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I think taking 1999 as a general example is a bad idea. The mechanics of how the bubble popped is not really interesting. It could have popped any number of way
by netcan 11y ago
I think taking 1999 as a general example is a bad idea. The mechanics of how the bubble popped is not really interesting. It could have popped any number of ways.
What happened in the 90s was this. People realized the internet was a huge deal. World changing, re-writing the rules of the economy, among other major human institutions (learning, governance, etc.) They were right. 20 years later a lot has changed because of the internet. Revolutions have been driven by it. Economic titans have been created by it.
A large chunk of the blue chip economy is now made up of internet and internet compliment companies, even Apple & MSFT are in that category. Google, Alibaba. The new blue chips being generated today are internet companies and I'll wager the blue chips generated in 2030 will also be driven by this.
The investors of 1997 were not wrong about the scale of the revolution. What they were wrong about was the importance of early mover advantages. It's as if they expected the internet economy to be built behind walls constructed in their entirety by 2000. They thought they were buying shares in Google, Facebook, Alibaba & Uber, that these companies were all being founded between 95 and 98. Seems silly now. But, hindsight.
The really large scale irrational exuberance lasted a short while, just 2-3 years maybe less. That's hard to justify but it's the end of a bubble when bubble thinking is totally disconnected with the rules outside the bubble.
In that environment, it doesn't matter what bursts the bubble, it's going to burst.
Without that kind of bubble, you don't get that kind of burst. With that kind of bubble, you inevitably get that kind of burst. Investor sentiment may be fickle, but U-haul traffic jams are caused by real economics, not panicky investors.
So, who are these unicorns? Can they survive a month or twenty of panicky investors? Can they do away with investors all together? Are they reliant on investor money for revenues like all the ad selling startups of 1999?
Here they are: http://graphics.wsj.com/billion-dollar-club/ http://graphics.wsj.com/billion-dollar-club/
I think no matter what investors do tomorrow morning, Uber, Xiomi, AirBnB and Palantir will still pay salaries, bonuses and such. The IPO might be put off by a couple of years. If the market goes extremely nasty a lot of people who expect to buy houses with stock options will be disappointed. That might cause trouble.
U-Hauls? I don't see it.
- Marazan 11y agoUber is burning through cash, without fresh investment they cannot keep going on their current course.
- netcan 11y agoPerhaps, but the comparison to 1999 giants is completely nonsensical, IMO. Uber are breaking records in building a business segment from scratch over an incredibly short span of time. They have been taking investment in order to grow fast. That's reasonable because (1) they have been able to use it to grow fast and (2) this is a business that probably tends to the winner-takes-all end of the spectrum. Is it riskier than ExomMobile? Yes. Is it a nonsensical investment no? Will they be harmed if all finance markets dry up completely. Yes. Would it kill them? Probably not, but who knows. But, the only reason for a tootle dry-up is if the fundamentals are totally broken, and there is no reason to think they are. Uber generates revenue. It's business model is pretty solid. Customer like it. This is nothing like the 99 companies.
- deleted 11y ago[deleted]
- ska 11y agoWhat they were wrong about was the importance of early mover advantages. There is also a tendency to underestimate the "early mover disadvantage", if you will - if you move too early you risk ending up being little more than a detailed market study for a company that will succeed with your idea a few years later. The current wave of delivery and mobile services includes lots of ideas people were chuckling about in 2000, but now they are functioning pretty well.
- jerf 11y agoI actually have a hard time coming up with an idea from the previous bubble that is not at least being tried again now with more success, or already successful. I'm not saying someone couldn't do it, but it's not easy. One classic mockery target is the company that was going to deliver dog food to people. (I want to say Pets.com but it seems like they were more diversified than that.) The only wrong thing about that idea was that it isn't its own company. Amazon will happily deliver you dog food, as well as all kinds of other basic staples. (They even started a new program for that lately.) Fresh grocery delivery from local stores is probably the best example I have... it exists, we can't quite call it dead, but only in very limited areas, and is still struggling to grow. (Bear in mind that there is a strong correlation between reading HN and being in an area that has grocery delivery. :) It isn't very common.) I'm interesting in anybody who can come up with something from 1999 that still doesn't exist at all, or has failed so utterly that nobody is trying it today.
- tdaltonc 11y agopets.com?
- ScottBurson 11y agoI buy cat food from chewy.com. I doubt the site is worth $1B, but it does seem to be staying in business.