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How tech’s defiance of economic gravity came to an abrupt end

economist.com

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Re: How tech’s defiance of economic gravity came to an abrupt end

#81

Post by paulryanrogers »

willcipriano wrote: post #54
paulryanrogers wrote: post #51

Earlier quoted context omitted.

Words can evolve. Here on this forum and in large parts of culture, 'technology' is any relatively recent innovation. Of which software is one of the more prominent examples.

Few would debate that the printing press is one of the most important pieces of tech humanity ever produced. At first it was used to print Bibles, but it was eventually used to print all sorts of other things. The philosophical texts that were later printed on the printing press were not a new "tech", but we pretend new apps for a iPhone are for some reason. When we increase the surface area of a definition like you…

FWIW, I'm only stating what seems obvious to me. You can disagree though I suspect trying to narrow the definition at this point will be pushing a rock up hill or swimming up stream.

My view of words like technology is they are more like sliding windows, covering what the zeitgeist is classifying. Somewhat like the word 'fashion' or 'fad' aren't limited to any one specific kind of dress or style.

The word 'technology' would be less useful if it always had to be qualified to exclude everything from fire and the wheel up to the transistor?

Re: How tech’s defiance of economic gravity came to an abrupt end

#82

Post by ramesh31 »

ehnto wrote: post #69
pigsty wrote: post #40

Earlier quoted context omitted.

The fact everything uses software doesn’t mean Slack, a generic chat platform with dozens of absolutely identical products, being acquired for 27.7 billion dollars ever made sense. That generic software company was valued higher than entire industries that supply components that all hardware depends on. Tech isn’t collapsing. But valuations were and continue to be fuckin nuts for a lot of companies and are coming dow…

Another fun example of looking at valuations versus actual real world production and output (real value delivered?): Tesla for a period was valued at a higher market cap than Toyota, the largest auto manufacturer in the world. Consider the real world infrastructure and output of Tesla, and the real world infrastructure and output of Toyota. Toyota is an order of magnitude larger operation. So for Telsa's valuation to…

>Tesla for a period was valued at a higher market cap than Toyota, the largest auto manufacturer in the world.

Tesla is still valued higher than Toyota, Honda, GM, and Ford combined.

Something is broken.

Re: How tech’s defiance of economic gravity came to an abrupt end

#83

Post by plaguepilled »

grog454 wrote: post #62
plaguepilled wrote: post #48

Earlier quoted context omitted.

As yes, CPUs, those things famously bought because of the software that runs it. Certainly not because of any fabrication advances by a given company, hohoho. All tech is software!

> As yes, CPUs, those things famously bought because of the software that runs it. They are bought because of the software that runs on it.

You are still licensed the operating system and end user software from a separate company or companies. Which means the reduction of tech to JUST the software is still extremely crass.

Said another way, the dependency graph is bidirectional. Software requires hardware to run. Hardware is of no practical use without software. The fixed quantity is the "use case", NOT the software.

Re: How tech’s defiance of economic gravity came to an abrupt end

#84

Post by bckr »

scarface74 wrote: post #78
nugget wrote: post #63

Earlier quoted context omitted.

Tech seems somewhat unique because you can start a new company and within a relatively short period of time (<10 years) you can threaten the eventual existence of Fortune 500 incumbents. The entire venture capital/startup ecosystem exists to identify these upstarts and help them obtain unstoppable momentum as quickly as possible. If the incumbents want to survive, they usually have to pay up, and the longer they wait…

Everyone says this narrative. But 10 years ago. - Google was the most popular search engine. Had a dominant position in adTech and YouTube was popular - Apple became the most valuable company in the US and the iPhone was sucking up most industry profits. - Amazon was by far the most dominant electric retailer and AWS was taking off (disclaimer: my current employer) - Microsoft had been the dominant operating system f…

Yeah, and how many startups did these companies acquire in order to maintain dominance?

Re: How tech’s defiance of economic gravity came to an abrupt end

#85

Post by [deleted] »

kalimanzaro wrote: post #70
crazygringo wrote: post #64

Earlier quoted context omitted.

Obviously tech itself isn't collapsing -- it's the astronomical growth that's collapsing, and much of valuation is based on growth. Now it's turning into merely "normal" growth. But that's all investor-side. Consumer-side, it's really more about tech maturing . If we take your example of owning a smartphone, it means that most people already have smartphones, and since the yearly upgrades are much more incremental no…

If by tech we mean everything touched by Moore's law, all this degrowth seems also to be a consequence of the lengthening of the doubling time in flops and words. Ultimately what you mean by normal growth would then be the replacement rate of your old computer by a new but not more powerful computer.

[deleted]

Re: How tech’s defiance of economic gravity came to an abrupt end

#86

Post by screye »

I believe the doom-n-gloom around all of tech is rather overblown.

There are sectors of tech that will absolutely struggle. Gig-economy companies won't ever meet their valuation. Negative PE ratio startups are realizing that hyper-scaling is not as infinite as they believed, and that means their earnings might never catch up to their price. Social media companies are finally facing stiff non-American competition (Tiktok). Lastly, it is nice to see the crypto scams be snuffed out. But, people have been calling all 4 of these out since before Covid.

Now, the biggest movers in tech seem to be in a healthy position. AMZN*, MSFT, AAPL and GOOG sit comfortably at the same average PE ratio as the S&P500. Those are value stock numbers for companies that are all leading innovation while having solid unit economics. They are front runners in areas that are their biggest risks (AI, Silicon) and their current offerings are essential tools to everyone globally. AFAIK, the adoption rates for cloud compute and mobile-silicon devices is only going to go up from here.

[AMZN] - AMZN does the weird profit-reinvesting thing, so they report lower margins on the highest revenue across tech. Thus the lower PE ratio. See it as you wish.

Re: How tech’s defiance of economic gravity came to an abrupt end

#87

Post by hef19898 »

plaguepilled wrote: post #83
grog454 wrote: post #62

Earlier quoted context omitted.

> As yes, CPUs, those things famously bought because of the software that runs it. They are bought because of the software that runs on it.

You are still licensed the operating system and end user software from a separate company or companies. Which means the reduction of tech to JUST the software is still extremely crass. Said another way, the dependency graph is bidirectional. Software requires hardware to run. Hardware is of no practical use without software. The fixed quantity is the "use case", NOT the software.

most hardware i use in my life, outside the laptop I use to write this comment or my phone, works pretty good without complicated software. Heck, even my cars are old enough to have some basic embedded software running the engine only.

Also, software without hardware to run on, or to write n, is even more pointless than hardware alone. At least the latter can be touched.

Re: How tech’s defiance of economic gravity came to an abrupt end

#88

Post by cma »

ehnto wrote: post #69
pigsty wrote: post #40

Earlier quoted context omitted.

The fact everything uses software doesn’t mean Slack, a generic chat platform with dozens of absolutely identical products, being acquired for 27.7 billion dollars ever made sense. That generic software company was valued higher than entire industries that supply components that all hardware depends on. Tech isn’t collapsing. But valuations were and continue to be fuckin nuts for a lot of companies and are coming dow…

Another fun example of looking at valuations versus actual real world production and output (real value delivered?): Tesla for a period was valued at a higher market cap than Toyota, the largest auto manufacturer in the world. Consider the real world infrastructure and output of Tesla, and the real world infrastructure and output of Toyota. Toyota is an order of magnitude larger operation. So for Telsa's valuation to…

They earn more profit than Toyota and have a ton of unbooked FSD revenue they can't book but could pay out as dividends if they want--apparently they never have to deliver in the average lifetime of the cars that came with it.

Re: How tech’s defiance of economic gravity came to an abrupt end

#90

Post by nugget »

scarface74 wrote: post #78
nugget wrote: post #63

Earlier quoted context omitted.

Tech seems somewhat unique because you can start a new company and within a relatively short period of time (<10 years) you can threaten the eventual existence of Fortune 500 incumbents. The entire venture capital/startup ecosystem exists to identify these upstarts and help them obtain unstoppable momentum as quickly as possible. If the incumbents want to survive, they usually have to pay up, and the longer they wait…

Everyone says this narrative. But 10 years ago. - Google was the most popular search engine. Had a dominant position in adTech and YouTube was popular - Apple became the most valuable company in the US and the iPhone was sucking up most industry profits. - Amazon was by far the most dominant electric retailer and AWS was taking off (disclaimer: my current employer) - Microsoft had been the dominant operating system f…

Google acquired YouTube and Facebook acquired Instagram. Both for what seemed like insane valuations at the time. Both were brilliant defensive acquisitions in hindsight. Both fueled tech valuations by illustrating the opportunity for rapid disruption.
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