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This article hits the nail on the head. The financial system is not working. Also there are VC-funded zombie companies everywhere. Just look at Snapchat or Uber

This article hits the nail on the head. The financial system is not working. Also there are VC-funded zombie companies everywhere. Just look at Snapchat or Uber. Never made a profit in a decade but they have ridiculously high market cap. What kind of investor puts their money into a business which has a decade long track record of losing money and no profits in sight? In a system which is notorious for incentivizing short term gains... It doesn't add up.

cbozeman 6y ago
Because everyone wants another Amazon or Tesla. Amazon took 20 years (mas o menos) to turn a profit. Tesla took 15ish or so? A lot of people have clearly latched onto something Jeff Bezos said a long time ago in an interview, which was, "Get big fast." The whole goal with Uber is to utterly crush all competition until they're the only game in town. The only other explanation for Uber is that they're banking on self-driving cars and are hoovering up data from the app towards that goal. Uber only has one way to win, no matter what, beat every other taxi company. They either do that by running every other taxi out of business, or find their Holy Grail of self-driving taxis. Do investors have the stomach to fund Uber until either of those things happen, though?
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thu2111 6y ago
QE. All the low risk high quality debt is effectively cleared by governments in order to 'stimulate' the economy. Well, after enough years of pumping enough stimulus in, the economy starts to look like someone on a perma-high who can't come down. That's what we're seeing here: totally irrational behaviour caused by an apparently endless supply of free money. Track it back far enough and you end up at the central bank.
dasudasu 6y ago
Not sure why you would even mention publicly traded companies for your point. Now the actual stock market, comprised of millions of individual investors, is propping up those market capitalizations. The VC delivered them to their IPO, and the market accepted them, so clearly they did something right as far as they are concerned.

cbozeman 6y ago

Because everyone wants another Amazon or Tesla. Amazon took 20 years (mas o menos) to turn a profit. Tesla took 15ish or so? A lot of people have clearly latched onto something Jeff Bezos said a long time ago in an interview, which was, "Get big fast." The whole goal with Uber is to utterly crush all competition until they're the only game in town. The only other explanation for Uber is that they're banking on self-driving cars and are hoovering up data from the app towards that goal. Uber only has one way to win, no matter what, beat every other taxi company. They either do that by running every other taxi out of business, or find their Holy Grail of self-driving taxis. Do investors have the stomach to fund Uber until either of those things happen, though?

deleted 6y ago
[deleted]

thu2111 6y ago

QE. All the low risk high quality debt is effectively cleared by governments in order to 'stimulate' the economy. Well, after enough years of pumping enough stimulus in, the economy starts to look like someone on a perma-high who can't come down. That's what we're seeing here: totally irrational behaviour caused by an apparently endless supply of free money. Track it back far enough and you end up at the central bank.

dasudasu 6y ago

Not sure why you would even mention publicly traded companies for your point. Now the actual stock market, comprised of millions of individual investors, is propping up those market capitalizations. The VC delivered them to their IPO, and the market accepted them, so clearly they did something right as far as they are concerned.