8 ms·

The Silicon Valley Loop

123 points by rmason 4y ago

rmason 4y ago
PG tweeted a point Ron Conway made that if San Francisco city government met them halfway that SF could be the AI capital of the world. https://twitter.com/paulg/status/1626284035348791296 https://twitter.com/paulg/status/1626284035348791296 I think if they fixed the homeless problem and converted some of the now unused office buildings to apartments it would go a long way. Think there's a real chance that could happen?
- nradov 4y ago
  Do San Franciscans want their city to be the AI capitol of the world? Ask long time Mountain View residents what it's like to live in the online advertising capitol of the world. Their property values are way up but quality of life is worse. Attracting tech giants to your city is in certain ways a Faustian bargain. Be careful what you wish for.
  - acchow 4y ago
    > but quality of life is worse Care to elaborate on this a bit? I imagine things like bad traffic are due to poor urban planning and lack of transit-oriented or walkable/bikeable design. I imagine a lot of misdirected blame towards the economic boom instead of NIMBYism.
    - majormajor 4y ago
      Anytime a bunch of people move in with way more money than you (or existing neighbors suddenly have way more money than you, and than they used to), you are going to have quality of life problems. They can outbid you on anything you both want that has any sort of scarcity. We haven't eliminated scarcity.
      - detourdog 4y ago
        Instead of scarcity we can create our own inflation. We can buy $50 khakis or $900 khakis.
      - fragmede 4y ago
        Housing's been shit since before the first dot com crash and has always been unaffordable, but other than the freeway being a parking lot at Shoreline Amphitheater at rush hour, and Safeway on Rengstorff being a shit show, can you be specific in what ways having both Google and Facebook (technically Menlo Park) has affected you?
        Ninjak8051 4y ago
        Not the OP, but Fishscapes, Bierhaus, Milk Pail, Sprouts, LazerQuest all gone, couldn't afford the rent. And that's just Mountain View. Retail that residents loved has been replaced by establishments exclusively for tech bros. Edit: Forgot about Game Kastle and Lee's Comics. Really I could go on all day. These community establishments are gone and never coming back ever, as long as Google lives.
  - majormajor 4y ago
    Does anyone outside of it want that either. We know that decentralization and redundancy have massive advantages in systems. Yet we (or at least - rich investors and CEOs and similar) also want to get rid of it in favor of centralized riches. The financialization of everything, with the drive to concentrate profits into fewer and fewer extremely-big winners, instead of having an organic ecosystem of research, production, and development, is very fragile, all for the benefit of a fairly small few at the very top.
    - thatfrenchguy 4y ago
      I mean, the reason those things centralize is because if you want to start a new company, having the people to build them nearby is clearly useful.
  - thatfrenchguy 4y ago
    I mean, housing crisis is already there and pretty insane.
- deleted 4y ago
  [deleted]
- ryanSrich 4y ago
  > I think if they fixed the homeless problem and converted some of the now unused office buildings to apartments it would go a long way. There is no “homeless” problem. There’s a drug epidemic problem. Giving homeless people free housing just moves the problem from the sidewalk to a building. A building that will quickly become a slum. The drug problem is what needs to be fixed.
  - majormajor 4y ago
    A substantial portion of people think the "homeless problem" is visibility and having to interact with homeless people more than the existence of homelessness. (Setting aside for now the amount of heavy lifting "if they fixed the homeless problem" is doing there... gee, why did nobody try to fix it ever before, anywhere?)
    - OkayPhysicist 4y ago
      In the US, the political will for "eliminate homelessness by giving them homes" is a political non-starter in a lot of places. In the left-liberal places, you've got entrenched interests fighting tooth and nail to prevent any housing at all from being built, and in right wing areas you've got a "being poor is God's punishment" attitude pushing back against any positive change at all. To make matters worse, any effort to solve the issue results in a large influx of homeless people, because when the standard across the country is one step above "hunt them for sport", you come across as a haven. In the places it has been tried, housing-first solutions have been wildly successful. It turns out getting your shit together is a lot easier when you don't have the constant stressors of living on the street.
  - Tiktaalik 4y ago
    Having a stable, safe place to live is a crucial and necessary step (among many other basic steps) to being in a place to be able to tackle more complex life problems, such as solving a chronic drug use problem. It's not terribly likely at all that anyone will ever get any traction on solving a chemical addition problem when they have dramatically more important and basic near term problems such as finding food and shelter.
- nemothekid 4y ago
  >I think if they fixed the homeless problem I think we will have AGI before America fixes the homelessness problem.
  - lalos 4y ago
    That's by design, money is actively invested on AI because they see an upside. Would you claim the same for homelessness?
    - gowld 4y ago
      The only way to "fix" homeless locally is to make local so terrible that people leave. SF attracts homeless people because it's a better place to live than most other places. Fixing homelessness requires a national solution or internal borders.
      - uoaei 4y ago
        It's easier than that. Give people homes.
        jboy55 4y ago
        Half the US wants to attach drug-testing and proof of job seeking to food stamps. The true solve for homelessness is unconditional money/housing. As long as the possibility that 5% of participants will take advantage of the program, the program is doomed.
        deleted 4y ago
        [deleted]
        lotsofpulp 4y ago
        Can the homes be in North Dakota?
    - cscurmudgeon 4y ago
      A lot of money goes into the homeless industrial complex https://www.latimes.com/california/story/2021-07-16/california-budget-homelessness-spending https://www.latimes.com/california/story/2021-07-16/californ... "BART oversaw $350,000 Salvation Army program that treated one person, audit finds" https://www.mercurynews.com/2023/02/03/bart-oversaw-350000-salvation-army-program-that-treated-one-person-audit-finds/ https://www.mercurynews.com/2023/02/03/bart-oversaw-350000-s... A lot of tax payer money is funneled into non profits that are revoked, suspended or delinquent nonprofits https://sfstandard.com/politics/san-francisco-nonprofits-revoked-suspended-delinquent-millions/ https://sfstandard.com/politics/san-francisco-nonprofits-rev... And of course those that directly steal funding: https://apnews.com/article/california-los-angeles-embezzlement-theft-4648d3fc59456f4f79ccb49e5d62cb95 https://apnews.com/article/california-los-angeles-embezzleme...
- nl 4y ago
  "Fixing the homeless problem" and "becoming the AI capital of the world" seem like they are unfortunately unrelated. Homelessness didn't stop tech companies having SF offices previously, why would it stop them now?
  - jboy55 4y ago
    Completely agree, before Twitter opened up in SF, SF had a homelessness problem and a petty crime problem. That didn't stop an influx of tech moving into SF, except now professional workers were now shocked to find that the homelessness and petty crime didn't make way for their gentrification.
- vyrotek 4y ago
  It will be quite the challenge. Coincidentally, I just noticed today that several RVs appear to be permanently parked around the YC office these days. https://twitter.com/vyrotek/status/1626253173978456064 https://twitter.com/vyrotek/status/1626253173978456064
- adam_arthur 4y ago
  The future is almost certainly going to be remote, there are far too many economic, environmental and social benefits to being remote. The days of cities being a forced hub for hundreds of thousands of career seekers is over. OpenAI itself has only ~300 employees. This is not going to be like the FAANG era at all, much more competition, much higher automation, fewer people required. And the real estate ship has already sailed in the Bay Area... that's a problem they should have been aggressively addressing 10 years ago, but they didn't. Don't think the VC types understand how much cost of living is an enormous turnoff to the average worker. The majority of tech employees, including myself, lived there for the career opportunities. Now it's no longer required. Why would I ever give up 60% of my take-home pay to state taxes to also pay a much higher CoL? I do expect RE costs to decline considerably there in real terms though, so perhaps in 5-10 years SF will have another shot
  - fragmede 4y ago
    California income tax tops out at 12.3% which is, um, nowhere near 60. That's higher than, say, Nevada, which has no income tax, but they make up their revenue in other ways, so unless you take a look at the bigger picture you'll be making decisions based on incomplete data.
  - jamiek88 4y ago
    >60% of my take-home pay to state taxes What? Don’t be absurd.
    - adam_arthur 4y ago
      Typo, should be 50%. Federal, state, local (SF City tax) puts you over 50% at the top bracket. The point is you can cut taxes significantly while also reducing CoL… the economic benefit is far too high to justify people crowding back into SF again
taude 4y ago
Really like this article. I'm hoping more people write about what's different about SV now, than in the past. I assume it has a lot to do with the 2008 wall street crash, and a lot of the people who'd normally have gone to wall street, suddenly were interested in "tech", regardless of their background.
- vineyardmike 4y ago
  > a lot of the people who'd normally have gone to wall street, suddenly were interested in "tech" Is there more to it than that? I think you summed it up well. I'll add that other "fancy" professions have structural limitations that seem to cause a glut of money-seeking software engineers (beyond the hyped up non-tech founder). Once upon a time, if you were smart and technical you became a doctor, but med schools haven't expanded capacity and its a long tough process compared to an undergrad CS degree. Lawyers experienced a massive growth a generation ago, and they haven't retired yet, depressing salaries and causing lawyers to work longer. SDEs are still a great career though, considering its still growing in salary and accessibility.
  - biohax2015 4y ago
    And what's wrong with that? Smart people follow the money.
    - vineyardmike 4y ago
      Nothing is wrong with it. Follow the money. I personally like making more of it. That said, some people enjoy technology for the sake of technology, and they likely lament the changing demographics of their colleagues. Personally, I noticed that at my highest paying job(at the time), most of my colleagues didn’t care about learning anything technological if it didn’t relate to their job growth. Eg. A real conversation i had: UDP vs TCP what’s tht? Networking stuff. Everything here is wrapped in an internal library, why do I need need to know those acronyms? PS: I suspect this is how companies brazenly violate GPL and other licenses. Not by manager mandate but engineers who don’t know anything about OSS and just git-clone a random GitHub repo.
smackeyacky 4y ago
The 'dot-com bubble' sounds like the name of a great cautionary tale, but any capitalist who kept taking their investment cues from the collapse of Pets.com missed out on a lot of money This is why your genuinely good startup will never attract money in that environment.
- cobertos 4y ago
  Are there examples of genuinely innovative or good startups that have follow this pattern?
  - smackeyacky 4y ago
    VCs roll the dice on garbage from fear of missing out and they get rewarded due to greater fools taking the fall. Anything good getting funded will be purely accidental at this point.
ghaff 4y ago
Quite the read. Though: >In a 2001 interview about his case study of the grocery-delivery site Webvan, Harvard Business School professor John Deighton said that direct-to-consumer internet advertising was here to stay, but “home-delivered groceries? Never.” There was no way to compete with supermarket efficiencies. Deighton’s prediction was — not to belabor the point — wrong. I'd argue that grocery delivery never really became a mainstream business outside of certain bubbles and urban circumstances.
- pm215 4y ago
  In the UK it's pretty mainstream (depending how you define that, but more than 12% of grocery sales are online) -- and it's done by the existing supermarket chains, mostly.
  - ghaff 4y ago
    I assume the US is a lot less. (Which makes sense because the US is a lot more spread out and, I assume, more people own cars.) Around where I live there is one service owned by a local supermarket chain plus, mostly, Instacart. I have heard it's bigger in the UK in general. It actually feels like one of those activities were doing more of during the pandemic but pretty much reset on.
  - pedrocr 4y ago
    Everyone is missing the actual point of the quote. The UK is at the top end in terms of online penetration in grocery and even there it's true that there's "no way to compete with supermarket efficiencies". Grocery retail stores are really efficient logistically. No one in the industry has truly cracked the problem of selling profitably online because of that. It's the same players doing physical stores and online because they're cross-subsidizing.
- jedberg 4y ago
  It picked up during the pandemic, and a lot of people decided to keep doing it afterwards. My BIL hasn't been to a store in ages. For the few things they can't get delivered, they just ask us to pick it up for them.
autokad 4y ago
I think the biggest problem is that people don't properly account for how much tech has to spend to fend off competitors. these are often ignored with statements like 'well they are losing money to grow their market share, but look at the growth!' I even seen people say the same things I heard during the dotcom. dotcom : "it doesn't matter how much money they are losing, what counts is users" dotcom2: "it doesn't matter how much money they are losing, what counts is TAM (total addressable market)
tracerbulletx 4y ago
Very happy to see Antitrust getting a shout out. This movie is my favorite double feature with Hackers.
xivzgrev 4y ago
That was a good insight on Uber. Some huge fund is looking to invest, and they like you. But if you say no, they give that massive cash to your competitor. They still get into the market, your competitor zooms past flying to new heights and you are choking on their dust. Helps explain some of the zany fundraising I saw over the past decade. It’s like a mini series of Ponzi schemes. All that matters is growth, because it’s easy to sell equity when something is rapidly growing. So seed sells to A, A sells to B, B sells to huge fund, and huge fund sells to public markets. The hype lasts just long enough to IPO (as the retail public finally can get a piece of this super hyped company) and…it all falls down because now profitability matters. Like this article said - it didn’t matter if your product ended up dying. It just mattered that you made a lot of money for early investors, so they’ll want to back you again.
- joshu 4y ago
  fwiw rarely does the A or B round buys the previous investor’s shares.
paulpauper 4y ago
It’s one thing to fall for Bankman-Fried’s magic money box; it’s another thing to do so by the flickering light of tell-all TV shows about Uber, Theranos, and WeWork. Even during this latest downward readjustment, there’s no good reason to believe there will be structural changes or even a lot of individual consequences in Silicon Valley. Hmmm..last time I checked uber is still around and worth a whopping $70 billion still, which is quite remarkable given how much money it lost and continues to lose. It should not be lumped in with the others.
- SQueeeeeL 4y ago
  I think the main thing is Uber has never presented a viable business plan. It's always been showing numbers based on subsidized rides, and is almost a house of cards. If they had started small, grew organically and had always maintained a healthy profit margin, it'd be a very different story
  - fairity 4y ago
    I'd suggest you take a look at their latest financials. They clearly have a viable, large, and soon-to-be profitable business (if so desired).
    - dreamcompiler 4y ago
      Assuming people keep using them after their prices rise to higher than cabs.
    - disgruntledphd2 4y ago
      Only if you ignore how much stock they're giving their employees (which one probably shouldn't). Give me GAAP profitability or give me death!
funstuff007 4y ago
No mention of ZIRP or a decade plus of quantitative easing. Without those, there would have been no lunacy.
- paulpauper 4y ago
  but there was huge bubble in 90s despite much higher interest rates
  - funstuff007 4y ago
    very true, but just because a bubble has different causes doesn't make it not a bubble.
ObviousHumanGPT 4y ago
Money is being thrown at Silicon Valley by clueless pension and sovereign wealth funds and the Softbank guy. This irrational exuberance started around the Windows 95 launch when bankers finally realized that computers and the internet weren't going to disappear in a few years as some sort of a fad and that they had no "tech" in their portfolio, hence the mad rush to buy any business with a website. The mad scramble to jump on these next big thing hasn't gotten less ridiculous since the dotcom era, but quantitative easing since the 2000 crash has increased the size of the speculative investments made available by an order of magnitude. The "textbook" example of Silicon Valley hubris favored by so called "journalists", Theranos, was laughed out of Sand Hill Road and had to go to Washington and the Walmart Brats for capital. In fact, most companies with negative return business plans (Ride sharing, food delivery, commercial realestate subletting, etc) weren't funded by Silly Valley investors at all beyond angel, seed, and A rounds.
bigjimmyk3 4y ago
Interesting mention of webvan, since one of its founders used the failure as inspiration to start Kiva Systems.

123 points by rmason 4y ago

PG tweeted a point Ron Conway made that if San Francisco city government met them halfway that SF could be the AI capital of the world. https://twitter.com/paulg/status/1626284035348791296 https://twitter.com/paulg/status/1626284035348791296 I think if they fixed the homeless problem and converted some of the now unused office buildings to apartments it would go a long way. Think there's a real chance that could happen?

nradov 4y ago
Do San Franciscans want their city to be the AI capitol of the world? Ask long time Mountain View residents what it's like to live in the online advertising capitol of the world. Their property values are way up but quality of life is worse. Attracting tech giants to your city is in certain ways a Faustian bargain. Be careful what you wish for.
- acchow 4y ago
  > but quality of life is worse Care to elaborate on this a bit? I imagine things like bad traffic are due to poor urban planning and lack of transit-oriented or walkable/bikeable design. I imagine a lot of misdirected blame towards the economic boom instead of NIMBYism.
  - majormajor 4y ago
    Anytime a bunch of people move in with way more money than you (or existing neighbors suddenly have way more money than you, and than they used to), you are going to have quality of life problems. They can outbid you on anything you both want that has any sort of scarcity. We haven't eliminated scarcity.
    - detourdog 4y ago
      Instead of scarcity we can create our own inflation. We can buy $50 khakis or $900 khakis.
    - fragmede 4y ago
      Housing's been shit since before the first dot com crash and has always been unaffordable, but other than the freeway being a parking lot at Shoreline Amphitheater at rush hour, and Safeway on Rengstorff being a shit show, can you be specific in what ways having both Google and Facebook (technically Menlo Park) has affected you?
      - Ninjak8051 4y ago
        Not the OP, but Fishscapes, Bierhaus, Milk Pail, Sprouts, LazerQuest all gone, couldn't afford the rent. And that's just Mountain View. Retail that residents loved has been replaced by establishments exclusively for tech bros. Edit: Forgot about Game Kastle and Lee's Comics. Really I could go on all day. These community establishments are gone and never coming back ever, as long as Google lives.
- majormajor 4y ago
  Does anyone outside of it want that either. We know that decentralization and redundancy have massive advantages in systems. Yet we (or at least - rich investors and CEOs and similar) also want to get rid of it in favor of centralized riches. The financialization of everything, with the drive to concentrate profits into fewer and fewer extremely-big winners, instead of having an organic ecosystem of research, production, and development, is very fragile, all for the benefit of a fairly small few at the very top.
  - thatfrenchguy 4y ago
    I mean, the reason those things centralize is because if you want to start a new company, having the people to build them nearby is clearly useful.
- thatfrenchguy 4y ago
  I mean, housing crisis is already there and pretty insane.
deleted 4y ago
[deleted]
ryanSrich 4y ago
> I think if they fixed the homeless problem and converted some of the now unused office buildings to apartments it would go a long way. There is no “homeless” problem. There’s a drug epidemic problem. Giving homeless people free housing just moves the problem from the sidewalk to a building. A building that will quickly become a slum. The drug problem is what needs to be fixed.
- majormajor 4y ago
  A substantial portion of people think the "homeless problem" is visibility and having to interact with homeless people more than the existence of homelessness. (Setting aside for now the amount of heavy lifting "if they fixed the homeless problem" is doing there... gee, why did nobody try to fix it ever before, anywhere?)
  - OkayPhysicist 4y ago
    In the US, the political will for "eliminate homelessness by giving them homes" is a political non-starter in a lot of places. In the left-liberal places, you've got entrenched interests fighting tooth and nail to prevent any housing at all from being built, and in right wing areas you've got a "being poor is God's punishment" attitude pushing back against any positive change at all. To make matters worse, any effort to solve the issue results in a large influx of homeless people, because when the standard across the country is one step above "hunt them for sport", you come across as a haven. In the places it has been tried, housing-first solutions have been wildly successful. It turns out getting your shit together is a lot easier when you don't have the constant stressors of living on the street.
- Tiktaalik 4y ago
  Having a stable, safe place to live is a crucial and necessary step (among many other basic steps) to being in a place to be able to tackle more complex life problems, such as solving a chronic drug use problem. It's not terribly likely at all that anyone will ever get any traction on solving a chemical addition problem when they have dramatically more important and basic near term problems such as finding food and shelter.
nemothekid 4y ago
>I think if they fixed the homeless problem I think we will have AGI before America fixes the homelessness problem.
- lalos 4y ago
  That's by design, money is actively invested on AI because they see an upside. Would you claim the same for homelessness?
  - gowld 4y ago
    The only way to "fix" homeless locally is to make local so terrible that people leave. SF attracts homeless people because it's a better place to live than most other places. Fixing homelessness requires a national solution or internal borders.
    - uoaei 4y ago
      It's easier than that. Give people homes.
      - jboy55 4y ago
        Half the US wants to attach drug-testing and proof of job seeking to food stamps. The true solve for homelessness is unconditional money/housing. As long as the possibility that 5% of participants will take advantage of the program, the program is doomed.
      - deleted 4y ago
        [deleted]
      - lotsofpulp 4y ago
        Can the homes be in North Dakota?
  - cscurmudgeon 4y ago
    A lot of money goes into the homeless industrial complex https://www.latimes.com/california/story/2021-07-16/california-budget-homelessness-spending https://www.latimes.com/california/story/2021-07-16/californ... "BART oversaw $350,000 Salvation Army program that treated one person, audit finds" https://www.mercurynews.com/2023/02/03/bart-oversaw-350000-salvation-army-program-that-treated-one-person-audit-finds/ https://www.mercurynews.com/2023/02/03/bart-oversaw-350000-s... A lot of tax payer money is funneled into non profits that are revoked, suspended or delinquent nonprofits https://sfstandard.com/politics/san-francisco-nonprofits-revoked-suspended-delinquent-millions/ https://sfstandard.com/politics/san-francisco-nonprofits-rev... And of course those that directly steal funding: https://apnews.com/article/california-los-angeles-embezzlement-theft-4648d3fc59456f4f79ccb49e5d62cb95 https://apnews.com/article/california-los-angeles-embezzleme...
nl 4y ago
"Fixing the homeless problem" and "becoming the AI capital of the world" seem like they are unfortunately unrelated. Homelessness didn't stop tech companies having SF offices previously, why would it stop them now?
- jboy55 4y ago
  Completely agree, before Twitter opened up in SF, SF had a homelessness problem and a petty crime problem. That didn't stop an influx of tech moving into SF, except now professional workers were now shocked to find that the homelessness and petty crime didn't make way for their gentrification.
vyrotek 4y ago
It will be quite the challenge. Coincidentally, I just noticed today that several RVs appear to be permanently parked around the YC office these days. https://twitter.com/vyrotek/status/1626253173978456064 https://twitter.com/vyrotek/status/1626253173978456064
adam_arthur 4y ago
The future is almost certainly going to be remote, there are far too many economic, environmental and social benefits to being remote. The days of cities being a forced hub for hundreds of thousands of career seekers is over. OpenAI itself has only ~300 employees. This is not going to be like the FAANG era at all, much more competition, much higher automation, fewer people required. And the real estate ship has already sailed in the Bay Area... that's a problem they should have been aggressively addressing 10 years ago, but they didn't. Don't think the VC types understand how much cost of living is an enormous turnoff to the average worker. The majority of tech employees, including myself, lived there for the career opportunities. Now it's no longer required. Why would I ever give up 60% of my take-home pay to state taxes to also pay a much higher CoL? I do expect RE costs to decline considerably there in real terms though, so perhaps in 5-10 years SF will have another shot
- fragmede 4y ago
  California income tax tops out at 12.3% which is, um, nowhere near 60. That's higher than, say, Nevada, which has no income tax, but they make up their revenue in other ways, so unless you take a look at the bigger picture you'll be making decisions based on incomplete data.
- jamiek88 4y ago
  >60% of my take-home pay to state taxes What? Don’t be absurd.
  - adam_arthur 4y ago
    Typo, should be 50%. Federal, state, local (SF City tax) puts you over 50% at the top bracket. The point is you can cut taxes significantly while also reducing CoL… the economic benefit is far too high to justify people crowding back into SF again

taude 4y ago

Really like this article. I'm hoping more people write about what's different about SV now, than in the past. I assume it has a lot to do with the 2008 wall street crash, and a lot of the people who'd normally have gone to wall street, suddenly were interested in "tech", regardless of their background.

vineyardmike 4y ago
> a lot of the people who'd normally have gone to wall street, suddenly were interested in "tech" Is there more to it than that? I think you summed it up well. I'll add that other "fancy" professions have structural limitations that seem to cause a glut of money-seeking software engineers (beyond the hyped up non-tech founder). Once upon a time, if you were smart and technical you became a doctor, but med schools haven't expanded capacity and its a long tough process compared to an undergrad CS degree. Lawyers experienced a massive growth a generation ago, and they haven't retired yet, depressing salaries and causing lawyers to work longer. SDEs are still a great career though, considering its still growing in salary and accessibility.
- biohax2015 4y ago
  And what's wrong with that? Smart people follow the money.
  - vineyardmike 4y ago
    Nothing is wrong with it. Follow the money. I personally like making more of it. That said, some people enjoy technology for the sake of technology, and they likely lament the changing demographics of their colleagues. Personally, I noticed that at my highest paying job(at the time), most of my colleagues didn’t care about learning anything technological if it didn’t relate to their job growth. Eg. A real conversation i had: UDP vs TCP what’s tht? Networking stuff. Everything here is wrapped in an internal library, why do I need need to know those acronyms? PS: I suspect this is how companies brazenly violate GPL and other licenses. Not by manager mandate but engineers who don’t know anything about OSS and just git-clone a random GitHub repo.

smackeyacky 4y ago

The 'dot-com bubble' sounds like the name of a great cautionary tale, but any capitalist who kept taking their investment cues from the collapse of Pets.com missed out on a lot of money This is why your genuinely good startup will never attract money in that environment.

cobertos 4y ago
Are there examples of genuinely innovative or good startups that have follow this pattern?
- smackeyacky 4y ago
  VCs roll the dice on garbage from fear of missing out and they get rewarded due to greater fools taking the fall. Anything good getting funded will be purely accidental at this point.

ghaff 4y ago

Quite the read. Though: >In a 2001 interview about his case study of the grocery-delivery site Webvan, Harvard Business School professor John Deighton said that direct-to-consumer internet advertising was here to stay, but “home-delivered groceries? Never.” There was no way to compete with supermarket efficiencies. Deighton’s prediction was — not to belabor the point — wrong. I'd argue that grocery delivery never really became a mainstream business outside of certain bubbles and urban circumstances.

pm215 4y ago
In the UK it's pretty mainstream (depending how you define that, but more than 12% of grocery sales are online) -- and it's done by the existing supermarket chains, mostly.
- ghaff 4y ago
  I assume the US is a lot less. (Which makes sense because the US is a lot more spread out and, I assume, more people own cars.) Around where I live there is one service owned by a local supermarket chain plus, mostly, Instacart. I have heard it's bigger in the UK in general. It actually feels like one of those activities were doing more of during the pandemic but pretty much reset on.
- pedrocr 4y ago
  Everyone is missing the actual point of the quote. The UK is at the top end in terms of online penetration in grocery and even there it's true that there's "no way to compete with supermarket efficiencies". Grocery retail stores are really efficient logistically. No one in the industry has truly cracked the problem of selling profitably online because of that. It's the same players doing physical stores and online because they're cross-subsidizing.
jedberg 4y ago
It picked up during the pandemic, and a lot of people decided to keep doing it afterwards. My BIL hasn't been to a store in ages. For the few things they can't get delivered, they just ask us to pick it up for them.

autokad 4y ago

I think the biggest problem is that people don't properly account for how much tech has to spend to fend off competitors. these are often ignored with statements like 'well they are losing money to grow their market share, but look at the growth!' I even seen people say the same things I heard during the dotcom. dotcom : "it doesn't matter how much money they are losing, what counts is users" dotcom2: "it doesn't matter how much money they are losing, what counts is TAM (total addressable market)

tracerbulletx 4y ago

Very happy to see Antitrust getting a shout out. This movie is my favorite double feature with Hackers.

xivzgrev 4y ago

That was a good insight on Uber. Some huge fund is looking to invest, and they like you. But if you say no, they give that massive cash to your competitor. They still get into the market, your competitor zooms past flying to new heights and you are choking on their dust. Helps explain some of the zany fundraising I saw over the past decade. It’s like a mini series of Ponzi schemes. All that matters is growth, because it’s easy to sell equity when something is rapidly growing. So seed sells to A, A sells to B, B sells to huge fund, and huge fund sells to public markets. The hype lasts just long enough to IPO (as the retail public finally can get a piece of this super hyped company) and…it all falls down because now profitability matters. Like this article said - it didn’t matter if your product ended up dying. It just mattered that you made a lot of money for early investors, so they’ll want to back you again.

joshu 4y ago
fwiw rarely does the A or B round buys the previous investor’s shares.

paulpauper 4y ago

It’s one thing to fall for Bankman-Fried’s magic money box; it’s another thing to do so by the flickering light of tell-all TV shows about Uber, Theranos, and WeWork. Even during this latest downward readjustment, there’s no good reason to believe there will be structural changes or even a lot of individual consequences in Silicon Valley. Hmmm..last time I checked uber is still around and worth a whopping $70 billion still, which is quite remarkable given how much money it lost and continues to lose. It should not be lumped in with the others.

SQueeeeeL 4y ago
I think the main thing is Uber has never presented a viable business plan. It's always been showing numbers based on subsidized rides, and is almost a house of cards. If they had started small, grew organically and had always maintained a healthy profit margin, it'd be a very different story
- fairity 4y ago
  I'd suggest you take a look at their latest financials. They clearly have a viable, large, and soon-to-be profitable business (if so desired).
  - dreamcompiler 4y ago
    Assuming people keep using them after their prices rise to higher than cabs.
  - disgruntledphd2 4y ago
    Only if you ignore how much stock they're giving their employees (which one probably shouldn't). Give me GAAP profitability or give me death!

funstuff007 4y ago

No mention of ZIRP or a decade plus of quantitative easing. Without those, there would have been no lunacy.

paulpauper 4y ago
but there was huge bubble in 90s despite much higher interest rates
- funstuff007 4y ago
  very true, but just because a bubble has different causes doesn't make it not a bubble.

ObviousHumanGPT 4y ago

Money is being thrown at Silicon Valley by clueless pension and sovereign wealth funds and the Softbank guy. This irrational exuberance started around the Windows 95 launch when bankers finally realized that computers and the internet weren't going to disappear in a few years as some sort of a fad and that they had no "tech" in their portfolio, hence the mad rush to buy any business with a website. The mad scramble to jump on these next big thing hasn't gotten less ridiculous since the dotcom era, but quantitative easing since the 2000 crash has increased the size of the speculative investments made available by an order of magnitude. The "textbook" example of Silicon Valley hubris favored by so called "journalists", Theranos, was laughed out of Sand Hill Road and had to go to Washington and the Walmart Brats for capital. In fact, most companies with negative return business plans (Ride sharing, food delivery, commercial realestate subletting, etc) weren't funded by Silly Valley investors at all beyond angel, seed, and A rounds.

bigjimmyk3 4y ago

Interesting mention of webvan, since one of its founders used the failure as inspiration to start Kiva Systems.