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

https://www.theatlantic.com/ideas/archive/2019/10/are-we-cusp-next-dot-com-bubble/600232/

by akrain • 7 years ago

238 148 7 years ago

firasd2• 7 years ago

I was getting insecure that my side-projects/hoped-for-businesses are things like a social news app and a podcast discovery app while Uber, SpaceX etc are changing the world but now that the software-is-eating-the-world companies are getting massacred in the stock market I feel at least some slight relief about my choices. Near-zero-marginal-cost is a magic that only pure-software (and other IP-based?) businesses have...

(Of course I'm overlooking that most new software biz that is doing well is B2B unlike my projects... but still.)

jacquesm3• 7 years ago

SpaceX is real. Uber, AirBnB, WeWork and all the other 'lawbreaking as a service' and 'subsidizing transactions with massive VC' companies are not.

WhyNotThough• 7 years ago

Taxi and hotel businesses deserved a little punch in the gut.

wisty• 7 years ago

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

firasd2• 7 years ago

I think the word 'subsidy' is kinda questionable here. (This writer's previous article used the same word to discover many companies[1])

If a company is not losing money on gross margins--if they are losing money in total 'unit economics' because the customer acquisition cost is high--does it really mean they are subsidizing usage?

An example is Casper, the mattress company. They are still selling mattresses to consumers for more than the mattresses cost to them. They are losing money on ads. If I see/hear a Casper ad, is that ad really a subsidy to me?

PS. Saw an interesting Twitter thread from Tren Griffin: "Whenever you read or hear the phrase 'losing money' you should ask yourself: what does this person mean?"[2]

1) https://www.theatlantic.com/ideas/archive/2019/10/say-goodby...

2) https://threadreaderapp.com/thread/1184981449172144128.html

mtts• 7 years ago

“ The problem with tech today isn’t so much that software failed to eat the world, but that the most celebrated unicorns weren’t actually software companies. They have struggled to achieve liftoff because their feet are stuck in the mud of the physical world”

This sums it up nicely.

Investors got deluded enough to think that if they threw enough money at a non-software company it would magically start making software company levels of profits.

Hopefully the real economy won’t be affected too much when this bubble finally bursts.

corporateslave5• 7 years ago

The thing is I don’t think investors got deluded, I think investors new exactly what they’re doing. They were hoping some greater fool would take the investment off their hands

ivanche• 7 years ago

That's not investing, that's speculation.

matwood• 7 years ago

The greater fools in the case of We being the public market. The rejection of the We IPO was a win against this ridiculousness.

PopeDotNinja• 7 years ago

I remember VCs investing in Cash4Gold when that was being hyped, presumably because it was growing stupid fast. [1] I think that qualifies as a we-are-a-tech-cuz-website company. What VCs mostly look for is growth. Some silo themselves into niches (e.g. enterprise software), but I reckon that any company with high growth potential would be fair game.

[1] http://www.nagellen.com/2009/12/high-tech-venture-capital-fi...

matthewaveryusa• 7 years ago

Yeah. Software's marginal cost can theoretically be zero, and in practice is is pretty close to that. Thinking of marginal cost for real estate I don't think there are economies of scale to be had beyond traditional merging of horizontals. Is tenant experience really the real estate largest cost? I don't think so -- land and construction is where you want to focus your efforts. That being said I have no idea what I'm talking out, this is just layman intuition.

janoc2• 7 years ago

Sorry but if someone thinks that throwing money at a software company with equally poor business fundamentals would work then they are completely deluded too.

Even software companies fail and don't make much profit to speak of. Just look at all that cryptocurrency/blockchain nonsense.

If your business is losing money and, worse, has no meaningful way to stop losing money, it makes no difference whether you are selling software, services or renting office space or running a taxi business. It will fail.

rubicon332• 7 years ago

Correct me if I'm wrong but... Instagram & Twitter were both unprofitable for a REALLY long time.

Instagram got bought by Facebook and eventually became an ad network.

Twitter eventually, after nearly a decade of not making a profit, made a profit.

muglug• 7 years ago

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).

cptskippy• 7 years ago

I don't think Slack counts, Slack's IPO was just a cash out because they saw the writing on the wall.

semiotagonal2• 7 years ago

Slack's stock price chart has a "down and to the right" appearance.

Slartie• 7 years ago

Well, nobody said that being a "pure" tech company automatically guarantees sky-high valuations, a hockeystick growth curve and the successful capture of a winner-takes-all market. Of course there must still be failures in that space, some which fail early and some which fail late.

It's just that the described path to success is close to impossible in any other space except for pure tech companies, preferably with a software-only product, which means that any company not fitting that description, but boasting absurd high valuations justified by assuming the company will go the path described above does most likely mislead investors.

empath75• 7 years ago

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.

NotSammyHagar• 7 years ago

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 ;-)

jjeaff4• 7 years ago

Microsoft Teams is definitely a direct competitor, and while it may not be nearly as good as slack, there are few companies out there with as many tentacles in Enterprise as Microsoft.

It would not be uncommon for an inferior product to win a significant market share. Especially when it comes to Enterprise software.

puranjay2• 7 years ago

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.

easytiger• 7 years ago

To be more specific it's a real estate company, that started out with a low asset ownership position.

Then it got into the asset game leveraging their revenue, but mostly leveraging some meaningless sociological/technological gibberish to skewer an investor.

I think this speaks to the state of the kind of people making decisions about things they don't even try to understand.

hurrdurr2• 7 years ago

This is what amazes me; that there are so many supposedly intelligent individuals throwing money at shitty ideas.

Google investing in Juicero comes to mind.

It's like any semblance of due diligence is just an afterthought.

buboard2• 7 years ago

Did the company call itself such? Or was she invited to the party for her renowned riches?

formercoder• 7 years ago

It’s easy to get rose tinted glasses and call a firm a “tech company” when it has the growth profile that wework did. What everyone forgot is that the other thing “tech multiples” require is high margins.

hanniabu• 7 years ago

How's it not a tech company? They have an app! /s

pembrook3• 7 years ago

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.

puranjay2• 7 years ago

The people that matter - the investors - valued WeWork like a high margin software company. Then WeWork itself tried to value itself like a high margin software company in its S-1.

Because WeWork's margins and revenue are similar to another very similar company - Regus - yet their valuation is more than 10x

arbuge• 7 years ago

"You might not have heard about these “real tech” companies—like Zscaler, Anaplan, and Smartsheet—because they mostly sell business-to-business software or cloud services. But all of them are trading more than 100 percent above their listed IPO price."

All of those are also down significantly from their all time high though.

SpicyLemonZest4• 7 years ago

Sure, but that isn't relevant to the IPO dynamics. Investors threw hundreds of millions at Zscaler, heavily subsidizing their growth, because they drew some charts saying they'd be profitable in the future. I'm sure that in 2014 you could have written an explainer about how suchandsuch Zscaler product is only competitive with Symantec because of VC money - or you could have written the reverse explainer, about how the Zscaler product isn't really competitive at all and they're duping people into using it using VC money and modern buzzwords. Both those genres are pretty popular about consumer-facing unicorns.

But it turned out the charts were right, and Zscaler is now profitable, although they still aren't making as much as investors at the all-time high expected.

dredmorbius• 7 years ago

There's a fantastic book that just came out in ... 1954 ... that I'd highly recommend. John Kenneth Galbraith's The Great Crash, 1929.

https://www.worldcat.org/title/great-crash-1929/oclc/3136579...

The tech and land booms of the time involved Florida real estate, railroads (a/k/a airlines), airlines (actual aircraft involved), "Radio" (RCA), new alternative energy source and distribution plays, and of course, Goldman Sachs.

I'd first read it following the 2007-8 global financial crisis. It's still relevant now. Short, highly readable, entertaining, and informative.

TheOtherHobbes2• 7 years ago

See also Anthony Trollope's The Way We Live Now.

Which was written in 1875. About the financial scandals of the 1870s.

code4tee2• 7 years ago

All that’s happening is that the market is calling BS on companies that lack sound business fundamentals. The days of valuing companies sky high that are deeply unprofitable but “it’s OK because we’re a tech company so it doesn’t matter” are over.

This is ultimately a good thing for companies with real businesses that were for much of recent history valued far less than those that had no clear prospects of making a profit. See all the writings about IWG vs WeWork on some of the previous insanity there.

Scoundreller• 7 years ago

It still works for taking over highly fragmented industries. And always will.

hn_throwaway_99• 7 years ago

The article touches on this, but I don't think it really addresses the root cause of the difference between 2000 and now. IMO the main difference is really just timing. Companies are staying private much longer than they did in the .com bubble. Back then, the IPOs still occurred during the "only thing that matters is eyeballs" phase, and when markets eventually expected profitability, the emperor was shown to be pantsless.

Now, though, companies that are going public are already large and have gobbled up a lot of their market due to VC funding. What's happening is that they are at the point where that profitability signal has to be in view - you can no longer say "it will be just around the corner". This flamed out most spectacularly with WeWork, but it's a bit of just desserts that private investors wanted to gobble up all the big early gains, only to find that the additional time just gives public investors more reason to be skeptical.

jacquesm3• 7 years ago

Punting a risky investment is a fine line between the dream still being alive and the bad news starting to roll in. For some investors - and sadly, even for some founders - this is during the earlier stages, which is why it is a huge red flag if founders or early investors insist on cashing out during later rounds.

daxfohl3• 7 years ago

One could argue the cloud services companies aren't really pure software as alluded to in the article, but a software veneer over a gig economy for the underlying hardware. This perspective would allow for a bit deeper of a comparison between what's working and what's not.

wbronitsky3• 7 years ago

I don’t understand this argument at all; it seems to be only buzzwords.

What is the relation of the gig economy to a cloud hosting service, other than most gig economy apps are built on cloud servers? Also, how does looking at the problem this way enlighten us?

rossdavidh• 7 years ago

I think the idea is that a cloud company is primarily renting hardware. Therefore, it doesn't scale like a software company; as its number of customers goes up, its number of employees and amount of capital equipment has to go up as well. This would mean it should not have a multiple like a pure-play software company, where the costs go up little if any as the number of customers goes up, because almost all of the software's development costs are up front.

code4tee2• 7 years ago

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 selling $2 for $1 in some cases (WeWork was basically losing nearly $1 for every $1 of revenue!)

Ride share companies grew fast when they sold VC subsidized rides but have struggled to maintain that market share dominance without subsidies (lots of other players quickly move in). MoviePass sold lots of subsidized movie tickets until the money ran out.

Thus the fallacy of the whole “it’s ok that we’re unprofitable because look at how fast we’re growing” is that in many cases these companies were only growing BECAUSE they were grossly unprofitable in the form of their investors massively subsidizing purchases.

ethbro• 7 years ago

The South Park gnome episode comes to mind. For values of:

1 - Demonstrate growth

2 - ?

3 - Profit

https://en.m.wikipedia.org/wiki/Gnomes_(South_Park)#/media/F...

Who knew it was a billion dollar business model?

rubicon332• 7 years ago

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.

tempsy• 7 years ago

If you look at the scooter companies they are now charging $.29/minute (vs I think $.15/min a year ago).

If you rent it for an hour, that now costs more than $20 with tax. Not exactly cheap anymore.

Waterluvian• 7 years ago

I think the problem is that a lot of these companies are trying this strategy with Juicero-like products. The moment they pivot to profitability, anyone else can just start squeezing at a lower cost.

Is Uber or We really making something that can't quickly be copied, even at a local level, once prices are doubled or tripled?

p1necone• 7 years ago

Imo this should be illegal. Taking a loss undercutting smaller competitors in a way that's only possible because you have piles of money unrelated to your actual business is going to distort the market in a way that's really bad for consumers in the long run.

Anecdotally I noticed this with Pita Pit in New Zealand. There used to be lots of independent pita places that had decent pricing, then pita pit started buying them out and replacing them with pita pit chains, while still competing on price relatively well. But as soon as they'd bought out all the competitors in the area they immediately almost doubled their prices.

fgonzag• 7 years ago

That's the thing about these non tech companies though. They have fixed costs per transaction, something pure tech companies don't. So tech companies can grow at a loss because their marginal cost for each customer is zero or close to zero. As long as you are selling more, you are getting closer to profitability.

This does not apply to all these "unicorns" that have a non negligible marginal cost on their services.

GhettoMaestro• 7 years ago

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.

SpicyLemonZest4• 7 years ago

Everyone agrees with that statement. The hard question is what "can't" means. Companies with a grow fast mentality always insist they could break even, and often present financial metrics indicating they do break even with the proper adjustments for purely growth-related costs. There's no obvious rule for how much you should trust a company's adjustments.

ChuckMcM• 7 years ago

An interesting brick and mortar example in the Bay Area was Fry's electronics. When they started, they grossly undercut all of the electronics brick and mortar stores and priced more like the distributors did rather than the stores.

As a result their business grew quickly and the other stores were unable to compete and went out of business. Then with the market to themselves they raised their prices to increase their margins. They also used access to adjacent markets (TVs, PCs, Radios, Appliances, Office Supplies) to supplement their margin which specialty retailers like Quement or Jade did not.

Their strategy was essentially to lose money on something that brought in customers, and to make extra money on other things once the customer had been acquired and was in the store.

The "grow fast at any cost" mentality is predicated on the understanding that the most difficult step of any new business is to change consumer behavior such that they go to the new business first. Once they have established that pattern they can then manipulate the pricing of their offerings in order to achieve the highest sustainable level of margin before they lose customers.

megaremote• 7 years ago

Like Youtube, which lost money every year until it was bought by Google. Or Instagram? Or a variety of others.

You don't understand why people want to copy those models of growths and get those big payouts? Which part confuses you?

Spooky23• 7 years ago

It works out often enough that it’s worth investing in. The WeWork thing is a great example — if they could dominate commercial real estate, that would be nearly unlimited upside.

TheSpiceIsLife• 7 years ago

The whole point of fast growing startups with ever-increasing valuations is to enable early investors to cash out at huge multiples.

Everything else is a side show.

enkid• 7 years ago

Sounds like a Ponzi scheme

Thorrez• 7 years ago

How do they generally cash out? Sell to other investors? IPO?

hammock3• 7 years ago

if I sell $2 for $1 that’s a false market

You're assuming that there is some objective value of a dollar, and that all dollars are worth that same. These assumptions are not necessarily true. Rather, they are myths that are propping up the current system.

hammock3• 7 years ago

Can't believe I got downvoted for this. Would be worth a whole blog post. Start with the fact that only approved banks have access to the "cheap money" that the Fed loans or are targets of the Fed's open market operations.

Or, start with the phrase "bad money chases out good."

tolmasky2• 7 years ago

If you just thought about the "false market" like advertising, it wouldn't seem so perverse.

Coca-Cola "wastes" millions on advertising, something that doesn't directly generate profits. From a cash flow perspective, it's giving money away to advertising agencies. The theory is that you have an indirect return through building mindshare. Same goes for "good will" deeds like charitable actions by corporations or taking a hit on a product to use a more environmentally friendly component. From a completely superficial perspective, this is a deliberately inefficient action that makes the market "more false".

You could imagine a scenario where you take in a lot of VC money to jump-start the initial production of a more environmentally friendly product while still selling it at a competitive price that really isn't justified by its production costs. Is this a false market? Perhaps, but it may serve to build out the necessary pipeline enough such that the unit economics eventually work to be self-sustaining and also build a lot of brand loyalty along the way.

These are bets. Advertising is a bet on brand recognition, one that can similarly take years to materialize (see the mattress industry). Facebook was a bet that paid off. Everyone laughed at how much they took in originally too.

Of course, like all bets, there can be bad bets, and even good bets that just don't pay off. In some sense, the WeWork story should be considered a great success: the public market did exactly what it was supposed to do, shine a light at the appropriate time on a bet that had been going on too long. The real danger is when these initial stages are funded incorrectly: if a VC Fund makes a stupid bet, well, that's the game, but if a pension fund had invested in this, then it would be dangerous.

chii5• 7 years ago

Coca-Cola "wastes" millions on advertising

but they don't overspend on advertising, unlike those VC funded companies. Each can makes a profit for coke, and therein lies the difference.

marcusverus• 7 years ago

The poster isn't saying that companies should never buy growth by selling $2 for $1. He's saying that VC seems to be bad at avoiding companies that only grow because of this. Consider PayPal. Early on, they would pay a $20 referral fee to anyone if they could get a friend to join and use PayPal. That's insane at first glance, but it worked because those new users kept on using the product; because the product itself was viable without the subsidy. Coca-Cola is the same way. They advertise, but they turn a profit after baking that into the price of the product. MoviePass was never going to work. The subsidy was the product. That's the concern.

treis• 7 years ago

The VC subsidies for some of these companies are so high that they are basically selling $2 for $1 in some cases (WeWork was basically losing nearly $1 for every $1 of revenue!)

Effectively none of these companies lose money on a marginal basis. In other words, an additional customer making an additional transaction helps their bottom line. There's always two major questions. (1) Can the company grow to where their overhead is covered in that marginal revenue and (2) can they acquire the customers cheap enough.

Your statement that WeWork loses $1 for every $1 illustrates a common misinterpretation. Those two numbers have basically no relationship with each other and don't tell us anything. Imagine that WeWork wasn't a total fraud. They set up their first 10 locations for $500,000, have annual revenues of 1 million and profit of 500,000. A VC comes along and says "Shit dawg, here's 50 million set up 100 more locations". So WeWork takes that money, spends 50 million and a year setting up new locations. \

What's their financial statement going to say? That they lost 49.5 million dollars on revenue of 1 million. Obviously that's an eye popping loss, but assuming they can replicate their success it's a smashing investment. The latter part of that last sentence is the important thing. Whether or not the money these companies is investing is going to see returns or if they're wildly optimistic in their long term projections.

ahartmetz• 7 years ago

Reportedly Uber did use money on a marginal basis and maybe still does. That's a big and important one.

mindvirus• 7 years ago

For a lot of these companies, they are profitable on a per customer basis, they're paying to acquire more customers.

For example, if it costs you $10 in marketing, promotions, etc. to acquire a customer, but on average those customers will pay you $20 over their lifetime, what should you do? Raise money and spend as much as you can to acquire more customers, if you think it scales!

ropable• 7 years ago

I think that we call this sort of thing a "loss leader" in retail. Unfortunately, it seems like some of these companies' entire market is a loss leader.

krzyzanowskim• 7 years ago

old companies (banks) that sell $2 for $2.15 (a loan).

banks sell $0.15 for $2.15, nobody can beat this business model. Bank only need $0.15 to give you a $2 loan and ask for $2.15 in return.

jeremydeanlakey• 7 years ago

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 Capital, sees your business potential and invests even though your GAAP income is low or negative. Smart Capital does very well for itself.

Suppose another investor, Sucker Capital, sees Smart Capital doing well, decides that profits don't matter and invests in Negative Margin Software, which never has hope of making money.

I think a lot of people can't distinguish between Negative Margin Software and Reinvestment Software. For many years, I didn't realize that they were separate things and I thought tech was mostly a Ponzi scheme.

At first glance, I see more Reinvestment Software vs Negative Margin Software compared to the dot-com era.

sfilipov• 7 years ago

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

countryqt30• 7 years ago

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

Retric3• 7 years ago

Facebook was a good example. They avoided excessive advertising in their growth phase, effectively spending potential profit for a huge user base. Critically, the profit was intangible as was the investment as the IRS does not care about money you never collected or the number of users you have only cash.

YouTube is another, as far as we can tell it’s currently extremely profitable yet people looking at their financials where laughing at the sale price when Google Snatched it up. Part of this is from ever more advertising coupled with ever lower bandwidth costs.

starfallg• 7 years ago

This is exactly what this article (that appeared here last month) was talking about -

https://mattstoller.substack.com/p/wework-and-counterfeit-ca...

https://news.ycombinator.com/item?id=21071890

webninja• 7 years ago

What balance sheet item shows this reinvestment that Negative Margin Software Company doesn’t have?

lordleft• 7 years ago

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 away anytime soon - that people still use .NET and other technologies because the enterprise endures, and companies like Microsoft are continually investing in their tooling. This article reminded me that sometimes unsexy technology powers the world, and if you can bring value and or mastery of that technology you can greatly benefit.

oldmanhorton• 7 years ago

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

np_tedious• 7 years ago

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.

karmakaze• 7 years ago

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.

saberience• 7 years ago

I'm reading this comment thinking about how wrong you could possibly be, or maybe how out of touch you are with C#, .Net, and how its perceived.

C# and .Net Core are miles away from unsexy, enterprise technologies. Microsoft has been doing an amazing job on the C# language in recent years, open-sourcing everything, making .Net Core run on every platform, being totally open about future updates, and pushing the .Net core framework to be more performant than about every other language other than C++, C, and Rust.

I work for a 2B valuation "startup" and we are fully .net core, all running in orchestrated Docker clusters and I perceive that choice as one of the reasons behind our success. The tooling and libraries, documentation, performance, etc, are in my opinion ahead of any other languages we could use: e.g. Java, Python, Haskell etc.

sabujp2• 7 years ago

The part about stock prices for non-tech and tech isn't entirely true, what about stocks like PD? Here's a company that's trying to posture itself as an enterprise grade ops system, stock is in the gutter

o-__-o• 7 years ago

Nothing sexy about monitoring. You or I could build our own overnight. Twilio is the true leverage and why they command a much higher P/E multiple

hunterloftis• 7 years ago

I agree with you but I’d phrase it differently. Perhaps that neither monitoring nor sms is “sexy,” but that you could reasonably hack together a monitoring MVP over a weekend but not a telephony MVP. There’s a natural barrier from the underlying problem domain.

sabujp2• 7 years ago

uber needs to shift to self driving taxis quickly

bydl0coder3• 7 years ago

How they will be better at making self-driving cars than established electronics and auto-manufacturers?

janoc2• 7 years ago

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 but a whitepaper and some hacked up "coin" - a derivative of the open source Ethereum code. And 99.9% of them has gone bust already, disappearing with all the investor's money.

This is about investors finally wising up that a start-up with no path to profitability is not a viable business, regardless of the explosive growth fueled by cheap VC dollars and undercutting the competition ("disrupting the market") by ignoring existing laws (Uber, ...).

At least not for public investors - it is still immensely profitable for the founders and early investors of those "unicorns".

However, their goal is not to make a profitable company but to grow fast, attract a lot of VC money and then recoup the investment in an inflated IPO when the entire Potemkin village gets sold off to a lot of naive suckers who end up footing the bill once the house of cards finally collapses.

This is what needs to called out, not some BS talk about "not-com" bubbles.

wool_gather• 7 years ago

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.

buboard2• 7 years ago

Ctrl-F "Interest rates" not found. That's what's different. Where is money going to go if not in the most hopeful investments, in bank accounts? If there is a bubble it's the fault of central banks

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

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