7 ms·

When Will the Tech Bubble Burst?

57 points by cs702 9y ago

yuhong 9y ago
I have been thinking about the ad bubble in particular, for which Google is not the only one responsible of course. Of course, it is all ultimately funded by debt. I wonder what Larry and Sergey will do when it ends.
- bdcravens 9y ago
  What "ad bubble"? Ads are merely how other bubbles monetize.
  - yuhong 9y ago
    Yea, that is part of why I knew that printing money using basic income would only encourage it.
    - islanderfun 9y ago
      What?
      - sova 9y ago
        I believe my non native speaker friend means that UBI does not address fundamental flaws in valuation in a Capitalistic system. Flaws thar would amount to concentration of wealth via advertising conglomerates , although I may be way off the mark.
      - yuhong 9y ago
        I mean, printing money using basic income would not boost the economy until consumers spend it, right?
  - stale2002 9y ago
    It is the eyeball bubble. The quintessential examples of this phenomenon are Twitter, and potentially snapchat. The idea of the "ad bubble" is that you have to have a massive amount of users to make the system work. And if growth stops... Well there goes your company. The bubble is that ads can't really pay for the ridiculous valuations that some of these companies are getting.
- yalogin 9y ago
  Ad bubble? Why is it a bubble? Ads are not going away only platforms change. It’s the company’s ability to serve the new platform that matters. Are you saying the number of ads on the internet as a whole is a bubble and that is going to fall off at some point?
  - yuhong 9y ago
    I don't mean that ads will completely go away as the bubble burst. There are several kinds of online ads, and I am particularly talking about third-party tracking ads for example.
  - autokad 9y ago
    facebook's desktop revenue (1.2b q2 2017 vs .9b q2 2015) has not been as robust as mobile, the lions share of their revenue and revenue growth is in mobile (8b q2 2017). its very easy to imagine that evaporating away very quickly in some economic event, especially considering mobile ads haven't really helped companies much (from what I have heard). even google could suddenly become a lot less profitable very quickly. many of the 260~ unicorns spend a lot on ads, a revenue stream that could disappear quite suddenly. i'm not saying its likely, just that it could reasonably happen
- mythrwy 9y ago
  Countless weeds that will die of drought long before the tree of Google perishes. Those roots go very deep.
aphextron 9y ago
This my emotional, biased opinion. But humanity has begun a fundamental shift in the way we live due to widespread, cheap access to digital technology and information via the internet. Whatever happened before the past 10 years of insane growth we have seen is completely relevant. The relics of a bygone era. People will say "yeah, everyone thinks this time is different". Except it is. We have never had anything even remotely as game changing as this before. For the first time in human history, absolutely no one can imagine what will come even 10 years from now.
- ryanbrunner 9y ago
  I know you addressed this, but this literally could have been written in 1999, and what's more, it was probably more accurate then. Technology has continued to expand, but I'd say the last 20 years have been a continuation of growth that's been happening since the 90's. Not all that much is fundamentally different today than it was in the early 2000's. Yeah, we all have smart phones and social media, and those are certainly cool and important things, but not quite up to breathlessly heralding a new age of humanity like you're doing.
  - sit12 9y ago
    Actually I think innovation has totally stagnated the last 10 years or so.
    - daxfohl 9y ago
      Yup, we still have the same basic CRUD, except now phones are faster so more JavaScript to make it look pretty.
  - nopinsight 9y ago
    Wouldn't you say autonomous vehicles (2020-30), mass adoption of seeing robots for manufacturing and warehouse work (2020-2030), CRISPR-based gene drive to nearly eliminate disease-carrying mosquitoes and other organisms (2020-2030), embryonic germline-editing for human enhancement (2025-40), and possibly Artificial General Intelligence (2030-2050) cause changes as massive as or more so than the rise of the Internet?
dabei 9y ago
The article doesn't seem to address the question of if there is a tech bubble. How does assigning an acronym for the top companies indicates a bubble? Yes, 7 out of top ten valuable companies are tech companies, but they are dominant players of large and highly profitable markets. Am I delusional?
- redwood 9y ago
  When regular people, who normally talk to you about recent movies, are telling you how much money they made on XYZ stock recently, that tends to be a sign that the market is starting to get inundated by novice investors who are essentially fueling an irrational rise. This is of course purely anecdotal but I do believe once the mainstream media latches onto a story and you start hearing the regular folks investing their money into that particular story there is a problem.
  - tpeo 9y ago
    I think I've read somewhere that once newspapers report some piece of financial news, it's no longer news. Anyway, it seems like sound advice.
    - edgyswingset 9y ago
      Not that I'm inclined to believe stuff either way, but this is an op-ed and not really financial stuff being reported on.
  - vostok 9y ago
    Are you saying that the novices are the cause of overly high valuations? If so I'm rather skeptical because these novices control very small amounts of money even in aggregate. If you're saying that the novices are just bad investors who always buy at the wrong time then I'd want a little more evidence of that. My base assumption is that the novices do not have predictive power and are simply "noise traders". Note that I'm not expressing a view on the market in this comment.
    - 9y ago
samdung 9y ago
The tech bubble is always bursting in the sense that 99% of all startups do not make any money for either the founders or the vc's.
teslaberry 9y ago
This time is most certainly different. Why? Read greenspans most recent set of half truths he published. This time is different because leading nations are mired in more debt than they have been since the 1920s, and interest rates are lower than in 200 years. Essentially this time is different because the next time the debt bubble bursts it will be politically devasting on a scale not seen in 90 years. The global depression in the 1920s led to world war. So this time is different than the last 70 years of economics since ww2. Greenspan says it like the 70s. No its not. There is no gold standard to default upon. And the fake oil crisis of the late 70s was engineered by u.s. bankers to soak up a lack,of demand for usd on international markets. That strategy will not work this time. If oil doubles in price it will not stregthen the dollar as it once did. The next bout of stagflation will lead to a dramatically weaker dollar. Impirted consumables will actually get more expensive in the u.s. How will the startup world be affected. Im not sure it will look much different than any itber bust sabe for the fact that it will be worse because theres more debt to default on than last time.
to_bpr 9y ago
I've a casual worry that $SNAP will hit the bricks and trigger something significant (and negative) within the industry in the near future. Is this worry justifiable?
- lalos 9y ago
  It's a reasonable worry. Your average investor is not tech savvy and definitely not the target age for most tech companies. Will an investor know the difference between FB, Twitter and Snap? Or will he come to a sell conclusion after seeing Snap and Twitter fumbling the ball deciding to cash out on tech. Pretty reasonable.
daxfohl 9y ago
I think iPhone X or whatever will be a dud. Okay it'll rocket off the shelves and people will think "why did I buy this?" And android phones after the latest Samsung release will be largely stagnant. Mobile already does what we want. I have an LG G3 and still love it. First(ish) 500+ ppi phone, I'm more than happy, no need to upgrade. There's going to be a thing that happens when everyone realizes, no need to upgrade. Less money goes into tech. Tech sector has a big barf. Much of modern economy is based on tech, so it has a big barf too. I see a modern-day medium-term middle ages coming, just because, meh, everything is good enough. The one light I see is autonomous cars. They could change the whole landscape. The random thing I'm thinking now is restaurants as we know them will be replaced. By those who specialize in exactly one dish. You order it for your family on Tuesdays and it comes in compostable packing, you eat and enjoy. The whole idea of going to a restaurant seems outdated. They'll die. Of course autonomous kitchen-cars (open sourced so you know exactly what you're getting?!) is even a step further.

57 points by cs702 9y ago

I have been thinking about the ad bubble in particular, for which Google is not the only one responsible of course. Of course, it is all ultimately funded by debt. I wonder what Larry and Sergey will do when it ends.

bdcravens 9y ago
What "ad bubble"? Ads are merely how other bubbles monetize.
- yuhong 9y ago
  Yea, that is part of why I knew that printing money using basic income would only encourage it.
  - islanderfun 9y ago
    What?
    - sova 9y ago
      I believe my non native speaker friend means that UBI does not address fundamental flaws in valuation in a Capitalistic system. Flaws thar would amount to concentration of wealth via advertising conglomerates , although I may be way off the mark.
    - yuhong 9y ago
      I mean, printing money using basic income would not boost the economy until consumers spend it, right?
- stale2002 9y ago
  It is the eyeball bubble. The quintessential examples of this phenomenon are Twitter, and potentially snapchat. The idea of the "ad bubble" is that you have to have a massive amount of users to make the system work. And if growth stops... Well there goes your company. The bubble is that ads can't really pay for the ridiculous valuations that some of these companies are getting.
yalogin 9y ago
Ad bubble? Why is it a bubble? Ads are not going away only platforms change. It’s the company’s ability to serve the new platform that matters. Are you saying the number of ads on the internet as a whole is a bubble and that is going to fall off at some point?
- yuhong 9y ago
  I don't mean that ads will completely go away as the bubble burst. There are several kinds of online ads, and I am particularly talking about third-party tracking ads for example.
- autokad 9y ago
  facebook's desktop revenue (1.2b q2 2017 vs .9b q2 2015) has not been as robust as mobile, the lions share of their revenue and revenue growth is in mobile (8b q2 2017). its very easy to imagine that evaporating away very quickly in some economic event, especially considering mobile ads haven't really helped companies much (from what I have heard). even google could suddenly become a lot less profitable very quickly. many of the 260~ unicorns spend a lot on ads, a revenue stream that could disappear quite suddenly. i'm not saying its likely, just that it could reasonably happen
mythrwy 9y ago
Countless weeds that will die of drought long before the tree of Google perishes. Those roots go very deep.

aphextron 9y ago

This my emotional, biased opinion. But humanity has begun a fundamental shift in the way we live due to widespread, cheap access to digital technology and information via the internet. Whatever happened before the past 10 years of insane growth we have seen is completely relevant. The relics of a bygone era. People will say "yeah, everyone thinks this time is different". Except it is. We have never had anything even remotely as game changing as this before. For the first time in human history, absolutely no one can imagine what will come even 10 years from now.

ryanbrunner 9y ago
I know you addressed this, but this literally could have been written in 1999, and what's more, it was probably more accurate then. Technology has continued to expand, but I'd say the last 20 years have been a continuation of growth that's been happening since the 90's. Not all that much is fundamentally different today than it was in the early 2000's. Yeah, we all have smart phones and social media, and those are certainly cool and important things, but not quite up to breathlessly heralding a new age of humanity like you're doing.
- sit12 9y ago
  Actually I think innovation has totally stagnated the last 10 years or so.
  - daxfohl 9y ago
    Yup, we still have the same basic CRUD, except now phones are faster so more JavaScript to make it look pretty.
- nopinsight 9y ago
  Wouldn't you say autonomous vehicles (2020-30), mass adoption of seeing robots for manufacturing and warehouse work (2020-2030), CRISPR-based gene drive to nearly eliminate disease-carrying mosquitoes and other organisms (2020-2030), embryonic germline-editing for human enhancement (2025-40), and possibly Artificial General Intelligence (2030-2050) cause changes as massive as or more so than the rise of the Internet?

dabei 9y ago

The article doesn't seem to address the question of if there is a tech bubble. How does assigning an acronym for the top companies indicates a bubble? Yes, 7 out of top ten valuable companies are tech companies, but they are dominant players of large and highly profitable markets. Am I delusional?

redwood 9y ago
When regular people, who normally talk to you about recent movies, are telling you how much money they made on XYZ stock recently, that tends to be a sign that the market is starting to get inundated by novice investors who are essentially fueling an irrational rise. This is of course purely anecdotal but I do believe once the mainstream media latches onto a story and you start hearing the regular folks investing their money into that particular story there is a problem.
- tpeo 9y ago
  I think I've read somewhere that once newspapers report some piece of financial news, it's no longer news. Anyway, it seems like sound advice.
  - edgyswingset 9y ago
    Not that I'm inclined to believe stuff either way, but this is an op-ed and not really financial stuff being reported on.
- vostok 9y ago
  Are you saying that the novices are the cause of overly high valuations? If so I'm rather skeptical because these novices control very small amounts of money even in aggregate. If you're saying that the novices are just bad investors who always buy at the wrong time then I'd want a little more evidence of that. My base assumption is that the novices do not have predictive power and are simply "noise traders". Note that I'm not expressing a view on the market in this comment.
  - 9y ago

samdung 9y ago

The tech bubble is always bursting in the sense that 99% of all startups do not make any money for either the founders or the vc's.

teslaberry 9y ago

This time is most certainly different. Why? Read greenspans most recent set of half truths he published. This time is different because leading nations are mired in more debt than they have been since the 1920s, and interest rates are lower than in 200 years. Essentially this time is different because the next time the debt bubble bursts it will be politically devasting on a scale not seen in 90 years. The global depression in the 1920s led to world war. So this time is different than the last 70 years of economics since ww2. Greenspan says it like the 70s. No its not. There is no gold standard to default upon. And the fake oil crisis of the late 70s was engineered by u.s. bankers to soak up a lack,of demand for usd on international markets. That strategy will not work this time. If oil doubles in price it will not stregthen the dollar as it once did. The next bout of stagflation will lead to a dramatically weaker dollar. Impirted consumables will actually get more expensive in the u.s. How will the startup world be affected. Im not sure it will look much different than any itber bust sabe for the fact that it will be worse because theres more debt to default on than last time.

to_bpr 9y ago

I've a casual worry that $SNAP will hit the bricks and trigger something significant (and negative) within the industry in the near future. Is this worry justifiable?

lalos 9y ago
It's a reasonable worry. Your average investor is not tech savvy and definitely not the target age for most tech companies. Will an investor know the difference between FB, Twitter and Snap? Or will he come to a sell conclusion after seeing Snap and Twitter fumbling the ball deciding to cash out on tech. Pretty reasonable.

daxfohl 9y ago

I think iPhone X or whatever will be a dud. Okay it'll rocket off the shelves and people will think "why did I buy this?" And android phones after the latest Samsung release will be largely stagnant. Mobile already does what we want. I have an LG G3 and still love it. First(ish) 500+ ppi phone, I'm more than happy, no need to upgrade. There's going to be a thing that happens when everyone realizes, no need to upgrade. Less money goes into tech. Tech sector has a big barf. Much of modern economy is based on tech, so it has a big barf too. I see a modern-day medium-term middle ages coming, just because, meh, everything is good enough. The one light I see is autonomous cars. They could change the whole landscape. The random thing I'm thinking now is restaurants as we know them will be replaced. By those who specialize in exactly one dish. You order it for your family on Tuesdays and it comes in compostable packing, you eat and enjoy. The whole idea of going to a restaurant seems outdated. They'll die. Of course autonomous kitchen-cars (open sourced so you know exactly what you're getting?!) is even a step further.