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It may not be entirely coincidental that a lot of financial carnage is happening just after the large scale printing of money (quantitative easing) stopped, int

It may not be entirely coincidental that a lot of financial carnage is happening just after the large scale printing of money (quantitative easing) stopped, interest rates started rising and borrowing money became no longer almost free (for the wealthy). Arguably numerous “new” financial constructs only worked with free money. Meme stocks, crypto, SPACs and very large VC funding may have needed all that free money to “work”? So maybe we’re just returning to more traditional financial investment patterns? Some or all of those financial constructs probably still have their place on a much reduced scale in more specific contexts. But it’s no longer guaranteed free money. I’m assuming that there are quite a few PhDs and other books in the works that will analyze those connections/dependencies in considerable detail.

airstrike 4y ago
To add to that list of factors: it's also the end of the decades-long ride in Technology stocks which drove a lot of FOMO sentiment that made that money so easily available... nobody wanted to miss out on the next Facebook, the next Uber, the next Airbnb, the next Theranos--wait The quality of the assets for these moonshot unicorns declined over time (IMHO partially because they were increasingly moving away from pure-bits to bits-and-atoms, making business cases much harder to execute and expensive to fund) and then the macro backdrop soured and here we are Bonus: here's what StableDiffusion drew for "A dream of moonshot unicorns, 4k trending artstation" because why not... https://i.stack.imgur.com/sFxIw.png https://i.stack.imgur.com/sFxIw.png
- datavirtue 4y ago
  Uber and Airbnb have made money?
  - amanj41 4y ago
    Airbnb had an adjusted EBITDA of ~$230m in Q1, so Airbnb has turned a profit once. Not sure about Uber
    - spywaregorilla 4y ago
      Adjusted means you made a profit if you ignore the fact that you made a loss.
      - Oxidation 4y ago
        Especially when servicing interest on debt (the I) isn't nearly as cheap as it used to be, unless the debt is locked in at a lower interest rate. Even if it is, but the term ends, a rosy-sounding EBITDA can turn ugly.
    - ctchocula 4y ago
      Uber has been adjusted EBITDA profitable since 2021 and is close to GAAP profitability (might reach it this year or 2024).
    - zinekeller 4y ago
      "Adjusted" EBITDA is frankly a sign that the company is making "magic" (read: misrepresentations) on its balance sheets. It's not surprising that Airbnb, Lyft and Uber are the only prominent companies using them.
  - kurthr 4y ago
    They did for the early investors >:^P
  - rtpg 4y ago
    my understanding is that Uber has a knob they can turn to just be profitable, and have chosen not to because they keep on wanting to grow and have access to more money.
    - lumost 4y ago
      Many firms have been saying this for a long time… it’s unclear how easy it is to turn this knob. Investors seem to be demanding cash returns from mega caps now. At a minimum - if Uber has to raise money again, we’d expect it to be in worse terms.
      - danielmarkbruce 4y ago
        Folks who have spent time working in SV tech companies know that for many companies (AirBnB is absolutely one) there is a knob which can be turned. The cost structures have a lot... fat. The spending in many of these places is beyond belief.
        lumost 4y ago
        Sure, but twitter is somewhat of a litmus test for this. When twitter started trying to cut fat they also crashed their revenue. Organizations love to accumulate fat, I don’t think anyone really has a clear idea of what is necessary fat and what isn’t. Your best bet would be getting consultants in to figure it out… who probably don’t know a heck of a lot about running a tech company.
        danielmarkbruce 4y ago
        Additional tests will be Salesforce, Twilio, Docusign, Facebook - all have promised efficiency from here on out. My guess is they'll all start putting up very good numbers. Somewhat fair point. But there are entire areas (like product initiatives) that are extremely speculative and just pet projects which can be cut at many places. Google for example wasted a billion here or a billion there like it was nothing, on things that made little sense, years ago.
ChrisMarshallNY 4y ago
I'm looking forward to companies that actually have viable product ideas. When money is tight, you are less likely to throw it at an AI-powered cheese-straightener, just because the founder did a great TEDx talk.
- neilv 4y ago
  After the last couple decades of our tech industry, I'm wondering who's going to be capable of executing on those viable product ideas. When the goal isn't "growth" and IPO/M&A exit, but to provide a product that people want, in a viable business model... and to do it without huge hiring... a lot of us will have to recalibrate/relearn how to think about everything we do.
  - ChrisMarshallNY 4y ago
    I am. I've spent my entire adult life, shipping software. I know there's lots of folks like me, out there. The problem is ... how do I put this ... It's really embarrassing ... You see, we're all old.
    - neilv 4y ago
      If we want to market some of us more, uh, battle-scarred engineers, for the emerging business environment, "old" could use an image makeover. The reason is, AFAICT, the current ageism started with dotcom startups, and by now might have enough inertia to linger long past when the VC-growth-appearance party is over. (I'm thinking we saturate the streaming services with new shows glorifying people with graying hair. Elite military commandos, brilliant business strategists, heartthrobs, revolutionaries, etc. In the shows, they should frequently draw upon their experience -- wisdom, as well as surprise esoteric skills -- to save the day. They should also have excellent taste in some of the better style of past decades, such as by driving classic exotic cars, and listening to timeless great music. They should be admired and loved by all.)
      - ChrisMarshallNY 4y ago
civilized 4y ago
Meme stocks are the weirdest part of it for me. GameStop is still priced several times the pre-meme value.
- TinyRick 4y ago
  The company is also in a much better financial position than it was pre-meme. They took advantage of their insanely valued share price in mid-2021 and performed an at-the-market equity offering which allowed them to pay off loans and improve their balance sheet significantly.
- filoleg 4y ago
  > GameStop is still priced several times the pre-meme value. As long as it keeps going on its current trajectory, it won't stay above the pre-meme value for much longer.
- yareally 4y ago
  AMC is almost back to prepandemic levels though
VLM 4y ago
Its a chaotic tipping point. The analogy for the market for lemons isn't as good as an analogy with 80s junk bonds. Groupthink is incredibly strong so if there's an underserved market, well, tough cookies for them, until the underserved market is so huge someone eventually takes the bait. Given that its been an underserved market for a long time, its pretty easy for the first entrant to make insane profits off the first couple deals. Then the usual suspects gather around and say they knew it all along that it was always the best idea ever and its going to be the new paradigm for the entire market going forward and only the best people have been in it from the start. By then even the slower retail investors are piling in, like an out of control crowd at a sporting event, and the crowd is starting to crush people. Of course its a very small market so returns seemingly instantly go from insanely high to insanely low because there's not many good deals in a tiny market, because its a tiny market, but the money is pouring it from the late entrants. Then when the new deals all collapse, the usual suspects lecture everyone about the inherent evils of capitalism and how they knew it was a bad idea all along, and everyone forgets about it until the cycle repeats. There is a valid realistic market for SPACs which are kind of "headhunter for mergers with small companies" but the problem is there's too much cash sloshing around and ALL of it flows at the same time to whomever had the highest rate of return last year, even if the market of good deals in that sector completely emptied out last quarter. Really the pity is its easy to see these situations develop but hard to "sell short" a fad. If I knew how to sell fads short I'd be a billionaire.

airstrike 4y ago

To add to that list of factors: it's also the end of the decades-long ride in Technology stocks which drove a lot of FOMO sentiment that made that money so easily available... nobody wanted to miss out on the next Facebook, the next Uber, the next Airbnb, the next Theranos--wait The quality of the assets for these moonshot unicorns declined over time (IMHO partially because they were increasingly moving away from pure-bits to bits-and-atoms, making business cases much harder to execute and expensive to fund) and then the macro backdrop soured and here we are Bonus: here's what StableDiffusion drew for "A dream of moonshot unicorns, 4k trending artstation" because why not... https://i.stack.imgur.com/sFxIw.png https://i.stack.imgur.com/sFxIw.png

datavirtue 4y ago
Uber and Airbnb have made money?
- amanj41 4y ago
  Airbnb had an adjusted EBITDA of ~$230m in Q1, so Airbnb has turned a profit once. Not sure about Uber
  - spywaregorilla 4y ago
    Adjusted means you made a profit if you ignore the fact that you made a loss.
    - Oxidation 4y ago
      Especially when servicing interest on debt (the I) isn't nearly as cheap as it used to be, unless the debt is locked in at a lower interest rate. Even if it is, but the term ends, a rosy-sounding EBITDA can turn ugly.
  - ctchocula 4y ago
    Uber has been adjusted EBITDA profitable since 2021 and is close to GAAP profitability (might reach it this year or 2024).
  - zinekeller 4y ago
    "Adjusted" EBITDA is frankly a sign that the company is making "magic" (read: misrepresentations) on its balance sheets. It's not surprising that Airbnb, Lyft and Uber are the only prominent companies using them.
- kurthr 4y ago
  They did for the early investors >:^P
- rtpg 4y ago
  my understanding is that Uber has a knob they can turn to just be profitable, and have chosen not to because they keep on wanting to grow and have access to more money.
  - lumost 4y ago
    Many firms have been saying this for a long time… it’s unclear how easy it is to turn this knob. Investors seem to be demanding cash returns from mega caps now. At a minimum - if Uber has to raise money again, we’d expect it to be in worse terms.
    - danielmarkbruce 4y ago
      Folks who have spent time working in SV tech companies know that for many companies (AirBnB is absolutely one) there is a knob which can be turned. The cost structures have a lot... fat. The spending in many of these places is beyond belief.
      - lumost 4y ago
        Sure, but twitter is somewhat of a litmus test for this. When twitter started trying to cut fat they also crashed their revenue. Organizations love to accumulate fat, I don’t think anyone really has a clear idea of what is necessary fat and what isn’t. Your best bet would be getting consultants in to figure it out… who probably don’t know a heck of a lot about running a tech company.
        danielmarkbruce 4y ago
        Additional tests will be Salesforce, Twilio, Docusign, Facebook - all have promised efficiency from here on out. My guess is they'll all start putting up very good numbers. Somewhat fair point. But there are entire areas (like product initiatives) that are extremely speculative and just pet projects which can be cut at many places. Google for example wasted a billion here or a billion there like it was nothing, on things that made little sense, years ago.

ChrisMarshallNY 4y ago

I'm looking forward to companies that actually have viable product ideas. When money is tight, you are less likely to throw it at an AI-powered cheese-straightener, just because the founder did a great TEDx talk.

neilv 4y ago
After the last couple decades of our tech industry, I'm wondering who's going to be capable of executing on those viable product ideas. When the goal isn't "growth" and IPO/M&A exit, but to provide a product that people want, in a viable business model... and to do it without huge hiring... a lot of us will have to recalibrate/relearn how to think about everything we do.
- ChrisMarshallNY 4y ago
  I am. I've spent my entire adult life, shipping software. I know there's lots of folks like me, out there. The problem is ... how do I put this ... It's really embarrassing ... You see, we're all old.
  - neilv 4y ago
    If we want to market some of us more, uh, battle-scarred engineers, for the emerging business environment, "old" could use an image makeover. The reason is, AFAICT, the current ageism started with dotcom startups, and by now might have enough inertia to linger long past when the VC-growth-appearance party is over. (I'm thinking we saturate the streaming services with new shows glorifying people with graying hair. Elite military commandos, brilliant business strategists, heartthrobs, revolutionaries, etc. In the shows, they should frequently draw upon their experience -- wisdom, as well as surprise esoteric skills -- to save the day. They should also have excellent taste in some of the better style of past decades, such as by driving classic exotic cars, and listening to timeless great music. They should be admired and loved by all.)
    - ChrisMarshallNY 4y ago

civilized 4y ago

Meme stocks are the weirdest part of it for me. GameStop is still priced several times the pre-meme value.

TinyRick 4y ago
The company is also in a much better financial position than it was pre-meme. They took advantage of their insanely valued share price in mid-2021 and performed an at-the-market equity offering which allowed them to pay off loans and improve their balance sheet significantly.
filoleg 4y ago
> GameStop is still priced several times the pre-meme value. As long as it keeps going on its current trajectory, it won't stay above the pre-meme value for much longer.
yareally 4y ago
AMC is almost back to prepandemic levels though

VLM 4y ago

Its a chaotic tipping point. The analogy for the market for lemons isn't as good as an analogy with 80s junk bonds. Groupthink is incredibly strong so if there's an underserved market, well, tough cookies for them, until the underserved market is so huge someone eventually takes the bait. Given that its been an underserved market for a long time, its pretty easy for the first entrant to make insane profits off the first couple deals. Then the usual suspects gather around and say they knew it all along that it was always the best idea ever and its going to be the new paradigm for the entire market going forward and only the best people have been in it from the start. By then even the slower retail investors are piling in, like an out of control crowd at a sporting event, and the crowd is starting to crush people. Of course its a very small market so returns seemingly instantly go from insanely high to insanely low because there's not many good deals in a tiny market, because its a tiny market, but the money is pouring it from the late entrants. Then when the new deals all collapse, the usual suspects lecture everyone about the inherent evils of capitalism and how they knew it was a bad idea all along, and everyone forgets about it until the cycle repeats. There is a valid realistic market for SPACs which are kind of "headhunter for mergers with small companies" but the problem is there's too much cash sloshing around and ALL of it flows at the same time to whomever had the highest rate of return last year, even if the market of good deals in that sector completely emptied out last quarter. Really the pity is its easy to see these situations develop but hard to "sell short" a fad. If I knew how to sell fads short I'd be a billionaire.