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This Tech Bubble Is Bursting
- deleted 10y ago[deleted]
- pj_mukh 10y agoIf everybody is a couple of layoffs away from profitability or multi-year runways, where are the big falls? Who is the Pets.com this time around? P.S: Also mixed messaging (http://www.wsj.com/articles/fidelity-in-reversal-raises-value-of-many-tech-startups-1462041176?mod=e2tw http://www.wsj.com/articles/fidelity-in-reversal-raises-valu...). Maybe its not all sky-is-falling doom and gloom.
- dudifordMann 10y agoHmmm, this might just be a candidate for a conspiracy where they are in reality shorting the market?
- untog 10y agoI know it'll be an unpopular opinion, but I really think Uber could be in for a big fall. Not because they haven't been successful, but because they've been too successful - they've opened the market up for themselves but also competitors. Most Uber drivers I ride with have at least one other ride share app open, none of them have a loyalty to the company. In fact, many actively dislike it. And riders I talk to aren't loyal either - they'll happily flip between Lyft, Uber, and whatever else is available, depending on who is offering a discount code that week. I don't doubt that Uber has a better investment in the future (self driving cars and the like) but it remains to be seen if they'll make it that far - that future is still a ways off. By itself that wouldn't be so drastic, but Uber has taken on a lot of funding and obstinately refused to go public. It could put pressure on other companies that are currently quite happily staying private, too.
- pj_mukh 10y agoWorst case scenario they pull out of China (where they are purposely hemorrhaging money). Their profitability in America, means they are in no threat of "dying".
- untog 10y agoBut will they continue to be profitable? Imagine a new startup launches today offering ridesharing in NYC. Drivers - who already have Lyft running - add the app to their roster. After some advertising spend, so do users. What is Uber's strategy to stop them? Spend more money, usually - more advertising! More drivers! Is that sustainable? What is Uber's moat?
- mrdrozdov 10y agoDriverless cars and state of the art engineering infrastructure.
- untog 10y agoDriverless cars at least half a decade if not a decade away from widespread adoption in cities. Who's to say they'll last that long? What does "state of the art engineering infrastructure" give users? I don't recall Lyft's app ever failing on me.
- bobjordan 10y agoFinally, Uber get's pushed out of relevance by driverless cars, from BMW, Mercedes-Benz, Chevy, Ford, etc., who will ultimately never let them have this market.
- CPLX 10y agoDriverless cars don't exist and there's literally zero evidence that Uber has a stronger claim on that market than any other aspiring company. Engineering for an app like this is non-trivial but hardly insurmountable. The one advantage they do have is network effect, the more drivers and users they have the quicker it is to get a ride and more lucrative for drivers. That does matter, the question is how much.
- potatolicious 10y agoAgree - Uber suffers from the same problem as Square. They created a new product expecting it to be stickier than it actually turned out to be. In Uber's case it turns out "better than a yellow cab" is a pretty low bar to clear, and neither drivers nor consumers have much loyalty and are highly price sensitive, creating a race to the bottom. In Square's case it turns out merchants will gladly use a slightly-worse iPad UI for payments if the fees are lower, and consumers don't really care regardless. Again, race to the bottom. Right now it looks like Uber is engaged in an epic price war in many markets where the prices are unsustainably low - and these prices are sustained by a combination of setting VC cash on fire and squeezing driver pay. Having no insider information into Uber, I'm a bit skeptical that they're that close to be sustainably profitable.
- uptown 10y agoUber's problem seems to be that they need to raise prices and cut driver rates once they've captured a market and driven out competition. Either that, or they need to switch to driverless cars to eliminate that component of their business - but that seems to be a ways off, and there's no reason to think other players won't be just as successful when you're able to remove drivers, one of the larger variables, from the overall equation. https://twitter.com/neilanalien/status/627873374505562112 https://twitter.com/neilanalien/status/627873374505562112
- aaroninsf 10y agoSqueezing driver pay: indeed. My mother drives in SF for Uber and Lyft. She makes about one quarter (with the same time/schedule) she did less than two years ago. Some call this _market efficiency_ and point out this is functioning as designed. My mother, she's moving back to Washington State.
- superuser2 10y ago> "better than a yellow cab" Better than a yellow cab (UberX) isn't the interesting part of Uber's business, Pool (and a swarm of dynamically routed cars buzzing around a city, picking up and dropping off people and cargo) is. Further, that swarm becomes more cost-effective the larger it is.
- FussyZeus 10y agoBrand loyalty is practically a myth at this point. I don't use any service or any product without some reservations about the company that made it, especially when it comes to apps and cloud stuff. People I talk to about this sort of thing USE online services, but we're also fully backed up and ready to move at a moment's notice. Probably a consequence of watching so many of these things go up in smoke.
- Touche 10y agoWhat matters more, driver loyalty or user loyalty? Uber feels like the Kleenex of its industry. Outside of the tech hubs I don't feel that most people are even aware that non-Uber ride services exist. I certainly here people asking their friends "should we get an Uber?" all the time.
- untog 10y ago> Uber feels like the Kleenex of its industry. I agree but not, I think, in the way you intend. If someone asks for a Kleenex and they get passed a non-Kleenex brand tissue, they rarely object. "Uber" could just become the 21st Century "Hoover".
- Touche 10y agoTissue paper is bought at a grocery store with each brand sitting next to each other. If tissue paper brands each had their own store, like ride sharing apps do, then I think Kleenex wouldn't have the problem you describe. Uber still has to compete on price, for sure. But there's certainly friction to A) download non-Uber ride sharing apps and (even greater IMO) B) open multiple apps to compare prices. If Uber's price doesn't seem unreasonably high, what reason is there for people to compare?
- dagwaging 10y ago>open multiple apps to compare prices that gives me an idea...
- waitwhatwhoa 10y agohttp://www.whatsthefare.com http://www.whatsthefare.com
- Touche 10y agoThere was a similar app during the check-in app craze (where a half-dozen competing apps existed) but that didn't stop Foursquare from eventually winning the space (even though it was arguably not the best of the options).
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- HillaryBriss 10y agoYeah, I see the same thing. Multiple apps open. Zero driver loyalty. Ride-sharing companies commodified drivers, so drivers commodified ride-sharing companies. And so have customers. It's like grocery shopping. One store might be a little cleaner than another, have longer hours or feel safer, but, mostly, you go with the low-price leader.
- rwj 10y agoA big part of Uber's advantage is corporate nullification. I'm sure their app is nice, but avoiding regulation appears to be their big advantage. Government may be slow, but it will catch up eventually. There are already several cities moving to update regulations so that Uber and the local taxi companies are playing by the same rules.
- loudin 10y agoI don't think Uber is going to completely turf out, but I believe they will experience a correction in their valuation. It looks like they last raised money at a $62.5 billion valuation [1], which suggests that investors are expecting the company to operate at a global level. Unfortunately, Uber is facing extremely stiff competition in China [2] and India [3]. There's also the well-publicized tension between Uber and various European companies. And that's not even taking into account increased regulation in US cities like San Francisco [4]. So, while Uber is clearly a successful company - how successful will it be? $62.5 billion dollars successful? My guess would be no, which would drive a correction for the company. [1] http://www.bloomberg.com/news/articles/2015-12-03/uber-raises-funding-at-62-5-valuation http://www.bloomberg.com/news/articles/2015-12-03/uber-raise... [2] http://fortune.com/2015/07/08/uber-didi-kuaidi-china-funding/ http://fortune.com/2015/07/08/uber-didi-kuaidi-china-funding... [3] http://qz.com/645258/uber-sues-ola-for-allegedly-using-the-same-dirty-tricks-uber-was-accused-of-using-on-lyft-and-gett/ http://qz.com/645258/uber-sues-ola-for-allegedly-using-the-s... [4] http://www.sfgate.com/bayarea/article/SF-to-require-Lyft-Uber-drivers-to-obtain-7250137.php http://www.sfgate.com/bayarea/article/SF-to-require-Lyft-Ube...
- marincounty 10y agoLyft seems to have the right attitude. I hope they gain market share, and overtake Uber. Yea--Uber has always rubbed me the wrong way, on so many levels.
- crzwdjk 10y agoIt's worse than that: not only are there plenty of competitors to Uber (especially on a local scale), but in a way, Uber sowed the seeds of its own destruction. Before Uber, all the regulations around the taxis business were a pretty high barrier to entry. But with billions of dollars of VC backing, Uber has done a pretty good job of clearing the regulatory hurdles out of its way... and out of the way of its competitors too. I suppose we should be thankful to the venture capitalists for so generously donating money to improve competition in the taxi industry.
- deegles 10y agoWhat I think could/should happen is someone releasing an open-source version of Uber/Lyft and selling support for city governments to run city-owned ride-sharing services. If the Uber app only worked in the city I live, I wouldn't mind at all. It would also be no trouble to download the local ride-sharing app when visiting a new city. This would be a win-win for many reasons, one of which would be that cities would keep the revenue from these services, or they could run it at cost and send more money to the drivers (thus stimulating the local economy and not VC valuations)
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- daniel_levine 10y agoNo ill will towards these companies/founders, but: - Fab - Theranos - Homejoy - Zirtual - To some degree Foursquare and Zenefits (still have time to fix) - The flash sales category One challenge is that when things aren't going well companies are much quieter than when companies are going well.
- noer 10y agoI thought Foursquare had started to turn itself around and started selling data services?
- __derek__ 10y agoThey may be turning it around, but they just halved their valuation in January.[1] [1]: http://www.nytimes.com/2016/01/15/technology/foursquare-raises-45-million-cutting-its-valuation-nearly-in-half.html http://www.nytimes.com/2016/01/15/technology/foursquare-rais...
- teen 10y agoDropbox. High burn rate + failure to pivot from a purely online storage service
- throwawayjane 10y agoNextdoor
- NDizzle 10y agoI have a great pets.com story, to add a little light heartedness to a serious topic like this. At their HQ the bottom floor had astroturf and a lot of windows. This is where the pet day care was for all of the employees. You'd walk past and see how great it was to work there - just look at the pet day care! When they shut down, they shut down so suddenly that nobody cleaned up that area. I forget how long that space was vacant, but I want to say it was roughly a year. You'd walk by the space and you'd see little doggie turds in various forms of decay on the nearly-neon astroturf. The dot com boom in a nutshell!
- mrweasel 10y agoTwitters is a company that honestly needs to fail. While people love Twitter, there's no business strategy to speak of. It's pretty unforgivably that a company as old a Twitter aren't making their own money at this point.
- broody 10y agoBurst already God damnit, I'm sick of this slow motion train wreck.
- adjwilli 10y agoI guess I'll never know how exactly it's bursting since that information is behind a paywall.
- adevine 10y agoClick the "web" link under the article title on HN, then you can access it from Google.
- headShrinker 10y agoGoogle the article to get through the paywall. Or if you aren't poor like me, buy the subscription. It's a pretty good newspaper. https://www.google.com/#q=site://www.wsj.com/articles/this-tech-bubble-is-bursting-1462161662 https://www.google.com/#q=site://www.wsj.com/articles/this-t...
- deleted 10y ago[deleted]
- randomname2 10y agoUse the "web" link underneath the title, left from the number of comments.
- pascal1usa 10y agoI do believe in paying for solid articles, but 29$ is about 2 orders of mag to Much. The paywall implementation is horrible too, I couldn't even Sign in with Facebook
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- hathym 10y agostock markets does not believe that yet.
- adventured 10y agoSo long as the Fed's policy is effectively 0% interest rates, that will continue to support significantly inflated valuations (privately and publicly). And the Fed isn't going to raise rates meaningfully (they can't), they've been lying about that for years. At this point negative rates in the US are more likely than any sort of normalization is.
- giaour 10y agoShouldn't a bubble burst be sudden and definitive, like fancy tulip bulbs being worth a king's ransom one day and close to nothing the next? I guess "the high tech sector may experience a reasonably paced contraction" wouldn't get as many clicks.
- tarr11 10y agoIf journalists keep writing articles about tech bubbles every few months, someone is bound to be correct. Looks like this "trend" started up again in 2013. https://www.google.com/trends/explore#q=tech%20bubble https://www.google.com/trends/explore#q=tech%20bubble
- api 10y agoI lived through 2001. This is not a bubble. As exhibit one I point out that everyone has been calling bubble since 2012. Real bubbles have more rah rah and less skepticism and more crazy. I do see a slowdown but this is nothing like dot.com. Seems like a normal correction and is not really separate from the rest of the economy being uncertain. Nothing tech specific. Bubble is an overused term. An inflated market is not a bubble, and a correction is not a bubble bursting. Markets go up and down all the time.
- talmand 10y agoAn inflated market can be called a bubble, it just depends on how inflated it is and how people interpret that. Just because something is a bubble doesn't mean it's destined to burst. What we're seeing now could be considered a cool-down that would prevent a burst. There's nothing overly negative calling something a bubble when it does appear to be a bubble.
- roymurdock 10y agoIt is not a bubble in that market caps are not "popping" - disappearing instantly, overnight, leaving shares worthless and dissolving fortunes. The current tech market is more like a punctured soccer ball, slowly leaking air. Regular people won't see this as a crash in their etrade portfolios; rather, they will notice a long, slow decline in the value of their pension/retirement funds.
- abritinthebay 10y agoSo... what you're saying is that it's a standard part of the normal cycle where things grow for a while, plateau or shrink a bit, then grow again? i.e. Not A Bubble.
- roofer 10y agoBuy Credit Default Swaps for private tech unicorns!
- ma2rten 10y agoHow does that work exactly? Can you also do that as an employee of that company to limit your risk?
- hackerboos 10y agoI believe it was a joke - http://www.venrock.com/why-you-cant-short-private-company-stock/ http://www.venrock.com/why-you-cant-short-private-company-st...
- gruez 10y agoIn other words, short them
- velox_io 10y agoWhile I don't think that the bubble is bursting, it does seem that the values some companies which have been massively overvalued, are being adjusted. I'd much rather see this than companies loosing 90-99% of the value overnight - That's a burst. If interns are making $80k a year, I think most of us are safe (for the time being).
- akhilcacharya 10y agoThere are many making around $102K now.
- BookmarkSaver 10y agoWhat do you mean by "many"? And do you have a source for that? Lucrative internships are generally like $25/hr. 102k is twice that.
- akhilcacharya 10y ago"Many" meaning the 1000's of interns working at places like Facebook (~8k + housing), Dropbox, and Jane Street. I personally wouldn't consider $25/hr to be particularly lucrative in the grand scheme of things considering how highly paid many interns in SV/SEA/NYC area. In my area, yes.
- itsbenweeks 10y agoI think this is pretty close to the truth. Investment capital getting out tech should cause people to be more discriminating in their business proposals, and the market will adjust accordingly. If anything, this will help prevent a crash.
- draw_down 10y agoI'm sure there is a bubble bursting, whatever that means. But it's interesting that this narrative always involves mentioning Zenefits, which is suffering because it ran afoul of the law, not due to an economic downturn.
- zekevermillion 10y agoThere is no bubble. There may be a dip in funding for companies of a certain stage, which could be due to any number of factors. Fund vintage (funds raised optimally at bottom of 2009 are now fully allocated); shift in focus away from sectors (no money for social media); random variance in relatively small pool of VC (tiny portion of total capital invested in small businesses).
- andersen1488 10y agoThese journalists, along with most people outside the tech industry, fail to see the overall picture. 4 out of 5 of the largest companies on earth are tech firms, and none of them were even close to that position 10 years ago. Software runs the world and tech companies are the single largest driver of the modern American economy, making the overall pool of companies that may go belly up at any given time larger. Public consciousness just hasn't caught up to that fact yet since it happened so fast.
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- refurb 10y agoI'd have to disagree. It may seem like tech is driving the US economy when you're standing in Silicon Valley, but it's not even in the top 5.[1] Energy, manufacturing, transportation, healthcare and agriculture have seen the most growth lately. Of course tech can play a role in all of those industries, but overall tech is not that big a part of the US economy. [1]http://www.investopedia.com/articles/investing/042915/5-industries-driving-us-economy.asp http://www.investopedia.com/articles/investing/042915/5-indu...
- vox_mollis 10y agoAdditionally, much of what most consider "tech" is actually media and entertainment. c.f. facebook, twitter, etc. - which just happen to utilize technology in their products. There is surprisingly little tech going on in "tech" today.
- wlesieutre 10y agoYou could say that Ford is in the automobile industry and they happen to utilize manufacturing in their products, but I don't think it's a useful distinction to make. Just like Ford's cars are made by factories, Facebook's products are made by programmers. Even if you want to look at the "tech industry" as meaning "creates tech for use by other people" instead of just "develops tech-based products for consumers," Facebook still has some solid output (React Native, Nuclide, etc).
- wellboy 10y agonot bursting, deflating
- chmaynard 10y agoThis is one of those articles that consists mainly of speculation, anecdotes, and quotes from phone interviews. It's hard to tell if Mimms ever left his office to do the foot-soldier work that serious journalism requires.
- tbrownaw 10y agoWith everything moving online, just how important is going places in person these days?
- chmaynard 10y agoGathering information online and by phone is probably not sufficient to find out all the facts and to develop leads. For example, insiders may be reluctant to reveal everything they know in phone calls and email. It's too easy to eavesdrop on electronic communications.
- hderms 10y agoI think showing up to your local startup accelerator/startup space every month or two might be worth the time and cost of gas when you're trying to make a case for an entire industry being a bubble.
- x3n0ph3n3 10y agoDrivel like this is why I refuse to pay for WSJ.
- lowglow 10y agoIf the funding bubble for startups has burst, fine, look to crowdfund startups and projects that people actually want to use. I wanted to validate ideas early and tighten the feedback loop for products I was building, so we built Baqqer in the hopes it would create transparent projects and companies that help grow community from day one. Less time floating around until launch going "I hope someone uses or pays me for this." and more time spent figuring out what people actually want.
- sealthedeal 10y agothe bubble will pop for companies that do not actually have a product to sell.
- vonklaus 10y agono, it isn't.
- amsheehan 10y agoHow many people with a WSJ login actually read this before commenting?
- chrisdalke 10y agoTip: If you copy and paste the title into Google and choose the first result, you can view the full article. The paywall only applies when the article is redirected from another website.
- tbsmartens 10y agoIf we think about the future of technologies, I am pretty sure there is a bubble: https://medium.com/@tbsmartens/is-iot-the-end-of-rocket-internet-2697f4b7a3d1#.r0mgmh3hy https://medium.com/@tbsmartens/is-iot-the-end-of-rocket-inte... It´s all about singularity: How many services do you need that all do the same? Not too many, not too many - and this realisations will hit everybody, from ad-tech to server technologies to consumer services.
- deleted 10y ago[deleted]
- Zelmor 10y agoTo Read the Full Story, Subscribe or Sign In
- pfarnsworth 10y agoI have a feeling it's going to be a "soft-landing" in terms of the tech scene in SV. I was hoping for a burst and a bit of a fall-out, but unfortunately everything I'm seeing is that the bubble is deflating slowly which is allowing for another round of inflation in the subsequent year, without the cleansing effect of a true burst like 2000. That would be unfortunate because it will mean that the next burst 5 years from now will be all the more painful, and we don't currently get any relief from high housing/rent, traffic, etc.
- ryguytilidie 10y agoFINALLY someone predicts the tech bubble bursting!
- typon 10y agoI honestly think this constant talk of tech bubble is the best thing that can happen to this industry. It keeps people skeptical and allows the industry to make course corrections. It's a much needed regularization.
- jdauriemma 10y agoCredit is much cheaper than it was in 2000. It's simply not as appealing for investors to make hasty exits when cash is so easy to come by from other sources.