Sillicon Valley Bubble Watch 2015: Correction, Deflation, or Burst?

The Something Awful Forums > Discussion > Debate & Discussion > Sillicon Valley Bubble Watch 2015: Correction, Deflation, or Burst?

coma: Oct 21, 2010

It's also worth noting that Amazon has been operating at thin margins in exchange for complete dominance of market share

# ¿ Aug 25, 2015 02:14

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# ¿ May 23, 2024 01:36

coma: Oct 21, 2010

Ghost of Reagan Past posted:

Aren't they making a lot of money from Amazon Web Services now?

A cool billion after operating expenses which is pretty nice, but their bread and butter is still the online retailing I believe

# ¿ Aug 25, 2015 02:31

coma: Oct 21, 2010

Anubis posted:

Futures are +300 or so right now. Seriously, calling for a complete collapse in tech or the general markets is idiotic. Yes, some smaller companies will go under. Yes, people are playing the lotto with startups. No, it isn't going away anytime soon because rich people will be constantly convinced that you only need to hit 1/100 to quadruple your money. We are in a correction but, despite some weaknesses, fundamentals aren't really that bad and people are going to have to put their money somewhere.

China may finally be realizing their tailor wasn't being entirely truthful about their new cloths though. But that kind of bubble is pretty common thing when you get huge groups of consumers suddenly interested in investing in the markets.

Unemployment rates were at 4.1 percent in 1999 and the 2000 bubble popped..and were a flat 4.0 in 2000

coma fucked around with this message at 02:45 on Sep 8, 2015

# ¿ Sep 8, 2015 02:16

coma: Oct 21, 2010

Anubis posted:

Are you seriously trying to claim that low unemployment numbers (especially the somewhat shaky U-3 rates) are a good indicator of impending doom? Or are you just trying to claim that good fundamentals aren't an indicator of continued growth? Because if all you are looking at is the U-3 that's... I mean there's reading tea leaves and then there's whatever that is, no offense. If you really think it's collapsing you should be heavily invested in gold because if the US has a true crash then it's going to be a lot more painful than 2008. We don't have room to lower interest rates or many of the other extraordinary measures that would be required to pull us out. Luckily things like consumer debt and banks being over leveraged are both down quite a bit. The things that turn a correction into a recession just aren't there in abundance, in the US right now. However, China, as our largest trading partner, is certainly going to drag us through the mud a bit and it won't be sunshine and rainbows. But again, people have to put their money somewhere. With treasuries paying next to nothing, bonds being low as can be, the only common options are stock, commodities like precious metals, or real estate.

And as for tech startups specifically... Tech companies still have the best chance of any new startup to hit it big, especially among companies that commonly look for early funding. One of the big advantages that tech companies have is patent value. Even if you aren't able to achieve profitability with your core product you might end up developing valuable software and being awarded important software patents that one of the established companies are willing to buy you out for.

Unemployment is the biggest thing the beltway is leaning on when imploring everyone that the stock market isn't connected to the real economy, however the unemployment rate was much lower in 2000 and even in 2008 it only started going up from 5.0 percent in April. Corporate debt is the highest percentage-wise it's ever been because of stock buybacks purchased on credit through QE which might make things tight if downward shifting revenues are a trend and/or the interest rate is raised and if that happens the amazing buyouts that keep startups from sinking might trend downward, it's not inconceivable.

While it's not a carbon copy of the dotcom boom (more rounds of private funding instead of IPOs) I think there's enough parallels to say it's a similar bubble, perhaps not as big as the last one, or perhaps bigger since this market is more connected to the rest of the economy, as opposed to the dotcom market which was almost virtualized since net usage hadn't peaked yet.

http://www.vanityfair.com/news/2015/08/is-silicon-valley-in-another-bubble

# ¿ Sep 8, 2015 04:22

coma: Oct 21, 2010

Necc0 posted:

When that happens the VCs stuck holding the bag will start demanding returns on their investment. They will have a few options

- Squeeze blood from a stone by either cutting drivers' rates or increasing fares. Doing this directly would be a death sentence so they could develop complex rules that gently caress their drivers over a longer period of time. This wouldn't be enough for them to make back their investment though so they probably won't go this route.
- Private buyout. Maybe Google or someone else will want to buy them entirely for their self-driving car fleet. If Uber had a good patent portfolio this would be a reliable strategy but... they don't. Buyout is very unlikely especially now that Google is looking like they're going to be more careful with their money from now on.
- IPO. Put the shares on the market and give Cramer blowjobs until his red sweating face explodes from screaming about what a good buy Uber is. Drop all the shares and run like hell. If we're at this point where Uber & many others are doing this, it's time to start drawing parallels to the dot-com bust. We're not there yet either, though.

Basically yes there's way more money in the field than there should be and some lucky bastards are making out like bandits. It's not really a problem though because the total people effected by this is small, and all the money is being grifted off rich people who view dropping the occasional ten-million the same way we view gambling on penny stocks. Once the Fed raises rates you may see a lot of this settle down.

What about Sarah Lacy and all the techjourno contrarians who say expanded VC funding rounds are basically a private version of what IPOs were to the dotcom boom and a more opaque bubble is still being inflated even without any of the unicorns going IPO?

# ¿ Sep 8, 2015 05:21

coma: Oct 21, 2010

uncurable mlady posted:

lacy isn't wrong, but she's not exactly right. there's not really a lot of structural risk if private money keeps pouring into startups. the people left holding the bag there are non-executive employees enticed into the job with a lot of stock options that are now diluted into junk (and worth nothing at all when the company gets parceled out to goog/fb/ms/hp/whoever)

even assuming the worst happens and a bunch of unicorns get pets dot commed, the worst case is that a bunch of rich people lose a lot of money. it's not like grandma's retirement fund is going to go tits-up. hell, the bay area may even see a housing collapse so people could afford to live there again

That's what I've heard too but weren't people saying that about the housing crash last time? I thought a lot of hopes of recovery were pinned on real estate

# ¿ Sep 8, 2015 14:54

coma: Oct 21, 2010

asdf32 posted:

Specifically it means their investors are hosed which is different. Consider groupon - insane hype/bubble/crash, but now they're earning a profit as a cupon/deal site because cupon/deal sites are viable businesses. The same may happen for uber but uber but uber is probably better in every way.

What about the other scenario where actual taxi services start using a big-tent Uberlike app to drive business, that's one of the reasons Didi Kuaidi is destroying Uber in China: they cover taxis and rideshares and threw the 'disruption' playbook in the trash. When you strip away the Jetsons futurology away from Uber the mobile ease-of-use and scam-prevention is basically what you're left with, and anybody can do that with taxis and some sort of regulated ridesharing system while junking the risky '1099s and driverless cars to the moon' component that is core to Uber.

# ¿ Sep 9, 2015 15:07

coma: Oct 21, 2010

asdf32 posted:

The core of uber is that when you click an app a car reliably shows up. Uber can continue to execute this under a pretty wide variety of laws and regulations. And despite the simplicity, taxi companies as structured are actually poor at competing with this for a variety of reasons.

Also, competition doesn't spell doom for a business.

That's what I was saying inarticulately though, when your real-core is so easy to replicate as opposed to your high-valuation fantasy-core, all you really have is the brand-recognition from first-mover benefit. And even though taxi-services are terrible and stuck in the jurassic era, they're having the screws put to them in such a way that it's not inconceivable that people on the taxi side and some enterprising person from the startup side could look at Didi Kuaidi and take advantage of Uber blowback.

# ¿ Sep 9, 2015 15:36

coma: Oct 21, 2010

e_angst posted:

Good point. I guess I'm just trying to compare this to the DotCom bust. It was mostly dumbass startups that caused the problem, but it ended up hurting the entire tech sector pretty severely. Dell, HP, and a lot of other reasonably sensible companies had some really hard times.

Beyond start up fuckery there's also the problem that computer wholesale inventories are rising rapidly, it points to not a lot of demand for new computers/hardware in general as performance increases become less relevant and pronounced

http://www.cnbc.com/2015/10/09/wholesale-inventories-climbs-01-in-august-in-line-with-expectations.html

# ¿ Oct 10, 2015 22:11

coma: Oct 21, 2010

EB Nulshit posted:

http://www.zillow.com/fremont-ca/

Where are Facebook's employee's supposed to live in Fremont if it costs MINIMUM $600k to buy a home? Looks exactly like there is a bad housing shortage.

Bruh,

# ¿ Oct 11, 2015 19:20

coma: Oct 21, 2010

What exorbitant prices! *pays out the arm for a McLuxury closet*

# ¿ Oct 11, 2015 19:22

coma: Oct 21, 2010

redreader posted:

In case nobody has mentioned it in this thread (I don't think so?) humble bundle did layoffs today. Twitter did 8% layoffs on Tuesday. Facebook is on a hiring go-slow or freeze. My company did layoffs in July. People say the market is hot but it's definitely cooling down. It doesn't mean it's a bust or anything, but yeah it's not what it was.

Beyond ridiculous valuations of unicorns and ad revenues hitting a wall one thing I think is coming into view is that Services For Everything is just not viable with wage stagnation being what it is. Brick and mortar has taken a huge hit (Wal Mart yesterday) but is anyone seriously planning on using the Amazon buttons for most of their day-to-day shopping? And if Amazon can't make it work who can?

# ¿ Oct 16, 2015 15:34

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# ¿ May 23, 2024 01:36

coma: Oct 21, 2010

MeruFM posted:

captains of industry don't need no books

They'll be in The Cloud(c) within 7 years anyway! Eventually! Most of them anyway! For a low price! More efficient than tax money!

# ¿ Oct 22, 2015 04:23

The Something Awful Forums > Discussion > Debate & Discussion > Sillicon Valley Bubble Watch 2015: Correction, Deflation, or Burst?