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Sigh. I click on comments and the top comment is two line DH2 responding to the title of the post. Not HN at its best. Actually I did say that valuations are

by pg 16y ago

Sigh. I click on comments and the top comment is two line DH2 responding to the title of the post. Not HN at its best. Actually I did say that valuations are high, and they'll probably fall in the future. But there is a difference between the ordinary rise and fall of prices and a bubble.

jonny_eh 16y ago
Exactly. Saying there's no bubble is a far cry from saying that valuations are high and will go down/correct/whatever. The digital media industry is a bit more mature now and the likelihood of a bubble is much less now. I imagine it will have it's ups and downs (as you said) just like any other industry. Also, a big difference between now and the late 90s is that companies are actually making money! The promise is starting to pay off.
mnemonicsloth 16y ago
You did reject their premise and then agree with their facts. To someone with a 20 second attention span (or someone spreading 20 seconds' attention over 5 minutes of interview) that sounds like talking your book. Soviet Union has no problems. There are no little green men. I don't know what you're obliged to say or not say, but you might get better results by reframing: "If this is a bubble, then bubbles happen every five years."
rgarcia 16y ago
For the uninitiated: http://www.paulgraham.com/disagree.html http://www.paulgraham.com/disagree.html I think you meant DH1...?
A1kmm 16y ago
At least as I read http://www.paulgraham.com/disagree.html http://www.paulgraham.com/disagree.html, it is an ontology for disagreements. Seiji's comment is not phrased as a disagreement, but rather a statement about how people will perceive your views. When the way people perceive a statement is important, predictions about how the statement will be perceived is as or more important than the truth of falsity of the statement. In terms of your hierarchy; I don't think that the take-home message from your hierarchy should be 'only ever say things that could be classified as DH6'. Discourse from authority or lack thereof has no place in scholarly correspondence of any form; everything should be based on the evidence available. However, non-experts often don't have the background or patience to evaluate claims about a certain field well enough to distinguish good reasoning from crank reasoning. Arguments from authority are therefore sometimes necessary to convince people on things they aren't experts in, and an argument against this authority can be an appropriate response (e.g. arguments like 'this person is saying things at odds with what 99.9% of scientists in the relevant field say, and are making claims that are outside their area of expertise', or 'this person has a serious conflict of interest in saying that'). The YouTube video doesn't work for me with either gnash or Adobe SWF player (YouTube normally works, I don't know why this one doesn't - maybe geographic restrictions) so I can't respond to the content of the video. The title is certainly an appeal to authority - "PG says this".
A1kmm 16y ago
How would you define a bubble then? The standard definition is "trade in high volumes at prices that are considerably at variance from intrinsic values". "The valuations are high, and they'll probably fall in the future" implies (by the way I construe it) "considerably at variance from intrinsic values". It would be hard to argue that there is not high-volume trade in the tech industry. Individual prices rising and falling due to changes in intrinsic value, for example, due to information about new competing technologies that could not have been anticipated before, or unanticipated information about things much of the tech industry is dependent on, like energy prices, can change the intrinsic valuations. But prices rising above the intrinsic value because of high investor confidence and investment dollars from one company cycling around the industry and buoying up the existing players is a bubble. It might not be as big a bubble as the last bubble, but it is still a bubble.
- Alex3917 16y ago
  "The valuations are high, and they'll probably fall in the future" implies (by the way I construe it) "considerably at variance from intrinsic values." At least for Angel rounds and series A, IMHO the valuations are finally where they should be. I agree that they will probably go down, but not because they are intrinsically overvalued; rather, I think the investors will eventually just come up with new ways to tip the balance of power back toward themselves. There definitely are a bunch of intrinsically overvalued startups that are raising a few hundred thousand bucks in angel rounds, but I suspect that we'll just see a gradual return toward using metrics when investing rather than some huge collapse.
- netcan 16y ago
  One analogy is inflation vs hyperinflation. Inflation is usually driven by money supply. Print more money or expand supply some other way and you get some inflation. Hyperinflation is driven by hyperinflation. That is, prices are rising so fast, that they are forced even higher. People rush to buy goods, commodities to get rid of rapidly devaluing money as fast as possible. This drives up prices. Governments need to print more all the time because what they printed last month isn't enough this month. Financial bubbles are similar and different to overpricing in a similar way. They drive themselves.

by pg 16y ago

jonny_eh 16y ago

Exactly. Saying there's no bubble is a far cry from saying that valuations are high and will go down/correct/whatever. The digital media industry is a bit more mature now and the likelihood of a bubble is much less now. I imagine it will have it's ups and downs (as you said) just like any other industry. Also, a big difference between now and the late 90s is that companies are actually making money! The promise is starting to pay off.

mnemonicsloth 16y ago

You did reject their premise and then agree with their facts. To someone with a 20 second attention span (or someone spreading 20 seconds' attention over 5 minutes of interview) that sounds like talking your book. Soviet Union has no problems. There are no little green men. I don't know what you're obliged to say or not say, but you might get better results by reframing: "If this is a bubble, then bubbles happen every five years."

rgarcia 16y ago

For the uninitiated: http://www.paulgraham.com/disagree.html http://www.paulgraham.com/disagree.html I think you meant DH1...?

A1kmm 16y ago

At least as I read http://www.paulgraham.com/disagree.html http://www.paulgraham.com/disagree.html, it is an ontology for disagreements. Seiji's comment is not phrased as a disagreement, but rather a statement about how people will perceive your views. When the way people perceive a statement is important, predictions about how the statement will be perceived is as or more important than the truth of falsity of the statement. In terms of your hierarchy; I don't think that the take-home message from your hierarchy should be 'only ever say things that could be classified as DH6'. Discourse from authority or lack thereof has no place in scholarly correspondence of any form; everything should be based on the evidence available. However, non-experts often don't have the background or patience to evaluate claims about a certain field well enough to distinguish good reasoning from crank reasoning. Arguments from authority are therefore sometimes necessary to convince people on things they aren't experts in, and an argument against this authority can be an appropriate response (e.g. arguments like 'this person is saying things at odds with what 99.9% of scientists in the relevant field say, and are making claims that are outside their area of expertise', or 'this person has a serious conflict of interest in saying that'). The YouTube video doesn't work for me with either gnash or Adobe SWF player (YouTube normally works, I don't know why this one doesn't - maybe geographic restrictions) so I can't respond to the content of the video. The title is certainly an appeal to authority - "PG says this".

A1kmm 16y ago

How would you define a bubble then? The standard definition is "trade in high volumes at prices that are considerably at variance from intrinsic values". "The valuations are high, and they'll probably fall in the future" implies (by the way I construe it) "considerably at variance from intrinsic values". It would be hard to argue that there is not high-volume trade in the tech industry. Individual prices rising and falling due to changes in intrinsic value, for example, due to information about new competing technologies that could not have been anticipated before, or unanticipated information about things much of the tech industry is dependent on, like energy prices, can change the intrinsic valuations. But prices rising above the intrinsic value because of high investor confidence and investment dollars from one company cycling around the industry and buoying up the existing players is a bubble. It might not be as big a bubble as the last bubble, but it is still a bubble.

Alex3917 16y ago
"The valuations are high, and they'll probably fall in the future" implies (by the way I construe it) "considerably at variance from intrinsic values." At least for Angel rounds and series A, IMHO the valuations are finally where they should be. I agree that they will probably go down, but not because they are intrinsically overvalued; rather, I think the investors will eventually just come up with new ways to tip the balance of power back toward themselves. There definitely are a bunch of intrinsically overvalued startups that are raising a few hundred thousand bucks in angel rounds, but I suspect that we'll just see a gradual return toward using metrics when investing rather than some huge collapse.
netcan 16y ago
One analogy is inflation vs hyperinflation. Inflation is usually driven by money supply. Print more money or expand supply some other way and you get some inflation. Hyperinflation is driven by hyperinflation. That is, prices are rising so fast, that they are forced even higher. People rush to buy goods, commodities to get rid of rapidly devaluing money as fast as possible. This drives up prices. Governments need to print more all the time because what they printed last month isn't enough this month. Financial bubbles are similar and different to overpricing in a similar way. They drive themselves.