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This reminds me a lot of PG's essay on how Yahoo was a beneficiary of its own advertising bubble that it created in the 90s: > By 1998, Yahoo was the beneficia

This reminds me a lot of PG's essay on how Yahoo was a beneficiary of its own advertising bubble that it created in the 90s: > By 1998, Yahoo was the beneficiary of a de facto Ponzi scheme. Investors were excited about the Internet. One reason they were excited was Yahoo's revenue growth. So they invested in new Internet startups. The startups then used the money to buy ads on Yahoo to get traffic. Which caused yet more revenue growth for Yahoo, and further convinced investors the Internet was worth investing in. http://www.paulgraham.com/yahoo.html http://www.paulgraham.com/yahoo.html

puredemo 11y ago
Sounds a lot like AdSense too, honestly.
- jfoutz 11y ago
  in 1998, google (er, alphabet) got its initial round of $100,000. You're not wrong but things in 1998 were weird. it wasn't clear that the internet should or would be commercial at all. 1998 was a big bubble, because we didn't know, at all, how the internet should work. c10k wasn't met yet. Parents (not grandparents) thought the internet was scary. Maybe big G (er alphabet) is indeed cannabalizing it's own resources to juice adsense revenue. It's different than the late 90's though. For example pets.com, or moo.com. There are ideas that were tried that make money now. In the beginning it was just weird. all sorts of crazy stuff was tried.
jacquesm 11y ago
YC was one of the best things to come out of Yahoo... Imagine, if Yahoo had not bought out PG and company this whole thing would have never happened. Yay for the bubble, and apparently even Ponzi schemes can have beneficial side effects.
- StavrosK 11y ago
  Which "whole thing" are you referring to? YC has been good, but I doubt it has created the industry. The money wanted to flow in, and it would have, YC or no.
  - jacquesm 11y ago
    This whole thing: Ycombinator, the 100's of start-ups that it has funded, the network of alumni it has created, the very website you are writing this on and the community that goes with it.. And sure, that money would have flowed in but the track record of YC to date is one that I think would not have been duplicated without the unique elements that YC has managed to bring to the table. They literally hacked the start-up world and that's nothing to swipe under the table. A ton of wanna-be competitors has come and gone (some are still there) but none of those have done nearly as well as YC. Whether or not it will continue for ever is unknowable but for now the results are quite amazing and not to be compared with what 'the industry' managed to achieve in the same timeframe. No other group has managed to create this number of start-ups, no other group has managed to change the dynamic between founders and funders this dramatically.
eggie 11y ago
This cycle of hype is extremely similar to what's going on with mobile advertising on Facebook. It's described pretty clearly in one of Evan Spiegel's "leaked" emails from 2013: > Facebook has continued to perform in the market despite declining user engagement and pullback of brand advertising dollars -- largely due to mobile advertising performance - especially App Install advertisements. This is a huge red flag because it indicates that sustainable brand dollars have not yet moved to Facebook mobile platform and mobile revenue growth has been driven by technology companies (many of which are VC funded). VC dollars are being spent on user acquisition despite unknown LTV of users - a recipe for disaster. This props up Facebook share price and continues to justify VC investment in technology products based on abnormally large mkt cap companies (i.e. "If this company attracts just 5% of users that FB has, it will be HUGE" - fuels spend on user acquisition as user growth is tied to values). When the market for tech stocks cools, Facebook market cap will plummet, access to capital for unproven businesses will become inaccessible, and ad spend on user acquisition will rapidly decrease - compounding problems for Facebook and driving stock even lower. (http://businessinsider.com/snapchat-ceo-on-tech-bubble-and-facebook-overvaluation-2014-12 http://businessinsider.com/snapchat-ceo-on-tech-bubble-and-f...) I can't help but think of Marc Andreessen's recent liquidation of 3/4 of his Facebook stock: http://businessinsider.com/marc-andreessen-selling-facebook-stock-2015-11 http://businessinsider.com/marc-andreessen-selling-facebook-.... Despite a stellar revenue report it looks like all is not right in the Faceland.

puredemo 11y ago

Sounds a lot like AdSense too, honestly.

jfoutz 11y ago
in 1998, google (er, alphabet) got its initial round of $100,000. You're not wrong but things in 1998 were weird. it wasn't clear that the internet should or would be commercial at all. 1998 was a big bubble, because we didn't know, at all, how the internet should work. c10k wasn't met yet. Parents (not grandparents) thought the internet was scary. Maybe big G (er alphabet) is indeed cannabalizing it's own resources to juice adsense revenue. It's different than the late 90's though. For example pets.com, or moo.com. There are ideas that were tried that make money now. In the beginning it was just weird. all sorts of crazy stuff was tried.

jacquesm 11y ago

YC was one of the best things to come out of Yahoo... Imagine, if Yahoo had not bought out PG and company this whole thing would have never happened. Yay for the bubble, and apparently even Ponzi schemes can have beneficial side effects.

StavrosK 11y ago
Which "whole thing" are you referring to? YC has been good, but I doubt it has created the industry. The money wanted to flow in, and it would have, YC or no.
- jacquesm 11y ago
  This whole thing: Ycombinator, the 100's of start-ups that it has funded, the network of alumni it has created, the very website you are writing this on and the community that goes with it.. And sure, that money would have flowed in but the track record of YC to date is one that I think would not have been duplicated without the unique elements that YC has managed to bring to the table. They literally hacked the start-up world and that's nothing to swipe under the table. A ton of wanna-be competitors has come and gone (some are still there) but none of those have done nearly as well as YC. Whether or not it will continue for ever is unknowable but for now the results are quite amazing and not to be compared with what 'the industry' managed to achieve in the same timeframe. No other group has managed to create this number of start-ups, no other group has managed to change the dynamic between founders and funders this dramatically.

eggie 11y ago

This cycle of hype is extremely similar to what's going on with mobile advertising on Facebook. It's described pretty clearly in one of Evan Spiegel's "leaked" emails from 2013: > Facebook has continued to perform in the market despite declining user engagement and pullback of brand advertising dollars -- largely due to mobile advertising performance - especially App Install advertisements. This is a huge red flag because it indicates that sustainable brand dollars have not yet moved to Facebook mobile platform and mobile revenue growth has been driven by technology companies (many of which are VC funded). VC dollars are being spent on user acquisition despite unknown LTV of users - a recipe for disaster. This props up Facebook share price and continues to justify VC investment in technology products based on abnormally large mkt cap companies (i.e. "If this company attracts just 5% of users that FB has, it will be HUGE" - fuels spend on user acquisition as user growth is tied to values). When the market for tech stocks cools, Facebook market cap will plummet, access to capital for unproven businesses will become inaccessible, and ad spend on user acquisition will rapidly decrease - compounding problems for Facebook and driving stock even lower. (http://businessinsider.com/snapchat-ceo-on-tech-bubble-and-facebook-overvaluation-2014-12 http://businessinsider.com/snapchat-ceo-on-tech-bubble-and-f...) I can't help but think of Marc Andreessen's recent liquidation of 3/4 of his Facebook stock: http://businessinsider.com/marc-andreessen-selling-facebook-stock-2015-11 http://businessinsider.com/marc-andreessen-selling-facebook-.... Despite a stellar revenue report it looks like all is not right in the Faceland.