3 ms·

I think for a lot of the golden geese we're entering a period where entropy is going to force a change to how they're valued, simply because infinite growth is

I think for a lot of the golden geese we're entering a period where entropy is going to force a change to how they're valued, simply because infinite growth is impossible. At some point (and I think we're there or close) you run out of people who both want and don't have a Facebook account, or a Netflix subscription, or whatever else it is you're shilling. Similarly there was a dip in Amazon's share prices after their latest earnings call after 2021 income only increased by two billion dollars. I get that these companies all started as scrappy startups, but they're now the establishment, and maybe they need to stop chasing infinite share value growth and start talking about paying reasonable dividends to retain value.

usrusr 5y ago
Growth expectations are a seemingly inevitable side effect of the stock exchange: imagine there was a perfectly highly profitable and perfectly stable (in both directions) company. To people sure of that stability, a "correct" share price would be defined as a function of central bank interest rate. Buy when below, sell when higher. But if that perfect stability existed in reality, people would not know. Even if the average expectation was spot on perfect stability, it would be a bell curve distribution with some being more optimistic and others less. Share transactions only go one direction, pessimists selling to optimists. You end up with an all-optimist ownership after pessimists and realists are bought out.
- zozbot234 5y ago
  There is a corrective mechanism to this dynamic and it's called the takeover bid. As soon as the "optimists" fail in their growth goals (and they will fail at some point, pretty much by definition), their valuation drops and the pessimists who had better foresight can take back control.
  - usrusr 5y ago
    But before that happens, any amount of "grow or die trying" can take place: as long as inertia keeps the lights on, team "reinvent ourselves!" enthusiastically digs an ever deeper hole. Occasionally those do strike gold I think, but I can't really think of an example right now. Some might say Nadella Microsoft, or the iPod company, but I'd say that the former wasn't quite down enough to qualify, and iPod-age Apple wasn't a growth bet at all: everything they did at the time would have been considered a success if it only stabilized on the level reached by the CRT iMacs.
notahacker 5y ago
Tbf, I think what he wants to do is basically the Amazon/AWS and Google/Waymo pivot where they basically use their massive piles of cash and engineering talent pipeline to try to capture the Next Big Market. And with a PE ratio based on growth that they'll struggle to achieve that roll of the dice might even be the best (or least worst) option. Problem is they're just so unfocused and goofy about it. To the extent that VR immersive experiences become big (which is likely not as big as Zuck thinks), it's more likely to be dominated by a company with a culture based around immersive worldbuilding and storytelling, not a company culture based around advertiser metadata and surfacing stuff people click on. And rebranding itself as a metaverse whilst all it has to show the average user is a website which has been around in essentially the same format for 15 years underlines that.

usrusr 5y ago

Growth expectations are a seemingly inevitable side effect of the stock exchange: imagine there was a perfectly highly profitable and perfectly stable (in both directions) company. To people sure of that stability, a "correct" share price would be defined as a function of central bank interest rate. Buy when below, sell when higher. But if that perfect stability existed in reality, people would not know. Even if the average expectation was spot on perfect stability, it would be a bell curve distribution with some being more optimistic and others less. Share transactions only go one direction, pessimists selling to optimists. You end up with an all-optimist ownership after pessimists and realists are bought out.

zozbot234 5y ago
There is a corrective mechanism to this dynamic and it's called the takeover bid. As soon as the "optimists" fail in their growth goals (and they will fail at some point, pretty much by definition), their valuation drops and the pessimists who had better foresight can take back control.
- usrusr 5y ago
  But before that happens, any amount of "grow or die trying" can take place: as long as inertia keeps the lights on, team "reinvent ourselves!" enthusiastically digs an ever deeper hole. Occasionally those do strike gold I think, but I can't really think of an example right now. Some might say Nadella Microsoft, or the iPod company, but I'd say that the former wasn't quite down enough to qualify, and iPod-age Apple wasn't a growth bet at all: everything they did at the time would have been considered a success if it only stabilized on the level reached by the CRT iMacs.

notahacker 5y ago

Tbf, I think what he wants to do is basically the Amazon/AWS and Google/Waymo pivot where they basically use their massive piles of cash and engineering talent pipeline to try to capture the Next Big Market. And with a PE ratio based on growth that they'll struggle to achieve that roll of the dice might even be the best (or least worst) option. Problem is they're just so unfocused and goofy about it. To the extent that VR immersive experiences become big (which is likely not as big as Zuck thinks), it's more likely to be dominated by a company with a culture based around immersive worldbuilding and storytelling, not a company culture based around advertiser metadata and surfacing stuff people click on. And rebranding itself as a metaverse whilst all it has to show the average user is a website which has been around in essentially the same format for 15 years underlines that.