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> Enjoy It While You Can I love the conclusion of this article. As someone who has participated in the online "deals" community for 10+ years, I have definitel

> Enjoy It While You Can I love the conclusion of this article. As someone who has participated in the online "deals" community for 10+ years, I have definitely benefitted from many of the opportunities. However, I do spend a considerable amount of time wondering what will happen when this house of cards comes falling down. But you know, I think that for every one person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going.

protonimitate 8y ago
Yup. I know things are too good to last, but (for the time being) I am happy to be on the 'winning' side of bad investments. I'm curious what is attracting investors to these start ups in the first place, is it really just the idea that 'this could be the next amazon'? As the article pointed out - Amazon dumped a ton of its money back into the company to expand services. Most of these burn rate services are happy with just getting people signed up and then stagnating.
- Mahn 8y ago
  > what is attracting investors to these start ups in the first place Growth, basically. As long as you can make a case that your 75 cent dollar store is rapidly accumulating customers, investors will be more than happy to overlook the economics of the business. Sometimes that works out, but I guess at that point it's more like gambling than investing for investors.
mmt 8y ago
> But you know, I think that for everyone person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going. That seems contrary to what the article is saying, which is that for every person taking advantage, there are zero people paying full price, because it's the investors who are keeping this economy going. As such, it may never end without a regulatory end to the winner-take-all scenario, as a different comment suggested.
- metalliqaz 8y ago
  All it would take for it to end is for investors to stop investing in money-burners.
  - mmt 8y ago
    Isn't that a tautology, though? My point is that actual[1] investors have an incentive to pour their money into money-burners because if just one of those initially money-burning is the next Google, Facebook, Amazon, or whatever overwhelming winner-take-all breakout profitable company, they will have more than justified dumping all that cash into the losers. [1] for lack of a better term. I've never quite understood why it's considered "investing" to buy stock in a company if someone other than the company itself previously owned the stock. That cash isn't going into company coffers. This activity seems more like asset ownership/speculating than asset allocation (which is what I think of when I hear the word "invest").
    - metalliqaz 8y ago
      Your point is well taken. I think I just don't agree that government stepping in is the only way to end the cycle. Seems to me it can/will die of natural causes when the "bubble" bursts.
      - mmt 8y ago
        But what bubble? Where's the irrationally increasing asset values at a macro level? Where's the "greater fool" that's buying it all up? Without that, there's nothing to burst. Moreover, this has been going on for so long, at least since (before) the dot-com boom, and we've had quite a few economic downturns. It's not very credible that any bubble would survive that.
ironjunkie 8y ago
I don't think the house of cards is going to fall. In this case what is happening is that the money made in a few lucky startups (Facebook, Gogole etc) are reinvested into those trials. In the end, it is the circle of life, A few mega winners are subsidizing those losing experiments. We should be there to take advantages of those as we are usually paying the price to the huge winning ones (indirectly, but still)
- maoistinquisitr 8y ago
  It's not reinvested capital. It's highly leveraged funny money from a decade of ZIRP. And this isn't really a "tech" problem at this point. The "real" economy is full of huge companies that are barely making any money, but are racking up debt and revenue. This article goes into how the same thing is playing out in the agriculture sector. http://archive.dailywealth.com/3602/the-real-trouble-with-bizarro-capitalism- http://archive.dailywealth.com/3602/the-real-trouble-with-bi...
sgloutnikov 8y ago
> But you know, I think that for every one person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going. A SiriusXM subscription comes to mind. Since they care about their subscriber numbers, they are willing to give you the "promotional" price if you ask or threaten to cancel.

protonimitate 8y ago

Yup. I know things are too good to last, but (for the time being) I am happy to be on the 'winning' side of bad investments. I'm curious what is attracting investors to these start ups in the first place, is it really just the idea that 'this could be the next amazon'? As the article pointed out - Amazon dumped a ton of its money back into the company to expand services. Most of these burn rate services are happy with just getting people signed up and then stagnating.

Mahn 8y ago
> what is attracting investors to these start ups in the first place Growth, basically. As long as you can make a case that your 75 cent dollar store is rapidly accumulating customers, investors will be more than happy to overlook the economics of the business. Sometimes that works out, but I guess at that point it's more like gambling than investing for investors.

mmt 8y ago

> But you know, I think that for everyone person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going. That seems contrary to what the article is saying, which is that for every person taking advantage, there are zero people paying full price, because it's the investors who are keeping this economy going. As such, it may never end without a regulatory end to the winner-take-all scenario, as a different comment suggested.

metalliqaz 8y ago
All it would take for it to end is for investors to stop investing in money-burners.
- mmt 8y ago
  Isn't that a tautology, though? My point is that actual[1] investors have an incentive to pour their money into money-burners because if just one of those initially money-burning is the next Google, Facebook, Amazon, or whatever overwhelming winner-take-all breakout profitable company, they will have more than justified dumping all that cash into the losers. [1] for lack of a better term. I've never quite understood why it's considered "investing" to buy stock in a company if someone other than the company itself previously owned the stock. That cash isn't going into company coffers. This activity seems more like asset ownership/speculating than asset allocation (which is what I think of when I hear the word "invest").
  - metalliqaz 8y ago
    Your point is well taken. I think I just don't agree that government stepping in is the only way to end the cycle. Seems to me it can/will die of natural causes when the "bubble" bursts.
    - mmt 8y ago
      But what bubble? Where's the irrationally increasing asset values at a macro level? Where's the "greater fool" that's buying it all up? Without that, there's nothing to burst. Moreover, this has been going on for so long, at least since (before) the dot-com boom, and we've had quite a few economic downturns. It's not very credible that any bubble would survive that.

ironjunkie 8y ago

I don't think the house of cards is going to fall. In this case what is happening is that the money made in a few lucky startups (Facebook, Gogole etc) are reinvested into those trials. In the end, it is the circle of life, A few mega winners are subsidizing those losing experiments. We should be there to take advantages of those as we are usually paying the price to the huge winning ones (indirectly, but still)

maoistinquisitr 8y ago
It's not reinvested capital. It's highly leveraged funny money from a decade of ZIRP. And this isn't really a "tech" problem at this point. The "real" economy is full of huge companies that are barely making any money, but are racking up debt and revenue. This article goes into how the same thing is playing out in the agriculture sector. http://archive.dailywealth.com/3602/the-real-trouble-with-bizarro-capitalism- http://archive.dailywealth.com/3602/the-real-trouble-with-bi...

sgloutnikov 8y ago

> But you know, I think that for every one person like me taking advantage of these "arbitrage" scenarios, there are like 10 people paying full price. They keep this economy going. A SiriusXM subscription comes to mind. Since they care about their subscriber numbers, they are willing to give you the "promotional" price if you ask or threaten to cancel.