40 ms·

Tech bubbles are bursting all over the place

• avgDev 4y ago
  I work for non-tech generating 100million+ in revenue. Cushy job, fully remote, good pay and full autonomy with flexible hours working as an IC. I recently talked to a startup, similar pay, culture would be a better fit since it was mostly techies and I'm a nerd by nature.....but things just got awkward as soon as I asked about their revenue....they were bleeding money and I was told they were being acquired by a big corp. Also, the tone worried me, the confidence the CEO presented early in the call disappeared. I also tried digging deeper into their business and what they were selling, as I have interest in that space due to my hobbies. I literally didn't see a need for their startup to exist. But I'm just an average developer what do I know.
  • lumost 4y ago
    Across every investment class there has been a trend of buyers needing to become more financially irresponsible in order to participate in the market. Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Need to build a ride-hailing app? prepare to pay people to ride indefinitely. Need to own a growth stock? prepare to pay upwards of 100x multiple on revenue. All around, there have been too many dollars chasing too few assets. I suspect the pendulum is swinging now that housing got to the price point where employees demanded equivalent pay increases to housing cost increases.
    • winter_blue 4y ago
      > where employees demanded equivalent pay increases to housing cost increases How can employees realistically speaking even do this?
      • DragonStrength 4y ago
        Well, if you're in California and don't own a house, you move. It's not a great option if you were raised here, but a whole bunch of people can take a small pay cut (especially thinking about down equity and inflation) to move back to their hometowns right now. For me, a home (3/2, 1500sqft) in the neighborhood I'd move to in my hometown (US city; 1 mil metro area) is less than my household income, which we'll realistically keep 80+% of when we move. I'd wager a healthy segment of Bay Area mid-level, domestic-born engineers fit this profile. I'd wager that holds true in many metro areas, even those we don't consider tech hubs because it is all relative. I wouldn't want to be a mid-level Bay Area manager in my 40's with a mortgage on the peninsula right now. Who is coming to buy that house? Who is going to train all the 22 year olds moving here? EDIT: And I didn't even think about all the early retirees the major changes to the workplace will obviously prompt. Who wants to spend the last couple years of their career re-learning how to do a job you've done for decades and have been well-compensated for? I'd be at the beach.
        • nostrademons 4y ago
          Mid-level Bay Area manager in my 40s with a mortgage on the peninsula here. Why would I want to sell my house? We bought it because we have kids that we want to raise in the Bay Area.
          • DragonStrength 4y ago
            There are plenty who would have chosen the Bay Area anyway, but for me who is younger and aware of how similar those suburbs are to any others in the country, I was dreading having to commit to the jobs a Bay Area mortgage require. I’m glad you’re already in your location of choice, but I’m sure you know most people move here for the jobs and would be elsewhere if the jobs moved.
        • winter_blue 4y ago
          I moved from the US to Canada, and got a new offer at a publicly-traded US company recently. In the US, pay is around $215k total comp ($175k base, $40k RSUs). Because, I'm in the Toronto (which is more expensive than most of the US), they said my pay would get a circa $111k USD base ($145k CAD base). Adjusted for inflation, I'm earning less than what I was making when I was 25 years old. Now, at age 32, I'm struggling to pay significant debts on this salary. What am I to do?
      • bityard 4y ago
        The old fashioned way: ask for a raise and go somewhere else if they don't pay?
    • metadat 4y ago
      You nailed it! It's the same "excessive dumb money" phenomenon as with the dotcom bubble back in 2000.
    • vkou 4y ago
      It's not irresponsible to bid 20% over asking. Asking is deliberately underpriced, because it is excellent advertising in a hot RE market. It's irresponsible to bid 20% over what the house is worth (which has nothing to do with asking price), just because you got emotionally attached to the house, and started a bidding war with another person emotionally attached to the house.
      • bombcar 4y ago
        Which is exactly what the "ask below" is trying to get you to do; you act differently (emotionally) in a bidding war than in a price negotiation.
        • s1artibartfast 4y ago
          I don't think it has to be emotional at all. There is what the house is worth to the seller, and what it is worth to the buyer, and the sale price is always somewhere in between. It is just taking advantage of an information asymmetry to get the sale price closer to what it is worth to the buyer.
      • corrral 4y ago
        It's not "emotionally attached", it's that it's been impossible to buy a house for a while if you're not willing to pay more than it will appraise for. You'll repeatedly lose to buyers who will do that, with cash offers to boot. This has been true even in many cities that aren't trendy, and have been building housing like crazy for a decade.
        • s1artibartfast 4y ago
          In what market? In the SF bay area 99% of houses appraise, even if they go 50% or $0.5m over asking
          • corrral 4y ago
            Boring Midwestern City that's not even a 3rd-tier tech hub. Other boring Southern city that's also not even a 3rd-tier tech hub. Buyers are having to take on the risk of having to cover any extra over appraisal in cash, consistently, while that used to be rare (and, yes, usually for "I am super invested, emotionally, in getting this particular house" reasons). My unremarkable suburban house in a boring city that's been building housing constantly and extensively for the last 10 years, is up like 25% in value over the last 2 years. We thought, based on extensive experience in this market, that we were already paying a bubble-induced premium of 15-20% when we bought it (possibly no longer true—thanks inflation). WTF.
    • bushbaba 4y ago
      ...or housing will drop as interest rates go up. And a non insignificant number of folks were over extended in leverage. I know too many folks who did 7/1 ARMs cash out refi to purchase another home in a 7/1 ARM loan, banking not on cashflow but appreciation. I know of folks who bought homes using margin loans in their stock portfolio. If housing stagnates, there will be margin calls, leading to supply shock, and price declines. Especially now that mortgage interest rates have nearly doubled year to date.
      • simulate-me 4y ago
        The price may also decline just because borrowing is more expensive. The difference between 2 and 6 percent interest is huge.
      • bombcar 4y ago
        Margin loans for house purchases isn't as insane as it might sound - assuming your financials are there. Margin interest is deductible against investment gains, house interest may not be for many earners. But not refinancing afterwards into a low fixed rate may come back to bite them, and soon.
        • lostmsu 4y ago
          Margin rates are also lower, and you don't have to pay the principal.
        • georgeecollins 4y ago
          >> Margin loans for house purchases isn't as insane as it might sound I understand the tax logic you are speaking about, but I think tax benefits are sometimes oversold to convince people to buy things (like homes and investments). You aren't a corporation, your liability isn't limited. Trying to shave a bit off taxes may have less benefit to you than the peace of mind of not having to juggle debt. You seem like you understand that when you talk about refinancing asap, so I think you know what you are talking about as well.
          • 4y ago
    • gonzo41 4y ago
      This is also a central banking fail in so far that there's that much liquidity in the market that can't find a productive outlet. There's a lot of money, but also not enough concentrated in one spot to do really useful ventures like large infrastructure projects. So instead the money is distorting everything. Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing. I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless.
      • api 4y ago
        Central banks have one hammer really: interest rates. Everything is a nail.
        • gonzo41 4y ago
          QE as well. I just don't see why they can't put conditions on some of their lending to focus the intent of the money.
          • mym1990 4y ago
            Simple: It is not the responsibility of the Fed to evaluate and empower or degrade certain markets according to what "smart investments" should be. This is ultimately up to the banks that receive the money and the people who come up with investment ideas.
            • WaxProlix 4y ago
              This entire conversation is about how those entities don't seem to be doing a particularly good job.
              • mym1990 4y ago
                And that is a very valid concern, but the Fed is not the one to address that problem.
    • BbzzbB 4y ago
      Yes, you need some level of financial creativity to justify buying into one of the many bubbles. But that's where the timeless Buffett quote[0] on Ted Williams and batting comes in, there's no called strikes in securities markets. Mr. Market doesn't force you to do anything at all, we're all free to ignore the speculation and focus on proper cash flowing businesses at reasonable valuations. The more boring the better (tho there are opportunities even with exciting companies these days), but just wait for the right pitch, no need to force it. You'd need a gun to my head if you wanted me to hold a portfolio of cash burning (even generating for that matter) businesses with valuations based on 5-10 year outlooks. 0: https://www.youtube.com/watch?v=l0Mw8hCzQ1I https://www.youtube.com/watch?v=l0Mw8hCzQ1I >The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.
      • throw8383833jj 4y ago
        Sitting in cash is not a defensive position, it's offensive and a highly risky one at that. When fiat, is losing 5-6% on average every single year, you can't afford to wait for the right moment to jump into equities. You have to be in it now, whether the valuation suits you or not. This of course exacerbates risk for everyone and forces everyone into risky positions because cash is now more risky than nearly all the other risky bubbles out there.
        • BbzzbB 4y ago
          I'm not sure where you bringing "sitting in cash" from.
    • colechristensen 4y ago
      This was driven by extended 0-ish% interest for an entire recession cycle. Unable to get "safe" returns, money chased more dangerous classes of assets and inflated prices. Inflation and a return to nonzero interest means capital gets to retreat to safer ground, pulling the rug out of stupid unprofitable startups that can only make money with head-in-the-clouds IPO valuation or FAANG acquisition.
      • MomoXenosaga 4y ago
        Is it really a bad thing? Unemployment is pretty low.
        • colechristensen 4y ago
          Long term, poor allocation of resources into junk work and business that doesn’t make money leads to crashes and periods of high unemployment. In other words you can’t keep the party going forever and how things are now isn’t an excuse for irresponsibility.
          • imtringued 4y ago
            That is illogical. Money-less economic models are unable to predict structural unemployment. In fact Say's law predicts that a theoretical barter economy is always at full employment. Of course the modeling flaw is that money is saved as a goal in itself so it will cease to circulate at some point which is the real source of unemployment.
        • throw_nbvc1234 4y ago
          Labor Force participation is also low. Job openings are around an all time high. https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/JTSJOL https://fred.stlouisfed.org/series/JTSJOL As these two converge, wages are probably going to go down while inflation may still be high.
        • deleted 4y ago
          [deleted]
    • amelius 4y ago
      Housing cost is part of how inflation is computed.
      • tremon 4y ago
        That depends. Here in NL, housing costs are explicitly excluded from the official inflation numbers, presumably because housing is still seen as an investment rather than a short.
      • mym1990 4y ago
        This depends. Housing cost if you're considering the price of owning a home is not part of CPI for the same reason that stocks are not a part of CPI, that being they are considered assets. If you talking about specifically renting housing, then correct(in US).
      • lumost 4y ago
        The owner equivalent rent measure that the Fed uses in the US has been decoupled from Housing prices for a long time. House price increases or rent increases don't necessarily have an impact on inflation if few are paying the marginal rate, and they choose to eat the higher cost rather than asking for more money. When a critical mass of individuals pay the marginal rate for housing, and they choose to demand more for their services to compensate - then it will show up in the inflation reports. I'd argue that it was a miss for the Fed to focus on owner equivalent rent rather than a broader measure of what consumers are paying for housing as the overall mix of housing has also been changing as the number of investment properties increases.
        • imtringued 4y ago
          If your monthly payment stays the same and the interest rate is lowered you pay less interest to the bank which means the seller gets your money instead. The price increase literally doesn't matter to you.
    • jeffreyrogers 4y ago
      > Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. If you expect inflation to stay high for a while this is actually rational... as long as you still have a job.
    • thomasahle 4y ago
      > Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Who buys a house in cash? You mean literal suitcases of dollar bills? Or do you just mean something like a bank transfer? What other ways are there to buy something?
      • deleted 4y ago
        [deleted]
      • noufalibrahim 4y ago
        In cash as opposed to getting the transaction financed.
      • afavour 4y ago
        They mean paying in full themselves, not backed by mortgage.
        • Clubber 4y ago
          Even if you get the mortgage, it's the same as cash to the seller. The bank just cut's them a check right away. The mortgage is between the bank and the buyer.
          • smabie 4y ago
            I just bought a house in cash, the seller wasn't willing to accept any non-cash offers. With a cash offer the seller and buyer can close in a significantly shorter amount of time than with a mortgage.
          • ejb999 4y ago
            >>Even if you get the mortgage, it's the same as cash to the seller. Not really, pay in 'cash' and you can close in days, pay with a mortgage and it might take weeks to months. Sellers always prefer cash buyers if they are in a hurry to sell.
          • seattle_spring 4y ago
            Sure if everything works out then the seller gets the same, but there are many more reasons a financed offer will fall through versus an all-cash offer.
    • tomrod 4y ago
      Part of this is because bonds have been out of the picture. Bring bonds back as valid investment vehicles, which impacts many other parts of the economy, and we'll see more assets going to "useful" investment like roads, power lines, and so on.
    • garren 4y ago
      Rising interest rates are starting to slow the housing craziness, at least where I’m at. I was regularly seeing 20-27% over asking with limited to no inspections, new listings going in hours. Nuts. All-cash is basically the new norm. Two years ago that was an issue for regular buyers, but it’s workable now since lenders have jumped into the mix, more and more offer an all-cash option - they make the purchase and transfer it to you under a traditional mortgage. You still have an appraisal gap to contend with, sine they’ll only pay what the place appraises for, but anyone who qualifies for a loan can probably qualify for the all-cash option.
      • sydd 4y ago
        Where I'm from (EU) experts say that prices will stagnate amd the market will slow down. On one hand the high inflation pushes out lots of buyers -- they can't or don't want to pay the high interest rates. This lowers demand and prices. On the other hand global supply chain issues (which got much worse with the war) lead to material shortages and rising material costs. This pushes up housing prices. The net result is likely stagnation -- few houses are built and few exchange owners. But prices stay high. Except if there will be a large recession causing people to loose their jobs and unable to pay their mortgages. This will crash the housing market, but looks unlikely now.
        • chaircher 4y ago
          Definitely looks that way in the UK - I've been watching my local housing market like a hawk because I'm looking to buy soon. Houses are staying listed a lot longer, a fair few getting reduced, and newer listings are coming in at more reasonable prices (as much as over £100k is reasonable for a 1 bed flat miles into poverty stricken suburbia). I think people are feeling more risk adverse cost of living etc and want to hold onto money and stay put where they are.
      • shrimpx 4y ago
        > All-cash is basically the new norm. It’s paradoxical that all-cash became the norm in a period where mortgage rates were at all time lows…
    • stjohnswarts 4y ago
      I don't think it's housing. It's just that the market had a boom during the bored pandemic times and now that that is over (except in china) the market is readjusting. The market is highly leveraged by psychology over the short term, but in the end even the most exuberant people have to face reality and tighten their belt. Housing will flat line or decrease now as well, since people realize the cost of mortgages is too damn high. Also with lumber and other prices falling that will help new home builds. If Russia ever stops the attempted genocide of Ukraine then markets will probably soar as gas prices come back down instead of increasing.
    • asta123 4y ago
      And for these reasons I question the whole concept of money, working for it, and saving for whatever dream. Flood of money can be so easily created but you have to work for it? Then you have to max out on debt, speculate and risk your hard earned funds, otherwise you are falling behind. Central banks have stuffed this one up and I it is a much bigger problem than inflation.
    • david927 4y ago
      > Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Buying in cash is being done to skirt the tightened up lending standards that followed the 2008 Crisis: https://www.reddit.com/r/Superstonk/comments/uflzht/the_2022_real_estate_collapse_is_going_to_be/ https://www.reddit.com/r/Superstonk/comments/uflzht/the_2022...
      • seattle_spring 4y ago
        It's being done to win bidding wars, because it's much less risky for a seller to choose a cash offer over financing.
      • gruez 4y ago
        >superstonk I'm baffled why people would get their economic analysis from a subreddit predicated on a short sequeeze that has failed to materialize.
        • david927 4y ago
          What gave you the idea that it would materialize in your time frame?
    • zitterbewegung 4y ago
      The markets are efficient but they aren’t perfect. In any situation the markets will do the best to optimize but will always fall short of perfection . Since markets aren’t perfect that’s why you can make money by speculation.
      • worik 4y ago
        > In any situation the markets will do the best to optimize but will always fall short of perfection The problem with markets is a "market efficient" outcome can be catastrophic for social welfare. During the Irish potato famine the markets allocated food away from Ireland because there were not many there who could afford it. They starved. The market functioned perfectly. Markets find equilibriums. Total collapse is an equilibrium. Starvation can happen at equilibrium. You can have 100_000 homeless people at market equalibrium
        • zitterbewegung 4y ago
          I'm actually saying the reverse and agreeing with you that there are market efficient outcomes that should have been considered or done . In the Irish Potato famine around 1-2 million people left the country. Instead of preserving the workforce they opted for a short term market equilibrium of selling the food to people that could pay and not performing some kind of tax that would feed the needy. The previous Tory government tried to do some charity but then the incoming government did a more of a hands off approach which is an incorrect response. So yes the Irish Potato famine was the result of a market efficient equilibrium that shouldn't have been allowed to occur.
        • thoms_a 4y ago
          Indeed. The "Free Market" can elevate a ruthless plutocracy of robber barons with private armies far longer than the little people can stay alive. As the Bezos Battalion, the Zuckerberg Zealots and the Musk Machines close in around your hometown's lithium supply, you can of course die with pride knowing that you believed in the Constitution and lived as the Founders intended. (plz no ban, I love Free Markets, I'm just working on my creative writing)
    • chiefalchemist 4y ago
      > All around, there have been too many dollars chasing too few assets. You can thank the central banks for this. They seem to be too focused on propping up the wrong metrics. Meanwhile the real economy - and the real people in it - are limping like a three-legged dog. Yet the top layer ignores the messages (e.g., in the USA, Trump being elected, and perhaps re-elected) and persists with the insanity. This cycle - and the associated level of denial - is not sustainable. Not economically. Not socially. And not ecologically either for that matter. We can't consume our way out of this madness.
    • QuarterReptile 4y ago
      Best explanation I've seen of this phenomenon, why it's bad for all involved parties, and knock him effects. It's focused on place making/urban development, but it lines up completely. https://podcast.strongtowns.org/e/strip-mall/ https://podcast.strongtowns.org/e/strip-mall/
      • cantrevealname 4y ago
        It would be very useful to have a one or two paragraph summary here. I think that very few people are going to listen to an hour long podcast without knowing something more about the ideas.
        • QuarterReptile 4y ago
          That's fair. Unfortunately I missed the edit window. It talks about the phenomenon (relevant to places that don't seem to be thriving more than to hot cities) of a new strip mall bring built next to a mostly vacant strip mall that's fairly new itself. It explains that this is a developer cashing in on the glut of money chasing returns. He talks about how any business that pretends to be legitimate gets funded, and the competition to loan money to actual functioning enterprises becomes so intense that the eventual owners/lenders/etc. end up having something that looks like a malinvestment because they were the people who predicted the lowest risk and highest returns (in the context of all the other insane things being funded.) I listen to between 300 and 500 podcasts annually and, despite having a backlog of 175 episodes of various things right now, this one was worth the re-listen (at 1.5x speed, of course.)
    • optimiz3 4y ago
      > Need to own a growth stock? prepare to pay upwards of 100x multiple on revenue. Depending on the growth rate, a 100x P/E may be cheap.
      • fortuna86 4y ago
        This sentence made my head explode. Growth is the means, not the end.
    • chrisseaton 4y ago
      Saying that paying 20% more than asking is irresponsible depends on whether asking was a fair price. If someone was always willing to pay 20% more then it wasn’t a fair price in the first place, and really people are just under listing for some reason.
  • MisterBastahrd 4y ago
    Same thing happened to me. There's a company in Dallas that had a website that basically presented users who were searching for a product type with a list of products along with their ratings. Apparently they were supposed to make money off of affiliate links. The website was buggy and slow, and also... Google does that already. So they pivoted, and now they've aimed their engine at CBD reviews or something. I still don't see the point.
    • me_me_mu_mu 4y ago
      I wish people would just build solutions to actual problems they have that other people also confirm to have. Not everyone is a visionary like Steve Jobs or whatever, and that’s okay. Just build something that solves your problem and helps others who also deal with it.
      • acuozzo 4y ago
        The issue is that many people have my problem (click below), but no scruples. https://news.ycombinator.com/item?id=31217221 https://news.ycombinator.com/item?id=31217221 The desire is there, but the idea(s) aren't and it's not for lack of trying. I've been reading that "ideas are cheap" for over a decade now, but I can honestly say that I haven't once come up with an idea that would make any money.
        • NateEag 4y ago
          > I've been reading that "ideas are cheap" for over a decade now, but I can honestly say that I haven't once come up with an idea that would make any money. Ideas are cheap. Good ideas are darned hard to find and even harder to recognize.
        • me_me_mu_mu 4y ago
          Idk either and I’m in the same situation trying to find something that will stick (I think they call it product market fit?) and people/businesses will pay for. I’m sure I’ll figure something out eventually. One thing you can try is just talk to everyone. Literally everyone. I’m a super introvert and socially awkward, but if I’m standing at the bus stop or in a Starbucks I’ll talk to people and 9/10 times they will talk. Sometimes they’re people who run or work at companies in industries unfamiliar to me (construction materials, biologist, textile) and they complain about what sucks. Just keep an open ear and hopefully you can find something interesting and compelling that you can build for. Good luck!
  • MAGZine 4y ago
    the fact that you stopped to ask those questions makes me think that you're at minimum, an above average developer. caring about the business and its fundamentals is important beyond just slinging code.
    • danielvaughn 4y ago
      I agree. I've had a couple of stints as a manager, now as a CTO for a small startup, and it's giving me so much insight into thinking about engineering from a business perspective. As an IC it's hard to get that birds eye view, but it's possible.
      • BurningFrog 4y ago
        Can you mention one or two such insights about thinking about engineering from a business perspective?
        • ben30 4y ago
          I've got this bookmarked: https://github.com/kuchin/awesome-cto https://github.com/kuchin/awesome-cto
        • danielvaughn 4y ago
          1. A developers job is not to write code. You happen to write code as part of your job, but your core responsibility is to implement solutions to business problems. Sounds simple, but it's harder to realize in practice. Case in point was a recent freelance job I took on. This client had paid some devs for months of work on a Stripe integration. They had built all this custom code on the front-end and back-end. I came in, read the docs since I was new to Stripe, and quickly learned that a custom solution puts the company on the hook for 300+ security requirements for PCI compliance. I scrapped all the code and directed users to Stripe's own checkout page. Not as nice of a UX, but that company's customers are now much more secure, there is less code to maintain, and the client is happy. 2. Your managers aren't perfect people, but their livelihood is in your hands. It's incredibly stressful to be a manager, so try to have compassion and empathy for the position they're in. They have to explain to the executive team the progress you're making, and if no progress is being made, they take the blame. 3. If you can't connect the dots between what you're doing on a daily basis, and the overall trajectory of the company, then something's wrong. There's a broken connection somewhere, and no one other than you is going to realize it. Speak up if you don't think what you're doing is useful.
  • prepend 4y ago
    It’s funny as that was my experience interviewing with companies between 1998-2000. Just insane business models but brazen confidence in themselves. I remember interviewing with a company in 2000 that had burned through like $40 in two years. This was New York and they hired IBM. I don’t remember their product but it was stupid. They had paid IBM to build their own custom app server for Java because their requirements were too specific for WebSphere that IBM made. They built their own internal Java app server from scratch. So that was stupid. Also the interview was on a Tuesday or something and they said that they were out of money on Friday but were confident they would get more money on Monday. They wanted me to start immediately and when I turned them down because of the funding, they asked if I would start on Monday. It was such a surreal experience that a whole organization could be so crazy.
    • maxlamb 4y ago
      $40? Did you mean $40 million?
      • SauciestGNU 4y ago
        No, it's just IBM for once billing accurately to reflect the value they delivered.
      • prepend 4y ago
        Yes, thanks. I swear autocorrect is going multiple words back to change things. They burned $40M. $40 on their own app server in IBM fees would be pretty cool and interesting in a different way.
    • kenrik 4y ago
      > Also the interview was on a Tuesday or something and they said that they were out of money on Friday but were confident they would get more money on Monday. > They wanted me to start immediately and when I turned them down because of the funding, they asked if I would start on Monday. Is is straight out of a comedy sketch, I feel like you could take that to an open mic night and kill with it.
    • hodgesrm 4y ago
  • conductr 4y ago
    Tangential. But I work in corporate finance. I'm generally privy to a large amount of information about the companies I work for. If there's something I don't know, I ask for it and people share because of my role. If I'm interviewing, we discuss a lot more than most people would about the health of the company that I would be joining. It's normal. That said. I'm obviously heavily biased but I have realized MOST non-finance employees know very little about the financial health of their employer or even how the business model operates, or even what is the current/future strategy of the company. When something MAJOR is announced, M&A/leadership changes/etc, the questions the room typically ask are: 1) will we still get 401k match 2) will we get fired 3) will the office relocate. People don't really care too much about the company, they care about how it's volatility impacts them. I don't think it's such a bad thing, but just pointing it out. In startup land, volatility is huge and the highs and lows can occur with rapid frequency. You have to be an assessor of risk when changing any jobs and this is part of it.
    • PeterCorless 4y ago
      I may be unusual but I've always found it prudent to ask my CEO about things like rate of corporate growth, funding and customer revenue generation, M&A, etc. Because if I am a vesting or fully-vested employee, then that's my own future at stake. The 401(k) can be dwarfed by many times by a successful stock worth millions, or, in a badly run or positioned company, the stock could be worthless underwater paper shares and I become dependent exclusively on the 401(k) for my sunset days. The financial literacy of many workers is low though. They don't understand what options are or what it means to really be a shareholder. When I was at Cisco — I'm talking in the 1990s — we used to describe what we called "stockholder angry." This was when a fully-vested employee heard a VP or above talking about some idea so stupid it would literally cost the company a penny per share or more. That's when the old dogs would get "stockholder angry" and propose alternatives, or ask people to stop ideas that were retrograde for the sake of the company's valuation. Because we knew what a penny per share meant to each of us. I believe it is valuable for employees at all levels to be able to know the state of their company's health, and then, with an informed mind, be able to voice their opinion on the fate of their organizations.
      • 4y ago
  • zeruch 4y ago
    "But I'm just an average developer what do I know. " Usually more than the 'above average' founder or VC.
  • chinchilla2020 4y ago
    Management people have built careers and fortunes in tech running sinking companies. Even within FAANG, many people build careers while working on sinking products (Most products in Google are revenue negative...)
    • photochemsyn 4y ago
      According to the article, FAANG is an obsolete acronym, it's now MAMAA...
      • ildon 4y ago
        Just killed a man...
      • belkarx 4y ago
        I feel like people are going to keep using FAANG for a good while just because 1) MAMAA is not as recognizable yet, and 2) FAANG has the generalized meaning of "big tech company" and most people get that
      • wing-_-nuts 4y ago
        I prefer the term FLAMINGASS. It's catchy
  • ilrwbwrkhv 4y ago
    Yes I am sure a lot of companies are building things that aren't required. But there are so many things were indeed better solutions are required, and if they exist would be worth investing in.
  • aoms 4y ago
    I often wonder how many of these startups even exist. How they ever get any funds to keep a run rate.. very puzzling but interesting non the less
  • Johnny555 4y ago
    Is there any growing startup that's not bleeding money? Isn't what the seed and Series A and maybe B funding is about? After series A funding I'd expect some revenue stream, but not enough to pay expenses, after B series, they should have a plan to profitability and some proven customers that show that they can actually get that revenue, and after C I'd expect them to be executing to that plan. If bleeding money scares you, then a startup is probably not the right fit, a huge number of startups fail.
    • enra 4y ago
      There are. It happens when you hit high level of product market fit with a lean team and don’t go on a massive hiring spree after but keep growing the team at a measured pace. I think Github, Notion, Retool, Slack, probably Figma, hit revenues quite quickly as they launched and became profitable or at least close to breakeven.
      • Johnny555 4y ago
        You mention Slack, but they had losses of $140M/year prior to IPO: Slack says it may not turn profitable; IPO filing reveals $139 million in losses, Microsoft primary competitor The Slack IPO filing shows annual revenue of $400.5 million, up 60% from the prior year, with a net loss of $138.9 million, for the 12-month period that ended Jan. 31. Slack's actual fiscal year-end date has yet to be determined.
        • kenrik 4y ago
          Slack grew their workforce too quickly. Actually the Slack I remember from when it first came out is more or less the same product they have now. I'm not really sure what all of those people were doing for all of those years.
          • worik 4y ago
            Why slack? I never understood. I never liked IRC. But to not like it and pay for it? I do not understand. Am I a fossil?
  • scarface74 4y ago
    There are a lot of companies with “100 million in revenue” and no profit… Mentioning revenue and not profit is not informative.
    • scruple 4y ago
      Yes. It's astounding (to me, anyway) how many companies aren't even close to profitability.
  • Animats 4y ago
    but things just got awkward as soon as I asked about their revenue I've had that conversation. Anyone remember Cuil, the search startup? No revenue. No revenue model. Then no business.
  • kolbe 4y ago
    What profit does your company generate? I wouldn't call anything 'cushy' or stable until there's a reliable way to cover all expenses and investor expectations--especially given how badly company have exploited Goodhart's Law with respect to revenue.
  • turtlebits 4y ago
    I was in the same boat as you. I was about to accept an offer, then I had a chat with their CTO and I asked some hard questions about their strategy (compelling product - but their vision was becoming a "platform" as a lot of startups do). Think I threw them for a loop and didn't get a great answer. Ultimately changed my mind on joining.
  • deleted 4y ago
    [deleted]
  • la6472 4y ago
    Bubbles are absolutely necessary in an innovative marketplace. There has to be thousands of fail fast companies before a titan emerges.
  • ramoz 4y ago
    Similar story. Knew someone at a Startup with a product & storyline that would make for a comedy fiction show. Their CTO called me, enjoyed a convo, and offered me some untitled job - no interviews, no game plans. But full on salary match, equity, whatever… (I make mid 6 figures) But I’ve been so entrenched in real business that the whole thing just seemed completely off to me.
  • Throwawayaerlei 4y ago
    Replies so far are responding to the startup path to profitability question, but just how good are the usual IT jobs in companies where that's a cost center?? In all the ones I've experienced or looked at, not hardly as good as tech companies pre-FAANG, your "cushy job, fully remote, good pay and full autonomy with flexible hours" strikes me as an uncommon situation.
• three_seagrass 4y ago
  https://archive.ph/qziMw https://archive.ph/qziMw
  • cardsofinhuman 4y ago
• raphar 4y ago
  https://archive.is/qziMw https://archive.is/qziMw
• Victerius 4y ago
  And all it took was the Federal Reserve raising the federal funds rate by less than 100 bps after a decade and a half of rock bottom rates. I have nothing more to add. I'm going to go outside and breathe some fresh air.
  • duckfruit 4y ago
    A rate hike that that was widely telegraphed and has been anticipated for years, to boot!
    • epgui 4y ago
      But it's the tone with which it was said, and the expressiveness of Chair Powell's eyebrows when he said it that was unanticipated. /s
      • 1minusp 4y ago
        Know that parents comment is /s but in truth, it really feels like interpretations of body language and text to indicate hawkishness/dovishness actually seems to matter.
        • epgui 4y ago
          Yeah, just to clarify, my own "/s" tag in this case didn't mean I wasn't serious, it just meant that I believed the market placed too much emphasis on purely subjective interpretations of things left unsaid. It's good to try and get all all the data you can, but inferring how someone feels based on extra-textual elements is not a particularly scientific affair. Judges and lawyers commonly say "you can't possibly know how this other person felt" or "you can't possibly know what this other person thought", even when appearances are highly suggestive... for good reason.
    • sroussey 4y ago
      Don’t fight the Fed.
    • 4y ago
• freeqaz 4y ago
  A lot of these companies have very reasonable P/E ratios now. Microsoft is sitting at around 27, Apple 25, and Facebook 15. None of those strike me as "inflated". Those are normal values for the stock market (20-25). Are investors just panicking?
  • rubidium 4y ago
    Don’t rising interest rates put a downward pressure on p/e as growth (often) requires capital thus loans?
    • JamesBarney 4y ago
      They do, but the biggest way this happens is investors shifting their asset allocations into bonds. So if bonds pay 10% per year a company with a p/e of 30 looks less attractive than if bonds pay 3% per year.
      • drexlspivey 4y ago
        > They do, but the biggest way this happens is investors shifting their asset allocations into bonds. The opposite is true actually, when rates go up there is a sell-off in bonds which is exactly what is happening right now where bond prices are down 10%-20%
        • JamesBarney 4y ago
          You're saying if interest rates increased and stock price P/E remained the same most funds would allocate less money to bonds? I don't understand why that would be. If the expected future cash flow of one asset increases (bonds), and remains the same for another (stocks) why would you allocate more money to stocks and away from bonds?
          • drexlspivey 4y ago
            The future cash flow of existing bonds is fixed and it does not increase. If you have a bond that pays a 2% annual coupon you will see it's value drop when interest rates increase. The reason is that you can now get a newly issued bond that pays a higher (say 3%) fixed coupon so your's is worth less. Your bond's price will drop to say 90% of the notional amount while the new bond will trade at 100% so they will effectively have the same "yield" of 3%.
• fidrelity 4y ago
  Some of the strongest tech companies were built during a downturn (PayPal if I remember correctly). It's a great time to build, but probably not the best time for fundraising.
  • mabbo 4y ago
    That's selection bias at work though. Getting funding isn't a lottery, in which everyone's odds are the same. The funding you receive and the terms of that funding are related to the current market and how good your business/idea is. When times are tough, VCs are still investing, but they're only investing in better ideas, more likely successes. Why take a chance on your long shot when a government bond is a sure thing at a reasonable percentage? We should expect that those companies that got funding during a downtime are better companies based on the fact that they got funding at all.
  • trompetenaccoun 4y ago
    It's rather that founders with a proper vision build companies regardless of market swings. During a boom cycle there's abundant founding, even for trash projects. Markets aren't as efficient as many assume, especially not in the short term. Now we're at the end of a boom cycle and everything gets battered but that's just the valuation changing, nothing else. It's speculation. In the public eye quality projects will emerge again a couple of years down the line when they're starting to get really big and no one except those actually interested in the tech will have paid attention to how they were working hard the entire time.
    • scollet 4y ago
      I think we will see even more optimization with constrained budgets. Software is pliable. You will have a network of middlemen running at cost.
• malwarebytess 4y ago
  I'm expecting brutal, decimating, RIF across the industry at the end of Q2.
  • notacoward 4y ago
    Also, if things follow the same pattern as I remember from the 90s and 00s, each RIF will be associated with a rise in stock price. So it's not all bad, depending on where you sit relative to the action.
  • rubidium 4y ago
    RIF?
    • gowld 4y ago
      Reduction in Force == layoffs
      • jonny_eh 4y ago
        Thanks, I wish people could speak clearly.
        • Clubber 4y ago
          It's a euphemism for layoffs which is a euphemism for mass firings, a la corporate speak. "Rightsizing," is another one.
          • malwarebytess 4y ago
            It's different from layoffs. RIF comes with the implication that the reduction is permanent.
            • Clubber 4y ago
              >It's different from layoffs. RIF comes with the implication that the reduction is permanent. Academically, yes you're right. Practically, they are the same. No one can afford to sit around and wait a year or two to get rehired after layoffs, if that ever happens; and anytime a RIF happens, the positions are usually refilled once finances are better.
• prohobo 4y ago
  People said this was the "best time ever to get funding" for a startup. I disagree. In my view, it was the best time ever if you played a particular game and had the right connections. I pitched an idea to a VC, which I had a prototype for, looking for $100k. He liked it but wouldn't fund because I didn't have a solid business plan. Fair enough, I need to find a business partner. But then he told me something about how I have to imagine that it's $100k of my money. I need to respect it properly and ask myself: would I give someone this money so easily? Meanwhile he had his hands in various bullshit crypto (not hating on crypto, just the projects) defi startups. I thought it was absurd, of course I don't respect your money: VC firms throw $250k+ around like candy to people who happen to give a specific quasi-Silicon Valley impression or are in crypto. You're telling me you can't spare $100k? Also, I haven't seen a single "promising" startup actually be profitable, except those ones made without major funding. This has all been some kind of weird ass circus for years, I'm glad the bubbles are bursting.
  • deleted 4y ago
    [deleted]
  • csallen 4y ago
    > You're telling me you can't spare $100k? That's not how it works. You're not the only person asking this VC for $100k. A thousand other people are, too. A policy where he spares it for (what he considers) a bad investment like yours means sparing it for all the other bad investments, too. That would cost a lot more than just one check.
    • prohobo 4y ago
      I'm saying that he was already neck deep in bad investments, which he happily funded. That's the main point I'm talking about. I'm not saying my idea deserved investment, just that this whole industry has been full of bullshit for years.
      • cercatrova 4y ago
        Maybe you think the investments he made are bad, but obviously he doesn't think so. However, you think your company is good enough to pitch to him to get investment, and he doesn't think so. There's nothing wrong with either side, it's just a difference of opinion. That doesn't necessarily make the "entire industry [...] full of bullshit."
• Gravyness 4y ago
  Tech? like technology? What does it mean? Because surely companies that apply scientific knowledge for practical purposes aren't 'bursting' all over the place, right? Does it refer to specifically these huge companies quoted on the article?
  • pc86 4y ago
    You know exactly what it means. There is no way that you think tech in this context means "applying scientific knowledge for practical purposes" unless you have - and I truly, deeply mean this with zero disrespect whatsoever - weapons-grade autism. When did it become the cool thing to pretend to not know anything about the context in which a particular discussion happens? It's maddening, but also completely exhausting.
    • whiplash451 4y ago
      I see where your anger is coming from, but there were quite a few other words than "autism" that you could have used.
      • 55555 4y ago
        I think "weapons-grade autism" paints a most vivid image.
        • quickthrower2 4y ago
          “smart ass” would be a more accurate way to say how they come across.
    • Gravyness 4y ago
      You alright?
  • Ekaros 4y ago
    Software and related things as main product. So things that have low marginal cost per unit after they are done... But really messy as anyone offering some type of platform or an other is also tech... Even if they don't have low marginal costs...
• olivermarks 4y ago
  The problem I have with the Economist these days - they've changed a lot recently as has the Financial Times - is that they are one of the big cheerleaders for creating bubbles out of tech they clearly don't understand. This starves the startups that have compelling and reachable business models and goals because the funding goes to (quite possibly financially scammy) moonshots with vague goals somewhere over the horizon. Uber is a good example of this: https://www.gobankingrates.com/money/business/famous-companies-arent-profitable/#:~:text=Uber%27s%20operating%20costs%20amounted%20to,year%20before%2C%20according%20to%20TechCrunch https://www.gobankingrates.com/money/business/famous-compani.... But because the scam worked and they managed to get publicly listed (how did that happen?! Publications like the Economist should have provided more cautions...) the gravy train rolls on. The sooner we get back to a 'Web 2.0' era like 2008> on the sooner genuine innovation will be funded again.
  • gowld 4y ago
    > they are one of the big cheerleaders for creating bubbles Can you share an example?
    • olivermarks 4y ago
      https://www.economist.com/leaders/2020/08/20/the-ipo-is-being-reinvented https://www.economist.com/leaders/2020/08/20/the-ipo-is-bein... The E runs plenty of cautionary articles and they are good at hindsight https://www.economist.com/business/uber-doordash-and-similar-firms-cant-defy-the-laws-of-capitalism-after-all/21806198 https://www.economist.com/business/uber-doordash-and-similar... But aren't exactly leading the charge against financial corruption imo
      • bobro 4y ago
        So do you have examples of cheerleading or what?
      • YuukiRey 4y ago
        The second article has the following subtitle: > The mania over ride-sharing and delivery companies has at times been absurd and closes with these words > In the flywheel economy hope and hype spring eternal, at least as long as interest rates remain low and capital is essentially free. Hardly an example of what you accused the newspaper of.
• deleted 4y ago
  [deleted]
• deleted 4y ago
  [deleted]
• 1024core 4y ago
  TY. Such comments should be pinned to the top.
  • dang 4y ago
    (We detached this subthread from https://news.ycombinator.com/item?id=31369432 https://news.ycombinator.com/item?id=31369432, which is now pinned to the top)
  • DerekBickerton 4y ago
    Redirects to archive.ph for some reason: https://archive.ph/qziMw https://archive.ph/qziMw
    • whimsicalism 4y ago
      they have a lot of tlds
• ctime 4y ago
  I don't think we need the latest Cloud/AI/ML/Crypto/Web3.0 bullshit to spin up fuckedcompany.com again. I remember thinking in ~2015 going to conferences that this shit was never going to last. Then around 2018 driving (sitting) on 101 listening to advertisements for "C3 IoT AI" on NPR thinking, could a company jam more meaningless buzzwords into a single company name? For shits, looked up their stock just and its down 85%[1] since it's IPO. ofc. To anyone who hasn't lived through a .com explosion, hold on to your butts. (also consider moving to cash and $SARK $VIX) [1]https://www.cnbc.com/quotes/AI https://www.cnbc.com/quotes/AI
  • whiplash451 4y ago
    Indeed. C3AI IPO buyers must feel really good today (despite today's results, actually).
  • the_doctah 4y ago
    Any time I ask on some financial forum about moving a chunk of investments to cash I get told that would be stupid, don't try to time the market, and just keep buying. I would have saved myself a bunch of losses if I had done it when I was thinking about it.
    • 1270018080 4y ago
      The caveat to "just keep buying" is that you shouldn't be buying individual stocks. As a retail investor, the best you can do is get lucky and confirmation bias yourself. Acknowledging you don't know what you're doing is the first step to success.
    • mirceal 4y ago
      You cannot time the market. When you have invested in something, did you do your DD or did you do it because everyone else did it? I would recommend a book called "the intelligent investor". I also recommend low fee mutual funds that track the market as the default thing to invest. Once you educate yourself more you can make more sophisticated investments. I also don't have anything against speculative investments. Just don't call it investing. It's gambling and it's fine as long as you know what you are doing and are okay with basically losing most (everything) you put in.
• debacle 4y ago
  How many dead unicorns can the industry withstand?
  • scollet 4y ago
    Unicorns are DoA in my opinion. If everyone's a unicorn, no one is.
• vishnugupta 4y ago
  It's fascinating to trace the genesis of present crash to Fed's policies post 2008 crisis. The interest rates were kept artificially low to prevent another Great Depression. 2010s saw an unprecedented rally of tech/growth stocks, fuelled by cheap capital. Growth at all cost was the mantra, hoping companies will turn profitable at some point á la Amazon. Uber's CEO hit the nail on the head when he wrote "The average employee at Uber is barely over 30, which means you've spent your career in a long and unprecedented bull run". There were signs of rate hike in 2019 but COVID forced Fed to create trillions of $$. Which only added fuel to the fire; equities, housing, crypto saw unbelievable growth. However the signs of inflation were clear in early-mid 2021 they were hoping it to be transitory. But when the inflation data came in late 2021 it turned out to be multi-decade high leaving Fed with no choice but to raise interest rates for the first time in more than a decade. Which brings us back to growth companies. As Uber's CEO candidly stated "Channeling Jerry Maguire, we need to show them the money". 2020s will be all about cash flow and efficiency. On the other hand expect to see cool innovations as it requires genuine scarcity to look for out of the box solutions. While Amazon's stock soared in 2010s their core tech was being built in 2000s while they were relentlessly driving for efficiency.
  • juanjmanfredi 4y ago
    Inflation metrics show that the economy post 2008 was in fact under stimulated, which is why the recovery from the financial crisis was so slow. The recent COVID-related stimuli are what went too far.
    • shakezula 4y ago
      I don’t know if I disagree but we were also in a really bad position if we didn’t do it. The stimulus did a lot of good, I saw the first hand benefits of what it did for people who really needed it.
      • adam_arthur 4y ago
        False dichotomy. It should have been done, but to a much lesser magnitude. That is plainly obvious to any rational minded person. The Fed also should have considered velocity in employment gains. They basically waited until labor market was already overheated to do anything... which means many are likely to lose their jobs in the fight with inflation now. Unfortunately the basic law of economics and real productivity vs nominal currency units has continued to exist, despite it being 2022.
• immigrantheart 4y ago
  I almost got offer from DoorDash, with obviously RSU as one of the compensation. Eventually didn't get the offer because they said I didn't pass leadership interview. Apparently I was interviewing at one level above I thought I was interviewing (the recruiter messed up). Anyway, I accepted an offer from a hedge fund, comparatively similar, but all cash. Now I feel that I am glad I accepted the hedge fund offer. I don't have a property, not looking to get one due to HCOL high property prices and high interest rate. My assets are mostly crypto and total stock market index. I think I'm good with my crypto investment for now (already filled my goals) so I am thinking to get more stocks. As someone with just cash compensation, what can I do in this downturn to make a lot of money in the stock market? Maybe I just stick with the old boring Apple.
  • jdlshore 4y ago
    Index funds. Check out the Bogleheads subreddit for a levelheaded investing approach.
    • metamet 4y ago
      Seriously. Unless you're looking to gamble, open a Vanguard account and pick an index fund targeting your retirement age or go with one that tracks S&P (VOO). Vanguard's fees for index funds (esp Admiral shares) are absurdly low, to boot.
  • dewlinedew2 4y ago
    Why not ask your friends at work?
    • short_sells_poo 4y ago
      Yeah this would be my first question too. Even beyond that, many (most?) hedge funds have an employee investment scheme where employees have a special vehicle via which they can invest into the fund performance without having to meet the often egregious criteria (e.g. not everyone has $100mln lying around in cash to meet minimum investment thresholds).
    • 4y ago
• gitfan86 4y ago
  Thank God. It has been so tiring listening to all the people playing the Greater Fool game of trying to get to an acquisition or IPO or SPAC. Maybe people can go back to build real actual useful products and services.
• tempsy 4y ago
  This is actually a good time to switch jobs because you'll be offered a compensation package with equity at relatively depressed prices.
  • xdavidliu 4y ago
    usually companies have hiring freezes because of this reason, so this is not so easy
• mmaunder 4y ago
  "Then there are rising interest rates. Besides possibly triggering a downturn, they reduce the present value of tech companies’ profits, most of which lie far in the future." This is key. If you have a 10 year horizon for your startup investments, hoping that one in 100 will become the next Amazon or Google, you're going to discount those future cashflows into todays dollars by applying an interest rate connected to current reality. If the base interest rates have skyrocketed, then the net present value of that future cashflow is way less. It's mentioned briefly in the article, but I wanted to unpack it here because it's a key reason that high inflation makes investment in startups far less attractive. "It would be wrong to compare the current tech slump to the bursting of the dotcom bubble two decades ago. Back then companies had neither healthy balance-sheets nor promising business models." I disagree with this. I'm not going to call out specific public companies, but there are many with no Price/Earnings to speak of because they are running at a massive loss. These companies are highly speculative investments and have yet to prove that they can turn a profit. It's not hard to generate revenue growth of 30% per year while running at a 20% loss. Creating a truly profitable company is hard, and much of the reason why these companies are listed on public markets is because early investors wanted to cash out by selling their stock to the public, rather than bear the risk of finding out whether the business can turn a profit. Many of these never-been-profitable companies have eye-wateringly high valuations based on multiple of revenue. We've seen 10x to 25x revenue in the past few years, while losing money hand over fist and never having proven they can ever turn a profit and become self sustainable. Just like the dot-com era, these folks are world class at creating the right optics and making the right noises on quarterly investor calls. But at the end of the day, creating a business that makes more money than it spends is what it's all about, and that is very difficult to do. These never-profitable businesses have been benefiting from the era of free money, and as that time ends, so will they.
  • disqard 4y ago
    > "... at the end of the day, creating a business that makes more money than it spends is what it's all about, and that is very difficult to do. These never-profitable businesses have been benefiting from the era of free money, and as that time ends, so will they." Indeed. You cannot cheat the fundamentals -- you can avoid/delay them, but they'll eventually catch up with you.
• legitster 4y ago
  This has been a long time coming. Back in the day, there was an inherent understanding that a stock price is supposed to reflect "the fundamentals" - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least tried to be profitable. But if you look at the share price of like, Tesla - it's completely insane. There is no way your slice of the company is worth that much. The stock market has been behaving like a pyramid scheme, where everyone assumed there will be more money entering than leaving any given stock. Tech is a pretty egregious sector because of how many business models basically boil down to "we don't actually need to make money if we have a desirable stock". In the long run, I don't think we'll be worse off if the next generation of software companies actually focuses on making products people want to buy rather than play games with DAU and user acquisition and etc.
  • izzydata 4y ago
    Over a long enough time frame the stock market and even the whole economy behaves like a pyramid scheme as it is dependent on new generations to be more people than the previous one.
    • rapfaria 4y ago
      What about life becoming more efficient?
      • shimmy568 4y ago
        There is a limit, growth can't continue forever (especially the exponential growth we've been seeing). We've got to level off at some point
        • scollet 4y ago
          There is still an element of optimization which involves compressing the problem space. This might be why we see thin vertical segments, but they are way over-valued for the optimization they provide. I think VCs' expectations misalign with reality. They are the ones incentivising infinite growth.
• nkabbara 4y ago
  Is this a good time to start buying as everyone is selling/panicking?
  • bombcar 4y ago
    It's always a good time to buy if you're doing dollar cost averaging into index funds. Trying to time the market is probably a fools game, much better spent trying to avoid total ruin.
    • nkabbara 4y ago
      Yup, I DCA regularly, but thinking about whether this is a good opportunity to throw extra into an index fund like VTSAX or maybe solid individual stocks. Extra would be coming from an account that I keep cash in for unforeseen opportunities.
      • shrimpx 4y ago
        As a rule of thumb, it's better to buy when the market's in the red than when it's doing well. As Warren Buffet said, "keep buying it through thick and thin, and especially through thin." (He was referring to an S&P 500 index fund.)
  • 1270018080 4y ago
    You should be buying index funds with a portion of every paycheck
    • scollet 4y ago
      Shouldn't you do this in a bull?
      • vineyardmike 4y ago
        You always do it so you don’t have to question the timing. If you do it during a bill, you’re waiting until the price is going up. Doing it during a bear gets you when the price is going down. Buy low sell high and all that jazz.
• hiram112 4y ago
  I've grown anxious the past few years watching salaries skyrocket while I've played it safe, remaining at my company with years of seniority, but average pay that has been eaten away by COL and inflation increases, though in a very stable industry related to defense. Every time I got the urge to hit Leetcode and start interviewing for a new gig with a 50% pay increase, I remember 2007-2009 and getting laid off from 3 different companies as the economy imploded. And it's hard to remember now, but things never really felt truly safe, even with in-demand tech skills, until 2016 or so, when suddenly recruiter email started really exploding with competitive offers. Watching the market cool down leads me to believe we're going into another downturn, and I'm becoming more confident I made a good bet by not jumping ship in the last year or two.
  • askafriend 4y ago
    > Watching the market cool down leads me to believe we're going into another downturn, and I'm becoming more confident I made a good bet by not jumping ship in the last year or two. It just seems like you're afraid of making a change, and now you've found a new justification to keep avoiding discomfort. The reality is, there are tons of good companies out there and they will pay $350-400k for senior engineers even in this current market. But go ahead and tell yourself that you made the right decision to do nothing.
    • momojo 4y ago
      With all the anxiety, sounds more like he's afraid of regret.
  • gigantosaurus1 4y ago
    There are companies that are arguably what I’d consider recession proof, offering 400-600k for fully remote senior / staff roles with very reasonable WLB. Including GOOG / MSFT / AMZN. They’re not laying people off / nor are they going anywhere for the foreseeable future.
  • shrimpx 4y ago
    It's probably a good time to get a job, because the stock package will be in terms of today's depressed stock prices.
• deleted 4y ago
  [deleted]
• mmaunder 4y ago
  Posted a few comments here re fundamentals. Wanted to add this excellent recent interview with Jamie Dimon discussing the realities of our current environment to help you get a sense of our current environment. https://www.youtube.com/watch?v=Q-5US4J03Wo https://www.youtube.com/watch?v=Q-5US4J03Wo Edit: There are incredible little nuggets of fundamental financial wisdom in this conversation. Responding to whether crypto is a hedge against inflation: "The higher inflation goes, the higher the cost of holding an asset that doesn't produce anything."
• seydor 4y ago
  As always, when things crash it's the best time to read the comments
  • scollet 4y ago
    You would have better luck running the comments through GPT.
  • RGamma 4y ago
    And then the ngate take on it.
    • quickthrower2 4y ago
      ngate hasn’t updated for a while. :(
  • fullshark 4y ago
    Something that's funny right now is there are a lot of bears gloating about what they think is going to happen in the market and cryptocurrencies the next 2 years without it even having happened yet. They've been waiting literally years for this moment and they think it's finally arrived and can't wait to dance.
    • wayne-li2 4y ago
      The market as of last year couldn’t be divided by bulls and bears. It was more like “mega bears, bears, bulls, mega bulls”. You’re talking about mega bears and they’re gloating because the mega bulls talked so much shit in the last 3 years. But most people are just regular bears and bulls. We don’t comment on the market. We understand the cyclical nature of it. Some of us may have rebalanced portfolios according to our beliefs. That’s about it.
    • heartbreak 4y ago
      For what it’s worth they were doing the same thing here in May 2020 warning everyone gleefully about how we hadn’t hit the bottom yet. Maybe they’ll be wrong this time, too. I don’t know.
• acd 4y ago
  I think companies with Schiller P/E price to earnings greater than 15 will get hit. Exponential growth till hit a linear reality and higher interest rates. https://en.wikipedia.org/wiki/Cyclically_adjusted_price-to-earnings_ratio https://en.wikipedia.org/wiki/Cyclically_adjusted_price-to-e... Plus some will call on tech startups not generating real organic revenue growth with realistic valuations. https://en.wikipedia.org/wiki/The_Emperor%27s_New_Clothes https://en.wikipedia.org/wiki/The_Emperor%27s_New_Clothes
• hintymad 4y ago
  I remember people were talking about Coinbase doted out $750K package to engineers with less than 2 years of experience (or new grad? I can't remember exactly). I had to wonder: what can a newly minted engineer do to generate so much value to Coinbase?
  • routerl 4y ago
    We're probably talking about engineers from well regarded schools, so having these people on the payroll lends a lot of credibility.
• 1270018080 4y ago
  I'm really hoping a16z's crypto scams collapse too. I don't know how to put it succinctly, but I would get a strong dose of schadenfreude from it. Their buzzword driven business plan and throwing money at actual nonsense is so frustrating. I can't imagine being one of their investors.
• lanevorockz 4y ago
  [flagged]
  • algoatecorn 4y ago
    I bet you're fun at parties.
• Bubble_Pop_22 4y ago
  Despite my handle I'd wager that it all comes down to a very risk averse society as shown by pretty much every metric ranging from low birth rate to drinking to smoking to drug usage etc. Back in the days when interest rates went down, people started new businesses or expanded those they already owned at a huge pace. I mean the population as a whole not the businesses in the S&P500. When the Fed rolled rates to zero and did QE post 2008 and super QE in 2020-2021 the population just invested in the stock and housing market. No initiative just buying "proven assets" . Investing in the stock market with a financial advisor essentially buying the S&P or some other mutual fund..that's way less risky than starting your own business. Now the Fed is raising rates and people (and financial advisors) aren't even sure about stocks anymore, they are selling in droves and go straight to US bonds which are even more risk averse (it's essentially the stuff that Insurance companies are required to hold by law to secure their premiums because the risk of default of US Federal govt is essentially zero) Of course there is crypto that is a casino, still it could be argued that investing in an asset with a marketcap of 1T dollar however new and unproven is still more risk averse than starting your own business.
  • Apocryphon 4y ago
    > Back in the days when interest rates went down, people started new businesses or expanded those they already owned at a huge pace. I mean the population as a whole not the businesses in the S&P500. Did you miss the startup boom + bubble of the past decade or something > Investing in the stock market with a financial advisor essentially buying the S&P or some other mutual fund..that's way less risky than starting your own business. Increases in the cost of healthcare, housing, education, etc. probably has something to do with the growing precariousness of the population and less willingness to engage in risky ventures like starting businesses. Can't blame people for wanting to mitigating risk when the stakes are so high these days.
    • Bubble_Pop_22 4y ago
      [flagged]
• Animats 4y ago
  This may be the end of meme investments. Low-end crypto products are collapsing. Some now have a lot of zeroes after the decimal point. * LUNA coin, the backing of UST, dropped from $183 to $0.0001178. UST itself is no longer tradeable. Its blockchain has been turned off. (Apparently that can happen.) * SLP coin, the currency of Axie Infinity's play to earn game, dropped from $0.30 or so to $0.005607. Remember when Axie was being touted as the future of play to earn, the way NFTs were going to make poor people in the Philippines rich? That was last year.
  • Ekaros 4y ago
    Now I have serious question. Which big stable coins could just stop being on chain? That is stop all transactions, that aren't just some database entries?
    • 3np 4y ago
      There's no "stopping being on chain" (not sure exactly what you mean by that). But as for stopping all transactions: None of the other major ones have their own blockchain but are smart contracts on other chains. However, at least both USDC and USDT have mechanisms in their smart contracts to freeze accounts and transactions. I have not looked up TrueUSD, not sure how that works. DAI does not.
  • 3np 4y ago
    Both projects have had major recent incidents that would have made them collapse/drop regardless of hype-cycle.
• lvl102 4y ago
  This market is so wild. The big techs are making so much money yet the market is in turmoil if you simply remove the big four (Apple, Google, Microsoft and Amazon). There are some great “value” if you look hard enough. People are quick to draw parallel to dotcom, but this one is quite different in so many ways.
  • woeirua 4y ago
    The fundamentals that drive each bubble are different, but it always ends the same way.
• 33MHz-i486 4y ago
  If your capital cost is low, you can buy growth (sell below cost) and use that to distract investors for a long time. Capital costs are not going to be low anymore. A lot of investors are going to blow up and be more skeptical/disciplined.
• SemanticStrengh 4y ago
  tesla is dead
• biohax2015 4y ago
  It’s been fun y’all. Time to apply to medical school I guess.
• andy_ppp 4y ago
  Great time to build a startup then, as by the time you have product market fit you'll either be living in a bunker eating canned food or things will have come around. http://www.paulgraham.com/badeconomy.html http://www.paulgraham.com/badeconomy.html I'm actually moving to Mallorca to bootstrap a startup for two months and quitting my job, only time will tell if I'm right!
  • gopher_space 4y ago
    Our tools are getting pretty decent, too. If rent was cheaper I think you'd see startups all over.
    • andy_ppp 4y ago
      Yes, I've moved from London to lower my burn rate, rent in Bristol is pretty cheap.
• paulpauper 4y ago
  Nasdaq up 3% today. great timing lol . these kind of stories tend to mark bottoms.
  • tristanperry 4y ago
    I'd be stunned if the Nasdaq above 11,800 (i.e. it's current level). There seems to be too many economic headwinds. I think today was a short term relief rally, not the turning point of one month's sell-offs.
    • paulpauper 4y ago
      It fell 30% because of Covid and recession in 2020. It was down as much as 30% yesterday of its peak but without either of those.
      • medvezhenok 4y ago
        Not sure that’s the fully correct take. It only had time to fall 30 percent before the FED announced QE infinity which turned it around (FED solved liquidity issues). If that didn’t happen it would have likely fallen further. Now we are having similar liquidity issues / dollar strength but the FED is not rushing to the rescue. Context is important
        • paulpauper 4y ago
          there was the whole covid & recession thing too which factored into the fed's decision .
• deleted 4y ago
  [deleted]
• scoofy 4y ago
  This is an area where Warren Buffett and Nassim Taleb agree in opposition to the efficient market hypothesis. Speculative investments are occasionally culled, and when that happens, some investors are injured, while others are completely wiped out. These moments of extreme plain make a fully diversified or even an anti-fragile strategy effective in the long run. Value investors don't get wiped out, they live to fight another day. This lesson was forced into me by my father during the dot com era, and it's been shown painfully true. The value trap is a concern, but market fundamentals are the only way to sleep at night. The biggest issue in markets is, due to the lack of need and cost of most public offerings, most companies with fundamentals are now out of reach of non-accredited investors and are completely funded by private equity.
• cmrdporcupine 4y ago
  So, given this... I have a product idea, along with another technical co-founder. I have a few months savings to feed my family, so I could feasibly work on it fulltime. ... Let's say I came up with a demo, a pitch deck, etc. Would people say the chances of getting seed capital is significantly reduced now? Or do we just not know yet?
  • methyl 4y ago
    It’d be best to work on product idea that can sustain itself. Bootstrapping never made more sense than today.
    • cmrdporcupine 4y ago
      Unfortunately my idea involves a hardware component. So, eh, yeah, significant upfront investment, etc.
  • TSiege 4y ago
    From personal experience over the last few months, it's going to be really really tough
• greyhair 4y ago
  Oddly enough, the best time to bootstrap a brand new startup is just at the tail end of a crunch. I see a bunch of early startups popping up by the end of October.
• swah 4y ago
  Just a few months ago I remember that "the industry" was very optimistic... hope I can still find a remote job..
• j45 4y ago
  Bubbles might be bursting but not necessarily the rapidly developing tech that people use and works.
• black_13 4y ago
• yalogin 4y ago
  Will be great if anyone familiar with the tech start up market can chime in here. There are a lot of companies still calling themselves startups but are almost a decade or more old that didn't go public. I wonder what happens to them. Instacart comes to mind. Then there are actual startups that appeared really promising like Tide, Sivo etc. Am curious how they fare as well. Is there a noticeable change in available startup funding?
• FunnyBadger 4y ago
  Economics is like gravity - what goes up must ALWAYS come down. It's only a matter of time.
• _8j50 4y ago
  22 years ago, info-tech was an industry for which its bubble can pop. Now, it is a foundational element of civilization. Much like bronze to the bronze age or iron to the iron age. The tech bubble popping means civilization popping. The basic rules of supply and demand apply differently to needs like tech as opposed to wants like tech in the dot-com bubble era. Not that I have high hopes for civilization but we are talking about different variables altogether. From the whitehouse relying on it to communicate with masses to the beggar in China that is forced to use an app for begging, tech is civilization as we know it now.
• plaguepilled 4y ago
  I realise this is a highly subjective claim, but what frustrates me to no end is not that tech is getting money, but the choices that are being made around capital allocation. Its understandable that tech is currently seen as a bubble. There's a lot of dubious products sucking up funding. But there are legitimate tech advances right now that do not receive enough funding and labour to be efficiently produced, and they do not receive that funding IN PART because other company pitches do. Here is a list of tech initiatives which I believe should be funded or supported MUCH more aggressively. It is non exhaustive. Tech / business side: - Low power CMOS alternatives - Linux and other core FOSS maintenance - Organising a stable ABI for rust - molten salt battery tech - Nationalising more key infrastructure - Nationalising food production - Machine learning for chemistry, mining, and metallurgy to improve efficiency and reduce emissions Consumer/citizen side: - tools to visualise and manage data privacy - better data privacy laws - improved government website UI - a non google browser While again, I am just a single data point, I suspect there are many others who are fatigued by the detachment that some of the tech sphere has to material effects in their community.
  • spacexsucks 4y ago
    You are not a sinke data point. I am with you 100%
• NonNefarious 4y ago
  [flagged]