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Bloomberg U.S. Startups Barometer

55 points by SQL2219 10y ago

JumpCrisscross 10y ago
This index appears to have been "designed and develop[ed]" by a digital artist [1], a "data journalist/designer for Bloomberg" [2] and a software developer [3]. Where are the econometricians? What guided the data sources and weighting of this index? What is it designed to predict, and how accurately does it do that in backtests? [1] https://aubergene.com/sketches/2014/paddle-clock/ https://aubergene.com/sketches/2014/paddle-clock/ [2] https://twitter.com/homiedonttweet https://twitter.com/homiedonttweet [3] https://www.linkedin.com/in/brendazysman/ https://www.linkedin.com/in/brendazysman/
- deleted 10y ago
  [deleted]
- stagbeetle 10y ago
  An econometrician does not have the necessary experience to create a practical "barometer" for an industry. Second, this is just a quick reference and nothing more. It's a simpler version of what the S&P stands for. It was done in collaboration with an analyst[0] and two execs[1][2] (insight maybe?). [0] https://www.linkedin.com/in/jonbirchler https://www.linkedin.com/in/jonbirchler [1]http://www.bloomberg.com/research/stocks/people/person.asp?personId=61025125&privcapId=875458 http://www.bloomberg.com/research/stocks/people/person.asp?p... [2]http://www.bloomberg.com/research/stocks/people/person.asp?personId=380632481&capId=379520491&previousCapId=379520491&previousTitle=Tune%20Labs http://www.bloomberg.com/research/stocks/people/person.asp?p...
  - JumpCrisscross 10y ago
    > An econometrician does not have the necessary experience to create a practical "barometer" for an industry Gross domestic product, producer price indices, consumer price indices, employment statistics, housing starts, manufacturing and trade inventory levels and flows and stock indices are not practical? I think you underestimate the role and prevalence of econometric methods. > It's a simpler version of what the S&P stands for The S&P 500 has a clearly-stated goal and methodology [1]. It's used as a shorthand for U.S. large cap equities because it's well designed for that purpose. The Bloomberg "barometer" doesn't do any of these. Is it supposed to forecast valuations? Ease of fundraising? IPO conditions? Nailing down what an index is designed to do, practically, is important because that directs which data one uses and how one weights them. Calling this a "quick reference" is a farce--it's an obfuscated infographic that fails to make a point. [1] https://us.spindices.com/documents/methodologies/methodology-sp-us-indices.pdf https://us.spindices.com/documents/methodologies/methodology...
    - leroy_masochist 10y ago
      You're being unreasonable and harsh. The infographic and its methodology are straightforward; as the footnote at the bottom of the infographic notes, > The index is a gauge of startup activity that equally considers capital raised, deal count, first financings, and exit count. Each of the input factors is normalized for its historical volatility and then the normalized factors are combined in equal proportions to form a normalized index for constructing this barometer. That's a very straightforward and defensible methodology. Really the only bone I would have to pick is that (AFAICT) the data is rebased to April 2007, which is a bit arbitrary -- but not sure how else I would have established base values if it were me doing it.
    - stagbeetle 10y ago
      > Gross domestic product, producer price indices, consumer price indices, employment statistics, housing starts, manufacturing and trade inventory levels and flows and stock indices are not practical? I think you underestimate the role and prevalence of econometric methods. They're very prevalent, I have no qualms about that. But, economics is a young field and we're starting to see the old methods come apart. Specifically, GDP. It has been touted as the end-all-be-all to measure a country's wealth (quality of life), however this notion is incorrect[0]. > The S&P 500 has a clearly-stated goal and methodology [1]. It's used as a shorthand for U.S. large cap equities because it's well designed for that purpose. I am speaking purely of a practical sense. That is, what use do market practitioners (investors, speculators, etc.) assign to it. The group of S&P indices (not just the popular 500) is used as a quick tool to gauge segment "health," i.e current level compared to all levels and means before it. This is the same reason this barometer is supposed to serve. >The Bloomberg "barometer" doesn't do any of these. Is it supposed to forecast valuations? Ease of fundraising? IPO conditions? It's supposed to be shorthand for the "startups" segment. However, since most startups (and in particular the technology startups that dominate this segment) are difficult to assign accurate valuation (due to: risk, intangible assets (see: goodwill), opaqueness of financials, private ownership, etc.), there is very little work with. >Nailing down what an index is designed to do, practically, is important because that directs which data one uses and how one weights them. Calling this a "quick reference" is a farce--it's an obfuscated infographic that fails to make a point. I believe it's a step into the right direction, but it definitely will need updating moving forward as we learn more about the nature of startups. [0]http://www.economist.com/news/briefing/21697845-gross-domestic-product-gdp-increasingly-poor-measure-prosperity-it-not-even http://www.economist.com/news/briefing/21697845-gross-domest... (as only one quick example)
- deleted 10y ago
  [deleted]
delegate 10y ago
Just a decade ago, a 'startup' meant a group of enthusiastic young people wanting to affirm themselves by creating some cool technology which will change the world, trying to convince people with money to 'invest'. Today, a 'startup' means a group of people with money hiring enthusiastic youngsters to implement something. They bet their youth, health, relationships and mental health to work for that something in exchange for 'funding rounds' and the chance to be the next Xberg. Unfortunately, more or less 90% of the enthusiastic young founders end up broke, depressed and resigned as a consequence. I know this because I've been the founder of a startup in the 90% club. Took me years to recover financially, mentally and personally. The quiet winners in this case are the big corporations, who's technology and services have been paid for with seed/venture money given to startups. The investors loose their money, but no worries, because they have other groups of young people who are doing the same thing. But of course there's a bright side to this - the 10% winners. Those that go on to transform the world around us. Again, I've been there - I was lucky to work for a startup that eventually made a multi-billion dollar exit. And change the world it did ! But now I'm looking at this changed world around me - what kind of reality are we living in ? We're constantly inside these cool shiny gadgets which can do incredible things, while the world around us is disintegrating - climate is going nuts, crazy politicians are getting elected and dystopia is settling in with clouds of war and destruction forming on the horizon. How did we get to this ? How come all these young and enthusiastic dreams morphed into dystopia ? Make no mistake - technology that you and I have been developing is very much a cause of what the outside world looks like today - didn't we 'change the world' ? And since most of this technology was born out of startups, we can conclude that the 'startup culture' was the precursor to the dystopia we're currently in. This has to change. It has to at least go back to 'young people solve world problems with money as a means' instead of 'young people do something for the sake of hitting the jackpot'.
- JumpCrisscross 10y ago
  > 90% of the enthusiastic young people end up broke The median salary for a "high-tech" worker in the United States with 1 to 4 years' experience is about $70,000 [1]. That's almost 60% higher than the median American family's $43,500 household income [2]. [1] http://www.payscale.com/research/US/Industry=High-Tech/Salary http://www.payscale.com/research/US/Industry=High-Tech/Salar... [1] https://en.wikipedia.org/wiki/Median_income https://en.wikipedia.org/wiki/Median_income
plantsoftware 10y ago
VCs are finding themselves with less cash than they expected because they invested in stupid ideas/people. This is good no matter how you cut it, if you have a shitty idea you wont get funded. If you have a good idea there will be less competition.
rdlecler1 10y ago
25-30% swings seem a little excessive for a barometer when most of that volatility is market noise rather than real sentiment. If there was a 30% Market crash on Wall Street there would be blood in the streets. Seems like this index needs some work to capture real sentiment.
DenisM 10y ago
Tracking sales of pin-pong tables might be a better indicator. [1] Also during dotcom bubble somone people used number of Porche Boxters in the street. These days it might be a different model, such as Tesla. [1] https://qz.com/676050/if-ping-pong-table-sales-are-falling-then-silicon-valley-is-clearly-doomed/ https://qz.com/676050/if-ping-pong-table-sales-are-falling-t...

55 points by SQL2219 10y ago

This index appears to have been "designed and develop[ed]" by a digital artist [1], a "data journalist/designer for Bloomberg" [2] and a software developer [3]. Where are the econometricians? What guided the data sources and weighting of this index? What is it designed to predict, and how accurately does it do that in backtests? [1] https://aubergene.com/sketches/2014/paddle-clock/ https://aubergene.com/sketches/2014/paddle-clock/ [2] https://twitter.com/homiedonttweet https://twitter.com/homiedonttweet [3] https://www.linkedin.com/in/brendazysman/ https://www.linkedin.com/in/brendazysman/

deleted 10y ago
[deleted]
stagbeetle 10y ago
An econometrician does not have the necessary experience to create a practical "barometer" for an industry. Second, this is just a quick reference and nothing more. It's a simpler version of what the S&P stands for. It was done in collaboration with an analyst[0] and two execs[1][2] (insight maybe?). [0] https://www.linkedin.com/in/jonbirchler https://www.linkedin.com/in/jonbirchler [1]http://www.bloomberg.com/research/stocks/people/person.asp?personId=61025125&privcapId=875458 http://www.bloomberg.com/research/stocks/people/person.asp?p... [2]http://www.bloomberg.com/research/stocks/people/person.asp?personId=380632481&capId=379520491&previousCapId=379520491&previousTitle=Tune%20Labs http://www.bloomberg.com/research/stocks/people/person.asp?p...
- JumpCrisscross 10y ago
  > An econometrician does not have the necessary experience to create a practical "barometer" for an industry Gross domestic product, producer price indices, consumer price indices, employment statistics, housing starts, manufacturing and trade inventory levels and flows and stock indices are not practical? I think you underestimate the role and prevalence of econometric methods. > It's a simpler version of what the S&P stands for The S&P 500 has a clearly-stated goal and methodology [1]. It's used as a shorthand for U.S. large cap equities because it's well designed for that purpose. The Bloomberg "barometer" doesn't do any of these. Is it supposed to forecast valuations? Ease of fundraising? IPO conditions? Nailing down what an index is designed to do, practically, is important because that directs which data one uses and how one weights them. Calling this a "quick reference" is a farce--it's an obfuscated infographic that fails to make a point. [1] https://us.spindices.com/documents/methodologies/methodology-sp-us-indices.pdf https://us.spindices.com/documents/methodologies/methodology...
  - leroy_masochist 10y ago
    You're being unreasonable and harsh. The infographic and its methodology are straightforward; as the footnote at the bottom of the infographic notes, > The index is a gauge of startup activity that equally considers capital raised, deal count, first financings, and exit count. Each of the input factors is normalized for its historical volatility and then the normalized factors are combined in equal proportions to form a normalized index for constructing this barometer. That's a very straightforward and defensible methodology. Really the only bone I would have to pick is that (AFAICT) the data is rebased to April 2007, which is a bit arbitrary -- but not sure how else I would have established base values if it were me doing it.
  - stagbeetle 10y ago
    > Gross domestic product, producer price indices, consumer price indices, employment statistics, housing starts, manufacturing and trade inventory levels and flows and stock indices are not practical? I think you underestimate the role and prevalence of econometric methods. They're very prevalent, I have no qualms about that. But, economics is a young field and we're starting to see the old methods come apart. Specifically, GDP. It has been touted as the end-all-be-all to measure a country's wealth (quality of life), however this notion is incorrect[0]. > The S&P 500 has a clearly-stated goal and methodology [1]. It's used as a shorthand for U.S. large cap equities because it's well designed for that purpose. I am speaking purely of a practical sense. That is, what use do market practitioners (investors, speculators, etc.) assign to it. The group of S&P indices (not just the popular 500) is used as a quick tool to gauge segment "health," i.e current level compared to all levels and means before it. This is the same reason this barometer is supposed to serve. >The Bloomberg "barometer" doesn't do any of these. Is it supposed to forecast valuations? Ease of fundraising? IPO conditions? It's supposed to be shorthand for the "startups" segment. However, since most startups (and in particular the technology startups that dominate this segment) are difficult to assign accurate valuation (due to: risk, intangible assets (see: goodwill), opaqueness of financials, private ownership, etc.), there is very little work with. >Nailing down what an index is designed to do, practically, is important because that directs which data one uses and how one weights them. Calling this a "quick reference" is a farce--it's an obfuscated infographic that fails to make a point. I believe it's a step into the right direction, but it definitely will need updating moving forward as we learn more about the nature of startups. [0]http://www.economist.com/news/briefing/21697845-gross-domestic-product-gdp-increasingly-poor-measure-prosperity-it-not-even http://www.economist.com/news/briefing/21697845-gross-domest... (as only one quick example)
deleted 10y ago
[deleted]

delegate 10y ago

Just a decade ago, a 'startup' meant a group of enthusiastic young people wanting to affirm themselves by creating some cool technology which will change the world, trying to convince people with money to 'invest'. Today, a 'startup' means a group of people with money hiring enthusiastic youngsters to implement something. They bet their youth, health, relationships and mental health to work for that something in exchange for 'funding rounds' and the chance to be the next Xberg. Unfortunately, more or less 90% of the enthusiastic young founders end up broke, depressed and resigned as a consequence. I know this because I've been the founder of a startup in the 90% club. Took me years to recover financially, mentally and personally. The quiet winners in this case are the big corporations, who's technology and services have been paid for with seed/venture money given to startups. The investors loose their money, but no worries, because they have other groups of young people who are doing the same thing. But of course there's a bright side to this - the 10% winners. Those that go on to transform the world around us. Again, I've been there - I was lucky to work for a startup that eventually made a multi-billion dollar exit. And change the world it did ! But now I'm looking at this changed world around me - what kind of reality are we living in ? We're constantly inside these cool shiny gadgets which can do incredible things, while the world around us is disintegrating - climate is going nuts, crazy politicians are getting elected and dystopia is settling in with clouds of war and destruction forming on the horizon. How did we get to this ? How come all these young and enthusiastic dreams morphed into dystopia ? Make no mistake - technology that you and I have been developing is very much a cause of what the outside world looks like today - didn't we 'change the world' ? And since most of this technology was born out of startups, we can conclude that the 'startup culture' was the precursor to the dystopia we're currently in. This has to change. It has to at least go back to 'young people solve world problems with money as a means' instead of 'young people do something for the sake of hitting the jackpot'.

JumpCrisscross 10y ago
> 90% of the enthusiastic young people end up broke The median salary for a "high-tech" worker in the United States with 1 to 4 years' experience is about $70,000 [1]. That's almost 60% higher than the median American family's $43,500 household income [2]. [1] http://www.payscale.com/research/US/Industry=High-Tech/Salary http://www.payscale.com/research/US/Industry=High-Tech/Salar... [1] https://en.wikipedia.org/wiki/Median_income https://en.wikipedia.org/wiki/Median_income

plantsoftware 10y ago

VCs are finding themselves with less cash than they expected because they invested in stupid ideas/people. This is good no matter how you cut it, if you have a shitty idea you wont get funded. If you have a good idea there will be less competition.

rdlecler1 10y ago

25-30% swings seem a little excessive for a barometer when most of that volatility is market noise rather than real sentiment. If there was a 30% Market crash on Wall Street there would be blood in the streets. Seems like this index needs some work to capture real sentiment.

DenisM 10y ago

Tracking sales of pin-pong tables might be a better indicator. [1] Also during dotcom bubble somone people used number of Porche Boxters in the street. These days it might be a different model, such as Tesla. [1] https://qz.com/676050/if-ping-pong-table-sales-are-falling-then-silicon-valley-is-clearly-doomed/ https://qz.com/676050/if-ping-pong-table-sales-are-falling-t...