5 ms·

What does it say about this entire industry if it seems like all of this supposed disruptive, revolutionary, making-the-world-a-better-place activity seems to b

What does it say about this entire industry if it seems like all of this supposed disruptive, revolutionary, making-the-world-a-better-place activity seems to be going away with a simple move from the Fed?

pas 4y ago
even the most resilient trees can't sprout in winter... blablabla. but of course the truth is that it's not the entire industry, it's not just the Fed, that fucking disruptive book is bullshit (most disruptors end up losing out as incumbents adopt), and the making the world a better place gang has 100000 spreadsheets and infinite amount of malaria bednets, but all they managed to do so far is that everyone and their dog now only associates them with that fallen crypto kid. a bit more importantly, these super amazing "returns" and asset bubbles and stock market to the moons and quarterly make it rain bonanzas can only continue as capital amortization doesn't start eating into it hard. and by capital I mean the culmination of the last however many decades of actual community and infrastructure building, not the nice financial instruments. yes, low interest rates are here to stay most likely, because of all the extremely wealthy retirement funds of aging populations all over the developed world are buying safe assets, so the US Treasury can sell a lot of bonds. the question is what are we going to do with this? the signs point to slowed incremental progress and general incompetent cycles of fake it till you make it cooperation (on all levels, from individuals to don't be evil companies to countries) and xenophobic populist outbursts of untreated change anxiety, dotted with hints of hope of more of the better stuff that's out there, like mRNA vaccines and other biotech magic, small modular nuclear reactors powering walkable cities without burning dead plankton, against a backdrop of war, pandemics, crazy AI and apathy.
- weatherlite 4y ago
  > yes, low interest rates are here to stay most likely, because of all the extremely wealthy retirement funds of aging populations all over the developed world are buying safe assets, so the US Treasury can sell a lot of bonds. Isn't it also dependent on inflation? Higher inflation = higher bond yields
  - pas 4y ago
    It's unsurprisingly a bit more complex than that, but yes. The mechanism is something like general price level increase accelerates (inflation overshoots the target) -> central banks act to cool the economy (they conduct open market operations to remove liquidity, increase various knobs like interest-paid-on-reserves, basically the opposite of "quantitative easing") -> this has a knock on effect on corporate and governmental bond auctions -> bond interest rates go up but this is a "closed loop" because the end result is that "inflation creeps back down to/below target level", and then bond yields go back to where they were and it seems that's mostly a function of the appetite for safe assets. of course this might all be irrelevant if central banks basically switch to "nominal GDP targeting" and one more small but very interesting piece in this puzzle (the jargon is not important, the "bonds stay on the balance sheet, so they are inconvenient" part is): https://libertystreeteconomics.newyorkfed.org/2023/02/understanding-the-inconvenience-of-u-s-treasury-bonds/ https://libertystreeteconomics.newyorkfed.org/2023/02/unders...
blihp 4y ago
That this has all happened before and it will all happen again.
- thebigspacefuck 4y ago
  So say we all
benjaminwootton 4y ago
You can get 4% on treasuries. It’s amazing how the whole startup game and VC ecosystem doesn’t absolutely trounce that considering the risk and effort everyone is applying.
- _5uxp 4y ago
  Sit long enough with that %4 and you will see with opp. cost that you're not getting anything for long term. That's for short term cash and such.
- refurb 4y ago
  Whats the real return on a 4% treasury when inflation is running 4-6%. Its negative.
  - ac29 4y ago
    TIPS have a real return of around 1.5% right now
    - jkuria 4y ago
      But you can only put in $10K
      - bklyn11201 4y ago
        You can only put 10k into I bonds (current rate 6.89%) You can put massive amounts into TIPS
- unicornmama 4y ago
  You get 4% on some deposit accounts. You get about 5% on 1 year treasuries.
- xnx 4y ago
  Now 5%!
- JumpinJack_Cash 4y ago
spaceman_2020 4y ago
The last wave of "unicorns" has been hardly "disruptive" in the positive sense of the word. If most of them were to disappear, my life would just be a little more cumbersome, but it won't change in any material way. DoorDash is nice, but restaurants delivered food before that too. Uber is nice, but it's barely better than the taxis it replaced - at least in my city. Airbnb is a good option, but if it were to disappear, I'll just do what I always did - get a hotel room. Considering that it tooks tens of billions of dollars to create businesses that were at best "nice to have", I have to wonder what's "disruptive" about any of this stuff.
- soneca 4y ago
  Uber, at least in my city (São Paulo), has been truly disruptive and made my life significantly better (since I don’t own a car or even know how to drive)
  - spaceman_2020 4y ago
    In my city, they lured in drivers with fat incentives, then encouraged them to buy new cars - even partnering up with lenders to offer loans with low/zero down payment. Of course, the incentives dried up and drivers were left with expensive cars they couldn't pay for unless they worked 12-14 hour shifts. I have zero sympathy for this godawful exploitative company. If the world didn't see them with the rose-tinted tech shades, they would have the same reputation something like Nestle has - a greedy, reckless, and exploitative corporation.
    - soneca 4y ago
      I agree they are a greedy, reckless, exploitative corporation. I do think though their product is a net positive to society, even a net positive to the drivers class in general (taxi is basically mafia around here and Uber driving was used as a sort of safety job fallback for people that would be otherwise unemployed).
- kragen 4y ago
  where i live, downtown, uber is nearly equivalent to taxis. pros for taxis: you have to wait less time, you can tell ahead of time if they have air conditioning, and pricing is predictable. cons for taxis: uber is always available, you know what you're paying before you get in, and taxi drivers rob you every chance they get, while uber drivers never do where my girlfriend lives, in the suburbs, taxis don't exist, so uber/didi/cabify is the only option other than taking the bus (which doesn't run at night) or walking (which is dangerous, especially at night) 'disruptive' innovations are worse in important ways than the incumbents they challenge, but much cheaper; from the perspective of the consumer, this isn't true of rides from uber or lodging with airbnb, but from the perspective of the provider, this is extremely true of uber and airbnb, which are 'competing' with the taxi medallion mafia and the regulatory regime established to protect established hotel chains getting a taxi medallion or getting licensed to open a hotel are enormously more expensive than signing up with uber or airbnb
twic 4y ago
This thread is specifically about A16Z and their "lose money but make it up on volume" strategy. A traditional VC fund, which carefully only invests in startups which are going to succeed, can still make good returns with 4% interest rates.
hammock 4y ago
Subsidies are a powerful drug, with serious withdrawal symptoms

pas 4y ago

even the most resilient trees can't sprout in winter... blablabla. but of course the truth is that it's not the entire industry, it's not just the Fed, that fucking disruptive book is bullshit (most disruptors end up losing out as incumbents adopt), and the making the world a better place gang has 100000 spreadsheets and infinite amount of malaria bednets, but all they managed to do so far is that everyone and their dog now only associates them with that fallen crypto kid. a bit more importantly, these super amazing "returns" and asset bubbles and stock market to the moons and quarterly make it rain bonanzas can only continue as capital amortization doesn't start eating into it hard. and by capital I mean the culmination of the last however many decades of actual community and infrastructure building, not the nice financial instruments. yes, low interest rates are here to stay most likely, because of all the extremely wealthy retirement funds of aging populations all over the developed world are buying safe assets, so the US Treasury can sell a lot of bonds. the question is what are we going to do with this? the signs point to slowed incremental progress and general incompetent cycles of fake it till you make it cooperation (on all levels, from individuals to don't be evil companies to countries) and xenophobic populist outbursts of untreated change anxiety, dotted with hints of hope of more of the better stuff that's out there, like mRNA vaccines and other biotech magic, small modular nuclear reactors powering walkable cities without burning dead plankton, against a backdrop of war, pandemics, crazy AI and apathy.

weatherlite 4y ago
> yes, low interest rates are here to stay most likely, because of all the extremely wealthy retirement funds of aging populations all over the developed world are buying safe assets, so the US Treasury can sell a lot of bonds. Isn't it also dependent on inflation? Higher inflation = higher bond yields
- pas 4y ago
  It's unsurprisingly a bit more complex than that, but yes. The mechanism is something like general price level increase accelerates (inflation overshoots the target) -> central banks act to cool the economy (they conduct open market operations to remove liquidity, increase various knobs like interest-paid-on-reserves, basically the opposite of "quantitative easing") -> this has a knock on effect on corporate and governmental bond auctions -> bond interest rates go up but this is a "closed loop" because the end result is that "inflation creeps back down to/below target level", and then bond yields go back to where they were and it seems that's mostly a function of the appetite for safe assets. of course this might all be irrelevant if central banks basically switch to "nominal GDP targeting" and one more small but very interesting piece in this puzzle (the jargon is not important, the "bonds stay on the balance sheet, so they are inconvenient" part is): https://libertystreeteconomics.newyorkfed.org/2023/02/understanding-the-inconvenience-of-u-s-treasury-bonds/ https://libertystreeteconomics.newyorkfed.org/2023/02/unders...

blihp 4y ago

That this has all happened before and it will all happen again.

thebigspacefuck 4y ago
So say we all

benjaminwootton 4y ago

You can get 4% on treasuries. It’s amazing how the whole startup game and VC ecosystem doesn’t absolutely trounce that considering the risk and effort everyone is applying.

_5uxp 4y ago
Sit long enough with that %4 and you will see with opp. cost that you're not getting anything for long term. That's for short term cash and such.
refurb 4y ago
Whats the real return on a 4% treasury when inflation is running 4-6%. Its negative.
- ac29 4y ago
  TIPS have a real return of around 1.5% right now
  - jkuria 4y ago
    But you can only put in $10K
    - bklyn11201 4y ago
      You can only put 10k into I bonds (current rate 6.89%) You can put massive amounts into TIPS
unicornmama 4y ago
You get 4% on some deposit accounts. You get about 5% on 1 year treasuries.
xnx 4y ago
Now 5%!
JumpinJack_Cash 4y ago

spaceman_2020 4y ago

The last wave of "unicorns" has been hardly "disruptive" in the positive sense of the word. If most of them were to disappear, my life would just be a little more cumbersome, but it won't change in any material way. DoorDash is nice, but restaurants delivered food before that too. Uber is nice, but it's barely better than the taxis it replaced - at least in my city. Airbnb is a good option, but if it were to disappear, I'll just do what I always did - get a hotel room. Considering that it tooks tens of billions of dollars to create businesses that were at best "nice to have", I have to wonder what's "disruptive" about any of this stuff.

soneca 4y ago
Uber, at least in my city (São Paulo), has been truly disruptive and made my life significantly better (since I don’t own a car or even know how to drive)
- spaceman_2020 4y ago
  In my city, they lured in drivers with fat incentives, then encouraged them to buy new cars - even partnering up with lenders to offer loans with low/zero down payment. Of course, the incentives dried up and drivers were left with expensive cars they couldn't pay for unless they worked 12-14 hour shifts. I have zero sympathy for this godawful exploitative company. If the world didn't see them with the rose-tinted tech shades, they would have the same reputation something like Nestle has - a greedy, reckless, and exploitative corporation.
  - soneca 4y ago
    I agree they are a greedy, reckless, exploitative corporation. I do think though their product is a net positive to society, even a net positive to the drivers class in general (taxi is basically mafia around here and Uber driving was used as a sort of safety job fallback for people that would be otherwise unemployed).
kragen 4y ago
where i live, downtown, uber is nearly equivalent to taxis. pros for taxis: you have to wait less time, you can tell ahead of time if they have air conditioning, and pricing is predictable. cons for taxis: uber is always available, you know what you're paying before you get in, and taxi drivers rob you every chance they get, while uber drivers never do where my girlfriend lives, in the suburbs, taxis don't exist, so uber/didi/cabify is the only option other than taking the bus (which doesn't run at night) or walking (which is dangerous, especially at night) 'disruptive' innovations are worse in important ways than the incumbents they challenge, but much cheaper; from the perspective of the consumer, this isn't true of rides from uber or lodging with airbnb, but from the perspective of the provider, this is extremely true of uber and airbnb, which are 'competing' with the taxi medallion mafia and the regulatory regime established to protect established hotel chains getting a taxi medallion or getting licensed to open a hotel are enormously more expensive than signing up with uber or airbnb

twic 4y ago

This thread is specifically about A16Z and their "lose money but make it up on volume" strategy. A traditional VC fund, which carefully only invests in startups which are going to succeed, can still make good returns with 4% interest rates.

hammock 4y ago

Subsidies are a powerful drug, with serious withdrawal symptoms