The argument about ad spending and dumb money makes sense and I can relate to it. SV startups have the freedom to build products which are inherently unprofitab

The argument about ad spending and dumb money makes sense and I can relate to it. SV startups have the freedom to build products which are inherently unprofitable (unprofitable by design). There are many incestuous networks of companies and investors within which startups dogfeed on each other's products in an attempt to generate profit for themselves. Unfortunately, money can't keep moving in a closed loop. Just like the economy of a country; if money exits the network faster than new money enters it, the network's finances will dry and shrivel up. The incestuous pattern of dogfeeding which is common in tech centers like SV tends to rely on a few 'alpha dogs' to actually extract money from outside the network. These alpha dogs are the tech giants; Google, Microsoft, Oracle, IBM, Facebook... - To avoid a bubble, these tech giants have to be able to make enough OUTSIDE profit to feed not only themselves but all startups and investors which indirectly depend on them for profit. With this dynamic, you would hope that the alpha dogs of the industry are highly profitable; but it's simply not the case. It's very rare to find a large tech company with a Stock Price/Earnings ratio below 30 - It seems that even the alpha dogs are struggling to feed themselves so it's hard to imagine that they would leave behind enough scraps for the others who depend on them. Interestingly enough, the giants like Google and Facebook tend to rely heavily on customers from INSIDE their network for profit (I believe a decent share of their revenue would come from advertising other tech companies) - Which means that even the alpha dogs are dogfeeding.