5 ms·

I agree with your thesis that genuine value creation will become more important. I think this is a more exciting market to operate in as opposed to one where w

I agree with your thesis that genuine value creation will become more important. I think this is a more exciting market to operate in as opposed to one where we simply need to raise and spend cash as quickly as possible.

jongjong 4y ago
For the first time in my career I'm also feeling cautiously optimistic about the future. I'm one of these people who was absolutely terrible in this low-rate environment. At least I got to learn about some of the reasons why I absolutely suck at it. One of my worst character traits is that I'm missing the hair-trigger opportunist factor (AKA "you've got one shot" factor) and this is precisely one of the traits which was rewarded heavily by the low-rate environment since it tends to reward first movers disproportionately.
- prox 4y ago
  What are some the skills or things you know that make you successful in this new environment, if I may ask? I think I might be one of those, but I lack the contextual information/knowledge to act on it.
  - jongjong 4y ago
    Well I can't be sure I will be successful in this new environment. Surely there's always luck involved. But I suspect that I will benefit from an environment where capital is spent more carefully. As someone who always bootstraps, it's been tough to compete against large amounts of capital. Too much capital flowing into an industry creates competition which drives up advertising CPC and crushes profit margins in that industry... Especially if those well-funded competitors aren't looking to make a profit themselves. If your competitor is willing to blow all their cash on advertising and allow their profit margins to shrink down to 0, you will also be forced to drop your margins down to 0 in order to remain competitive. If you're bootstrapped and rely on profit margins to sustain yourself, you simply cannot stay afloat in such competitive low-margin environment. With high interest rates, there is an increased incentive for investors to just park their money into savings accounts instead of putting it to work (competing against small businesses) in the markets.
    - abnercoimbre 4y ago
      Are we saying there's a new era of small businesses thriving in the tech / software industry? God I hope so!
boppo1 4y ago
> genuine value creation But how do we even know what this is anymore? With more than half the wealth accumulated by the top fraction of society it seems like ultra-luxury goods are going to be the most profitable, but surely that's not actually genuine value creation. And have we strayed too far to achieve that without austerity? How will we pay interest on the national debt?
- hoseja 4y ago
  Does the top fraction of society ever actually spend significant amounts though. No. Trickle-down has never worked.
  - heartbeats 4y ago
    They don't have to spend it per se; by conventional economic theory, as long as they keep it in the bank, it's enough. Keynes: > Europe was so organized socially and economically as to secure the maximum accumulation of capital. While there was some continuous improvement in the daily conditions of life of the mass of the population, Society was so framed as to throw a great part of the increased income into the control of the class least likely to consume it. The new rich of the nineteenth century were not brought up to large expenditures, and preferred the power which investment gave them to the pleasures of immediate consumption. ... If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a régime intolerable. But like bees they saved and accumulated, not less to the advantage of the whole community because they themselves held narrower ends in prospect. > Thus this remarkable system depended for its growth on a double bluff or deception. On the one hand the laboring classes accepted ... a situation in which they could call their own very little of the cake that they ... were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. ... And so the cake increased; but to what end was not clearly contemplated. Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation. Saving was for old age or for your children; but this was only in theory,—the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.

jongjong 4y ago

For the first time in my career I'm also feeling cautiously optimistic about the future. I'm one of these people who was absolutely terrible in this low-rate environment. At least I got to learn about some of the reasons why I absolutely suck at it. One of my worst character traits is that I'm missing the hair-trigger opportunist factor (AKA "you've got one shot" factor) and this is precisely one of the traits which was rewarded heavily by the low-rate environment since it tends to reward first movers disproportionately.

prox 4y ago
What are some the skills or things you know that make you successful in this new environment, if I may ask? I think I might be one of those, but I lack the contextual information/knowledge to act on it.
- jongjong 4y ago
  Well I can't be sure I will be successful in this new environment. Surely there's always luck involved. But I suspect that I will benefit from an environment where capital is spent more carefully. As someone who always bootstraps, it's been tough to compete against large amounts of capital. Too much capital flowing into an industry creates competition which drives up advertising CPC and crushes profit margins in that industry... Especially if those well-funded competitors aren't looking to make a profit themselves. If your competitor is willing to blow all their cash on advertising and allow their profit margins to shrink down to 0, you will also be forced to drop your margins down to 0 in order to remain competitive. If you're bootstrapped and rely on profit margins to sustain yourself, you simply cannot stay afloat in such competitive low-margin environment. With high interest rates, there is an increased incentive for investors to just park their money into savings accounts instead of putting it to work (competing against small businesses) in the markets.
  - abnercoimbre 4y ago
    Are we saying there's a new era of small businesses thriving in the tech / software industry? God I hope so!

boppo1 4y ago

> genuine value creation But how do we even know what this is anymore? With more than half the wealth accumulated by the top fraction of society it seems like ultra-luxury goods are going to be the most profitable, but surely that's not actually genuine value creation. And have we strayed too far to achieve that without austerity? How will we pay interest on the national debt?

hoseja 4y ago
Does the top fraction of society ever actually spend significant amounts though. No. Trickle-down has never worked.
- heartbeats 4y ago
  They don't have to spend it per se; by conventional economic theory, as long as they keep it in the bank, it's enough. Keynes: > Europe was so organized socially and economically as to secure the maximum accumulation of capital. While there was some continuous improvement in the daily conditions of life of the mass of the population, Society was so framed as to throw a great part of the increased income into the control of the class least likely to consume it. The new rich of the nineteenth century were not brought up to large expenditures, and preferred the power which investment gave them to the pleasures of immediate consumption. ... If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a régime intolerable. But like bees they saved and accumulated, not less to the advantage of the whole community because they themselves held narrower ends in prospect. > Thus this remarkable system depended for its growth on a double bluff or deception. On the one hand the laboring classes accepted ... a situation in which they could call their own very little of the cake that they ... were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. ... And so the cake increased; but to what end was not clearly contemplated. Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation. Saving was for old age or for your children; but this was only in theory,—the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.