6 ms·

For those of us who are young enough (30 or less) to not have witnessed the internet bubble at a conscious age, we might be tricked to think that we're in a bub

For those of us who are young enough (30 or less) to not have witnessed the internet bubble at a conscious age, we might be tricked to think that we're in a bubble due to certain indicators. The NASDAQ index, the valuation prices, the money poured into venture capital, etc. To those of you like me I recommend you to read about what was happening in 95-99. The panorama was crazy, and today's context doesn't compare to the one of those days. At the end, if the macroeconomic environment changes, who cares? Yes, paying attention to the macro is important and that may even imply changes in strategy, but should you not start a startup because there's a bubble? Even worse, should you (person who hasn't built anything but criticizes everyone who builds something) try to convince your friends not to start startups because we're in a bubble? The main difference between today and 1999 is that digital products are actually generating value in people's lifes. Please don't compare pets.com to WhatsApp

api 10y ago
I lived through it and yes, yes, yes... Today is nothing like dot.com. It was crazy... you had pre-revenue companies with no real working product raising series A, B, C, and then going public all within a year. Total unhinged market mania.
- smt88 10y ago
  > you had pre-revenue companies with no real working product raising series A, B, C Color[1]? Theranos? uBeam? Clinkle? Those crazy things are absolutely happening now, but the scale is important to know. (I don't know how the scale compares to the dotcom bubble.) 1. http://mashable.com/2012/10/17/color-shuts-down/ http://mashable.com/2012/10/17/color-shuts-down/
  - a_small_island 10y ago
    You cut off the most important part of his point: "and then going public all within a year."
    - smt88 10y ago
      Companies went public without a working product? What are some examples?
      - jacquesm 10y ago
        Nanosys.
        smt88 10y ago
        Very interesting, but didn't really help to make the point because: 1) it was founded after the tech bubble 2) it succeeded (or, at least, still operates) 3) had patents and a founding team with a string of successes in the industry
- pedalpete 10y ago
  Magic Leap kind of fits into that model, I'm sure there are other better examples.
x2398dh1 10y ago
Since you didn't really experience, I'll tell you that Email, chatrooms, Ebay, Napster, being able to check stocks online, stupid stuff like that was amazing at the time actually...and a lot of the business models which would later go on to make money were being talked about at the time...but the technology had not caught up to the economic feasibility. You couldn't have a Youtube in 1999 because there wasn't enough bandwidth. Now what I think could be happening, using the 90s vs today heuristic you're suggesting...is that there is a massive amount of over-enthusiasm in AI where people think it's basically a magic box that you put stuff in, and you get Lt Commander Data on the other side...and there is no understanding or differentiation between what the different forms of machine learning, and what is technologically feasible, how hard it is to build, etc, that is going to cause a bubble because people don't want to miss out on AI, even though they don't understand what it is. That being said, there are many different forms of web and data tech...mobile, cloud, IoT, etc that you can invest and diversify in now...whereas the late 90s was a lot more monolithic - PC's and websites.
- notacoward 10y ago
  > the technology had not caught up to the economic feasibility. Nowadays it often seems the other way around - the technology is there, but the economics are questionable. The disconnect between valuation and even the most optimistic revenue projections for something like a chat app or a picture-sharing site can reach two orders of magnitude in the wrong direction. The market for tech companies themselves has become completely disconnected from the market for those companies' products and services.
hourislate 10y ago
I was curious if you could tell me what value WhatsApp is actually providing? or for that matter facebook or twitter? Are they on the bleeding edge of scientific discovery? I always felt they were like a social outlet for folks to waste time and their only revenue stream was advertising.
- nyxtom 10y ago
  Actually, this - I believe - is the entire premise why we have no bubble this time around. It's because these companies are indeed on the bleeding edge of scientific discovery. The brightest minds in research work at these companies. The research and development that comes out of these companies, that create new open source work, and spawn out new markets in analysis, intelligence, economics - all of the work from these companies fuels growth for every other business out there who use any part of the technology stack to drive their business model. Just my 2 cents
  - overcast 10y ago
    I'll give you Facebook, and MAYBE Twitter. But WhatsApp is a messenger service, a space where tons of others have come and gone. I'm not sure what bleeding edge they are sitting on in regards to scientific discovery.
    - hourislate 10y ago
      Facebook is worth more than all the major auto manufacturers in the world combined. It is worth more than Boeing and Airbus and General Electric combined. Where do they make the majority of their money? Is it advertising? or is it investments that they have made with public money? I am curious what their profits look like that their valuation is 328 Billion dollars.
      - durga 10y ago
        If you aren't being merely rhetorical just google for Facebook quarterly earnings
greenyoda 10y ago
"The main difference between today and 1999 is that digital products are actually generating value in people's lifes. Please don't compare pets.com to WhatsApp" Not all the tech companies that were hot in 1999 were like pets.com. Google and Amazon were amazing new things back then, and other companies like Dell, Sun and Qualcomm were also high fliers on the NASDAQ. (I'm old enough to have been an investor in 1999.) I think the most significant difference between the 1999 bubble and today's situation is that today, many of the companies with astronomical valuations are not public. For example, if Uber's valuation tanks, some employees and some rich investors will unfortunately lose money, but most people will see little effect - if you have a 401-K invested in an S&P 500 index fund, you won't care too much. And the big public tech companies that are making money, like Google, Amazon, Apple and Facebook, probably won't be affected much if all venture backed companies disappeared tomorrow (except that their labor market would be flooded with developers). The NASDAQ might take a dip, but it won't be like 1999.
- mahyarm 10y ago
  Pension funds and others do invest in these large companies, and that money does effect a lot of other people.
  - krambs 10y ago
    True, but institutions like these generally have a very small percentage of their dollars in high-risk investments.
- deepGem 10y ago
  Well Mutual fund money is flowing into Uber and the likes. So, there will be some impact on public money. Agreed, it won't be as bad as the 99 bust.
overcast 10y ago
No, let's compare it to nonsense like SnapChat being valued at $16 billion. Pets.com generated value, PetSmart's $400+ million a year profit can attest to that market. Their issue was horrendous mismanagement of funds, and shipping stuff for more than it was selling. The biggest issue with companies then was going public.
- tempestn 10y ago
  I think writing off SnapChat as "nonsense" might be unwise. I'm 35 and even I enjoy sending snaps back and forth with my wife. (And I'm talking G-rated stuff; look what the kid just did, that kind of thing.) And I'm not even really the target demographic. It's a new communication paradigm, much like Twitter was. (A completely different paradigm, but similarly new.) It will likely have similar challenges. But it isn't just some "nonsense".
  - overcast 10y ago
    Why don't you just send it as a text message instead of having your child's moment deleted?
    - tempestn 10y ago
      We send texts too - Google Hangouts actually - and take plenty of non-snap pictures, but you don't need to save everything in life. When you're hanging out with someone in person you're not recording every moment. Snapchat is kind of like a virtual version of that.
    - darawk 10y ago
      That's a hard question to answer precisely, but one I think about often. I use snapchat and text and gchat extensively, and I often wonder what it is about snapchat that makes it more convenient. As best I can tell it's two things: 1. The ephemerality makes me feel less self-conscious about the quality of the picture. It's going away momentarily, never to be seen again, so all I care about is conveying what is happening in the moment, not getting the perfect shot. 2. It's fast. Snapchat sacrifices image quality for speed to some extent, and the interface is faster and more fluid, particularly for broadcasting a snap to multiple people. These things combine to make sending snaps feel very conversational. When I think of sending an image by text it feels like a hassle, and i'll only do it if it's a picture I want someone to have for more than 10 seconds. I'm not sure if this explanation totally conveys my meaning, but in using it, it is quite clear to me that there is indeed something categorically different between snapchat and MMS texting, though it is admittedly somewhat hard to pin down what that is.
jacquesm 10y ago
It's all about the interest rates.

api 10y ago

I lived through it and yes, yes, yes... Today is nothing like dot.com. It was crazy... you had pre-revenue companies with no real working product raising series A, B, C, and then going public all within a year. Total unhinged market mania.

smt88 10y ago
> you had pre-revenue companies with no real working product raising series A, B, C Color[1]? Theranos? uBeam? Clinkle? Those crazy things are absolutely happening now, but the scale is important to know. (I don't know how the scale compares to the dotcom bubble.) 1. http://mashable.com/2012/10/17/color-shuts-down/ http://mashable.com/2012/10/17/color-shuts-down/
- a_small_island 10y ago
  You cut off the most important part of his point: "and then going public all within a year."
  - smt88 10y ago
    Companies went public without a working product? What are some examples?
    - jacquesm 10y ago
      Nanosys.
      - smt88 10y ago
        Very interesting, but didn't really help to make the point because: 1) it was founded after the tech bubble 2) it succeeded (or, at least, still operates) 3) had patents and a founding team with a string of successes in the industry
pedalpete 10y ago
Magic Leap kind of fits into that model, I'm sure there are other better examples.

x2398dh1 10y ago

Since you didn't really experience, I'll tell you that Email, chatrooms, Ebay, Napster, being able to check stocks online, stupid stuff like that was amazing at the time actually...and a lot of the business models which would later go on to make money were being talked about at the time...but the technology had not caught up to the economic feasibility. You couldn't have a Youtube in 1999 because there wasn't enough bandwidth. Now what I think could be happening, using the 90s vs today heuristic you're suggesting...is that there is a massive amount of over-enthusiasm in AI where people think it's basically a magic box that you put stuff in, and you get Lt Commander Data on the other side...and there is no understanding or differentiation between what the different forms of machine learning, and what is technologically feasible, how hard it is to build, etc, that is going to cause a bubble because people don't want to miss out on AI, even though they don't understand what it is. That being said, there are many different forms of web and data tech...mobile, cloud, IoT, etc that you can invest and diversify in now...whereas the late 90s was a lot more monolithic - PC's and websites.

notacoward 10y ago
> the technology had not caught up to the economic feasibility. Nowadays it often seems the other way around - the technology is there, but the economics are questionable. The disconnect between valuation and even the most optimistic revenue projections for something like a chat app or a picture-sharing site can reach two orders of magnitude in the wrong direction. The market for tech companies themselves has become completely disconnected from the market for those companies' products and services.

hourislate 10y ago

I was curious if you could tell me what value WhatsApp is actually providing? or for that matter facebook or twitter? Are they on the bleeding edge of scientific discovery? I always felt they were like a social outlet for folks to waste time and their only revenue stream was advertising.

nyxtom 10y ago
Actually, this - I believe - is the entire premise why we have no bubble this time around. It's because these companies are indeed on the bleeding edge of scientific discovery. The brightest minds in research work at these companies. The research and development that comes out of these companies, that create new open source work, and spawn out new markets in analysis, intelligence, economics - all of the work from these companies fuels growth for every other business out there who use any part of the technology stack to drive their business model. Just my 2 cents
- overcast 10y ago
  I'll give you Facebook, and MAYBE Twitter. But WhatsApp is a messenger service, a space where tons of others have come and gone. I'm not sure what bleeding edge they are sitting on in regards to scientific discovery.
  - hourislate 10y ago
    Facebook is worth more than all the major auto manufacturers in the world combined. It is worth more than Boeing and Airbus and General Electric combined. Where do they make the majority of their money? Is it advertising? or is it investments that they have made with public money? I am curious what their profits look like that their valuation is 328 Billion dollars.
    - durga 10y ago
      If you aren't being merely rhetorical just google for Facebook quarterly earnings

greenyoda 10y ago

"The main difference between today and 1999 is that digital products are actually generating value in people's lifes. Please don't compare pets.com to WhatsApp" Not all the tech companies that were hot in 1999 were like pets.com. Google and Amazon were amazing new things back then, and other companies like Dell, Sun and Qualcomm were also high fliers on the NASDAQ. (I'm old enough to have been an investor in 1999.) I think the most significant difference between the 1999 bubble and today's situation is that today, many of the companies with astronomical valuations are not public. For example, if Uber's valuation tanks, some employees and some rich investors will unfortunately lose money, but most people will see little effect - if you have a 401-K invested in an S&P 500 index fund, you won't care too much. And the big public tech companies that are making money, like Google, Amazon, Apple and Facebook, probably won't be affected much if all venture backed companies disappeared tomorrow (except that their labor market would be flooded with developers). The NASDAQ might take a dip, but it won't be like 1999.

mahyarm 10y ago
Pension funds and others do invest in these large companies, and that money does effect a lot of other people.
- krambs 10y ago
  True, but institutions like these generally have a very small percentage of their dollars in high-risk investments.
deepGem 10y ago
Well Mutual fund money is flowing into Uber and the likes. So, there will be some impact on public money. Agreed, it won't be as bad as the 99 bust.

overcast 10y ago

No, let's compare it to nonsense like SnapChat being valued at $16 billion. Pets.com generated value, PetSmart's $400+ million a year profit can attest to that market. Their issue was horrendous mismanagement of funds, and shipping stuff for more than it was selling. The biggest issue with companies then was going public.

tempestn 10y ago
I think writing off SnapChat as "nonsense" might be unwise. I'm 35 and even I enjoy sending snaps back and forth with my wife. (And I'm talking G-rated stuff; look what the kid just did, that kind of thing.) And I'm not even really the target demographic. It's a new communication paradigm, much like Twitter was. (A completely different paradigm, but similarly new.) It will likely have similar challenges. But it isn't just some "nonsense".
- overcast 10y ago
  Why don't you just send it as a text message instead of having your child's moment deleted?
  - tempestn 10y ago
    We send texts too - Google Hangouts actually - and take plenty of non-snap pictures, but you don't need to save everything in life. When you're hanging out with someone in person you're not recording every moment. Snapchat is kind of like a virtual version of that.
  - darawk 10y ago
    That's a hard question to answer precisely, but one I think about often. I use snapchat and text and gchat extensively, and I often wonder what it is about snapchat that makes it more convenient. As best I can tell it's two things: 1. The ephemerality makes me feel less self-conscious about the quality of the picture. It's going away momentarily, never to be seen again, so all I care about is conveying what is happening in the moment, not getting the perfect shot. 2. It's fast. Snapchat sacrifices image quality for speed to some extent, and the interface is faster and more fluid, particularly for broadcasting a snap to multiple people. These things combine to make sending snaps feel very conversational. When I think of sending an image by text it feels like a hassle, and i'll only do it if it's a picture I want someone to have for more than 10 seconds. I'm not sure if this explanation totally conveys my meaning, but in using it, it is quite clear to me that there is indeed something categorically different between snapchat and MMS texting, though it is admittedly somewhat hard to pin down what that is.

jacquesm 10y ago

It's all about the interest rates.