is happening now. For starters, I think you will realise that most startups circa 2000/1 were nothing more than litteral "thin air" -- compare that to the likes of Facebook who actually have revenues, hell, they even have a product . I kno…

But did Instagram have revenue? The question wasn't if investors back then had money, but if the company they invested in were making any money. Facebook had money, Instagram wasn't making any. So to me that's very similar. Also he's right that now that Instagram was valued at $1 billion, we're already starting to see others like Square immediately looking to raise capital at huge valuations, just because Instagram w…

But did Instagram have revenue?

While that's a valid question, one sale of one company does not a bubble make.

We really, really have to stop saying "bubble" every time some company gets sold for a greater amount of money than we think it's worth.

Re: We are in a Bubble

#76

Post by lsb »

mdda wrote: post #71
sopooneo wrote: post #62

Earlier quoted context omitted.

Yes, but the rich only get rich on a bubble if they know it is a bubble and get out soon enough. So we are to assume that the rich are getting the tech train moving, letting the Hoi polloi add some rule coal to the fire, then hopping off before the thing crashes off a cliff? That is possible, but every part of my forced analogy is necessary for the idea to hold water.

Grammar trivia : "the Hoi polloi" contains redundancy, since "Hoi" duplicates the "the".

Grammar trivia: "children" contains redundancy, a doubled plural. The germanic plural of "child" is "childer", and that didn't sound plural enough, so they added the -en that pluralized such fine words as ox -> oxen, and child-er-en then sounded correct.

Re: We are in a Bubble

#77

Post by edwinnathaniel »

sidman wrote: post #33
samstave wrote: post #3

I am not interested in any of the "we are in a bubble" posts as much as I am interested in "What the fuck will happen when this bubble bursts!" I have been in tech in SV since 1997. I was here for the build, frenzy and pop of the last bubble. In 2001 I had a BBQ at my place - 50 people came and we ate and drank by the pool. Of those 50 - all tech workers - 4 had jobs. I was out of work for 18 months (6 of which I tra…

> ALL of these people are at the greatest risk - what will happen if this bubble bursts. We will be FUCKED I have the same thoughts exactly. I was a junior at university when the last bubble burst so i have no idea what it was like. Currently i have been running my startup after quitting my job for almost a year and we are doing OK but this talk of bubble worries me because i dont know what to expect. Will it only ef…

HN readers cannot predict the future.

Re: We are in a Bubble

#78

Post by sytelus »

Purely from investor perspective, here's how I would do FB valuation:

Assume that FB doubles its profits in next 2 years. Then also let's say it gets in to 3 new businesses as big as its current business and dominates them just as well. That would put their profits to ~$8B.

Now again assume that FB maintains its dominance successfully on all of the above 1+3 businesses for next 10 years. So in this "dominating life span" of FB, there would be total $80B made. If you put probability of everything from inventing new businesses to fending off all competitors successfully for next 10 years at 0.5 then FB's risk adjusted worth would be $40B. It should be obvious that this valuation is way too on generous side (normally I would more aggressive parameters). It should be easy to see that valuations like $100B is extremely unrealistic.

As OP has pointed out bubble is an effect when people take one unrealistic valuation as a reference point and make their own valuations just as unrealistic causing system-wide chain reaction. With Instagram, Evernote and such that chain reaction is unfolding right in front of us.

Re: We are in a Bubble

#79

Post by viandante »

From a business perspective (and believe it, it hurts me saying that), this discussion makes no sense. It's like saying: 'are we in a PMIs bubble'? Or, 'are we in a multinationals bubble?'. The point is that we tend to group things together in categories. But does it make sense to put, say, Facebook and, say, MakeLeaps (start up that manages invoices for small businesses) in the same category? It think it does not, as much as it does not make sense to put Apple and Mc Donald in the same pot. Would you say Apple and Mc Donald are in a multinationals bubble?

However, those discussions do show something, that there is an underlying need to understand the market and the businesses out there. More start ups focused on BtoB I think are needed. Corporate and business software sucks and costs a lot in terms of actual cost and lost efficiency, when are people going to realize that and work on that too?

Re: We are in a Bubble

#80

Post by iRobot »

hooande wrote: post #46

The third point explains the first two. Something has to be done with the billions of dollars fleeing real estate and the general stock market. You get billion dollar valuations when people are saying "I have a billion dollars and I really need a place to invest it" The startup community needs to get over the idea that "valuations" are based in reality. Rich people need ways to get richer. They could choose tech star…

It kinda makes the asteroid mining venture from yesterday seem a lot more sensible and tangible an investment long term.
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