4 ms·

I remember seeing a comment by pg that if he really thought there was a bubble and was cynically exploiting that fact, he just wouldn't say anything at all. I

by il 16y ago

I remember seeing a comment by pg that if he really thought there was a bubble and was cynically exploiting that fact, he just wouldn't say anything at all. I think, from the perspective of pg and YC, there really is no bubble, at least with angel investments. With YC, high quality startups building things people want are raising enough money to bring products to market. The real bubble is on the high end with Facebook's valuation jumping billions of dollars every week, even though they're obviously not creating billions of dollars of value in a week. That's the definition of speculation.

bootload 16y ago
"... I remember seeing a comment by pg that if he really thought there was a bubble and was cynically exploiting that fact, he just wouldn't say anything at all. ..." That was probably straight out of "How to Win Friends and Influence People". If there is a bubble, what you see is large transfers of money flow from people who want to risk capital to make profit. Does Milner, DST really understand "social media"? Probably not. There was a dig by Annie Lowrey a writing an article on Warren Buffet buying into railways in Slate that hints at this [0]. Is this a wise move by YCombinator? In the short term yes. In the longer term I'm not so sure. Why? If you want to understand the nature of an investor, follow the source and providence of the cash. Yuri Milner > DST > Alisher Usmanov The Milner investment trail leads straight back to Uzbeck Russia and old-school Oligarchy, something the Economist has noted. [1] Randomness didn't play a part in the success of DST as a company. [2] I can't believe pg isn't aware of this [3] and if you look carefully, the Milner deal is at arms-length of ycombinator. A deal good for all parties at the expense of appearing "murky". [0] Annie Lowrey, Slate, "Working on the Railroad: All the big returns were in Singapore or Hong Kong or Silicon Valley, they said, so they put their money into hot social-media start-ups and emerging economies." ~ http://news.ycombinator.com/item?id=2277702 http://news.ycombinator.com/item?id=2277702 [1] "A bigger problem for DST may be that some see it as Russian—and thus “murky”." ~ http://www.economist.com/node/16539424?story_id=16539424 http://www.economist.com/node/16539424?story_id=16539424 [2] "According to the 2010 edition of Forbes magazine, the oligarch is one of Russia's richest men, with a fortune estimated at US$19.9 billion, and the world's 100th richest person." ~ http://en.wikipedia.org/wiki/Alisher_Usmanov http://en.wikipedia.org/wiki/Alisher_Usmanov [3] "There are a lot of ways to get rich... There are plenty of other ways to get money, including chance, speculation, marriage, inheritance, theft, extortion, fraud, monopoly, graft, lobbying, counterfeiting, and prospecting. Most of the greatest fortunes have probably involved several of these." ~ http://paulgraham.com/wealth.html http://paulgraham.com/wealth.html
redthrowaway 16y ago
Just because there's speculation doesn't make it a bubble. Look at oil prices. They've been supremely inflated by commodities and futures traders, but they'll remain inflated as long as there's sufficient trading volume to keep them up. If they ever deflate, it's not like it will bankrupt the oil industry. A tech bubble is only a problem if its bursting would destroy sufficient wealth so as to impact the viability of future innovation. Taking facebook as the canonical example, popping that bubble is only a problem if a lot of the wrong people lose their money. GS losing their money doesn't really hurt anybody but GS and their clients. FB's VCs have all gotten their money back by now, so they're fine. In order for the bubble that everyone here fears (startups) to burst, you would have to have the widescale destruction of wealth through the failure of many highly-priced startups. It would have to remove enough investors from the market to make money "sticky", that is, to the point where it stops flowing. If you look at the silly valuations out there, Facebook isn't going anywhere and isn't losing money, so they've got time to figure things out. Groupon makes disgusting amounts of money. Twitter... well, they're dispensible and their valuation isn't too ridiculous. Even the "service not business" startups aren't taking much money out of the ecosystem. We might be in for an adjustment, but it shouldn't get to the point where good startups have trouble finding money.

by il 16y ago

bootload 16y ago

"... I remember seeing a comment by pg that if he really thought there was a bubble and was cynically exploiting that fact, he just wouldn't say anything at all. ..." That was probably straight out of "How to Win Friends and Influence People". If there is a bubble, what you see is large transfers of money flow from people who want to risk capital to make profit. Does Milner, DST really understand "social media"? Probably not. There was a dig by Annie Lowrey a writing an article on Warren Buffet buying into railways in Slate that hints at this [0]. Is this a wise move by YCombinator? In the short term yes. In the longer term I'm not so sure. Why? If you want to understand the nature of an investor, follow the source and providence of the cash. Yuri Milner > DST > Alisher Usmanov The Milner investment trail leads straight back to Uzbeck Russia and old-school Oligarchy, something the Economist has noted. [1] Randomness didn't play a part in the success of DST as a company. [2] I can't believe pg isn't aware of this [3] and if you look carefully, the Milner deal is at arms-length of ycombinator. A deal good for all parties at the expense of appearing "murky". [0] Annie Lowrey, Slate, "Working on the Railroad: All the big returns were in Singapore or Hong Kong or Silicon Valley, they said, so they put their money into hot social-media start-ups and emerging economies." ~ http://news.ycombinator.com/item?id=2277702 http://news.ycombinator.com/item?id=2277702 [1] "A bigger problem for DST may be that some see it as Russian—and thus “murky”." ~ http://www.economist.com/node/16539424?story_id=16539424 http://www.economist.com/node/16539424?story_id=16539424 [2] "According to the 2010 edition of Forbes magazine, the oligarch is one of Russia's richest men, with a fortune estimated at US$19.9 billion, and the world's 100th richest person." ~ http://en.wikipedia.org/wiki/Alisher_Usmanov http://en.wikipedia.org/wiki/Alisher_Usmanov [3] "There are a lot of ways to get rich... There are plenty of other ways to get money, including chance, speculation, marriage, inheritance, theft, extortion, fraud, monopoly, graft, lobbying, counterfeiting, and prospecting. Most of the greatest fortunes have probably involved several of these." ~ http://paulgraham.com/wealth.html http://paulgraham.com/wealth.html

redthrowaway 16y ago

Just because there's speculation doesn't make it a bubble. Look at oil prices. They've been supremely inflated by commodities and futures traders, but they'll remain inflated as long as there's sufficient trading volume to keep them up. If they ever deflate, it's not like it will bankrupt the oil industry. A tech bubble is only a problem if its bursting would destroy sufficient wealth so as to impact the viability of future innovation. Taking facebook as the canonical example, popping that bubble is only a problem if a lot of the wrong people lose their money. GS losing their money doesn't really hurt anybody but GS and their clients. FB's VCs have all gotten their money back by now, so they're fine. In order for the bubble that everyone here fears (startups) to burst, you would have to have the widescale destruction of wealth through the failure of many highly-priced startups. It would have to remove enough investors from the market to make money "sticky", that is, to the point where it stops flowing. If you look at the silly valuations out there, Facebook isn't going anywhere and isn't losing money, so they've got time to figure things out. Groupon makes disgusting amounts of money. Twitter... well, they're dispensible and their valuation isn't too ridiculous. Even the "service not business" startups aren't taking much money out of the ecosystem. We might be in for an adjustment, but it shouldn't get to the point where good startups have trouble finding money.