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Why is it a bubble when they have an incredibly successful business that prints money where the people building the service are being rewarded for helping build

Why is it a bubble when they have an incredibly successful business that prints money where the people building the service are being rewarded for helping build such a successful outcome?

adamnemecek 9y ago
There might be some regulatin coming their way.
- briandear 9y ago
  Which will make their business even more solid as it will make it harder for new entrants.
  - adamnemecek 9y ago
    Not really no. Not all regulations are like that. These will most likely go after fb very directly.
  - Lionsion 9y ago
    That's sloppy thinking. Here's and example why: what if a new regulation new banned targeted advertising? That would kneecap FB's business model and unique value proposition while making it easier for new entrants, since they won't have to compete with FB's now-legally-useless data trove.
dx034 9y ago
Because that was exactly the argument banks used before 2008. Not that salaries in Finance are low now but a lot of the excesses have been cut back following the crisis. Banks also made a ton of money pre-2008 but that didn't come out of nowhere. So far, there has been no industry that just continued making high margins over decades without any cut backs. I doubt tech will be the first one.
- icebraining 9y ago
  But the industry as a whole doesn't have these margins or salaries; only the top dogs do.
  - dx034 9y ago
    Pre-2008 not all banks were hugely profitable. Some investment banks were and some smaller companies. The tech sector isn't that dissimilar. Salaries in SV show that not only Google and Facebook are willing to pay $200k+ for engineers, most of the industry will (and usually can). As tech can't print money, these salaries must come from somewhere. And at some point those sources won't be able or willing to provide it. Maybe that's a soft landing, maybe harder. I don't know but as I said previously, I'd be surprised if tech's the first industry in centuries that channels wealth into the hands of few (including SV landlords) without any consequences.
    - icebraining 9y ago
      Salaries in SV show that (...) most of the industry will (and usually can). Yeah, that's what I doubt. SV is not the tech industry as a whole. The average salary for a software developer in the US is less than half than that, and if we removed those top outliers, it'll be even less. So I'm skeptical that this is out of the ordinary; doesn't seem that different from other well-paid white-collar professions like lawyers.
      - f00biebletch 9y ago
        And, even in SV, most of the industry cannot; certainly the AirBnB/uber/lyft's of the world can, but the smaller companies seem to be falling behind (based on anecdotal conversations at least).
  - fergie 9y ago
    If you live in a first world country, try to find out what your mid-tier technology consultancies (Accenture, Deloitte, CGI, etc) are charging customers. It is almost certainly around 250-350k per year, even if they are working for an unglamorous, boring, traditional customer. The real issue is that outside of leading tech environments, too much rent is being extracted from the wages of software engineers.

Why is it a bubble when they have an incredibly successful business that prints money where the people building the service are being rewarded for helping build such a successful outcome?

adamnemecek 9y ago

There might be some regulatin coming their way.

briandear 9y ago
Which will make their business even more solid as it will make it harder for new entrants.
- adamnemecek 9y ago
  Not really no. Not all regulations are like that. These will most likely go after fb very directly.
- Lionsion 9y ago
  That's sloppy thinking. Here's and example why: what if a new regulation new banned targeted advertising? That would kneecap FB's business model and unique value proposition while making it easier for new entrants, since they won't have to compete with FB's now-legally-useless data trove.

dx034 9y ago

Because that was exactly the argument banks used before 2008. Not that salaries in Finance are low now but a lot of the excesses have been cut back following the crisis. Banks also made a ton of money pre-2008 but that didn't come out of nowhere. So far, there has been no industry that just continued making high margins over decades without any cut backs. I doubt tech will be the first one.

icebraining 9y ago
But the industry as a whole doesn't have these margins or salaries; only the top dogs do.
- dx034 9y ago
  Pre-2008 not all banks were hugely profitable. Some investment banks were and some smaller companies. The tech sector isn't that dissimilar. Salaries in SV show that not only Google and Facebook are willing to pay $200k+ for engineers, most of the industry will (and usually can). As tech can't print money, these salaries must come from somewhere. And at some point those sources won't be able or willing to provide it. Maybe that's a soft landing, maybe harder. I don't know but as I said previously, I'd be surprised if tech's the first industry in centuries that channels wealth into the hands of few (including SV landlords) without any consequences.
  - icebraining 9y ago
    Salaries in SV show that (...) most of the industry will (and usually can). Yeah, that's what I doubt. SV is not the tech industry as a whole. The average salary for a software developer in the US is less than half than that, and if we removed those top outliers, it'll be even less. So I'm skeptical that this is out of the ordinary; doesn't seem that different from other well-paid white-collar professions like lawyers.
    - f00biebletch 9y ago
      And, even in SV, most of the industry cannot; certainly the AirBnB/uber/lyft's of the world can, but the smaller companies seem to be falling behind (based on anecdotal conversations at least).
- fergie 9y ago
  If you live in a first world country, try to find out what your mid-tier technology consultancies (Accenture, Deloitte, CGI, etc) are charging customers. It is almost certainly around 250-350k per year, even if they are working for an unglamorous, boring, traditional customer. The real issue is that outside of leading tech environments, too much rent is being extracted from the wages of software engineers.