3 ms·

I don't think you can compare what we see now to the bubble days. Let's look at some key differences: - In the 90s there were 50 million internet users, now th

by motti_s 15y ago

I don't think you can compare what we see now to the bubble days. Let's look at some key differences: - In the 90s there were 50 million internet users, now there are over 2 billion. The internet economy is huge. - It's becoming easier to get seed funding, but it hasn't become any easier to raise series A (some claim it's becoming harder due to the increased number of seed companies chasing those series A dollars). In the bubble days the madness went all the way to the IPO. - When the bubble burst, people lost faith in the future of technology, or at least in the rate at which it would advance. Now that phones have become computers, books have been digitized, and people rely on technology for every aspects of their lives (even to socialize!), it's pretty obvious that technology is here to stay. For sure we may see a down-swing. If macro economics go in shambles due a new war or an economic meltdown in Europe, then technology investment will suffer as well. But as opposed to the bubble days, I don't think technology investment will be the cause for such a down-swing. I think we have matured since the bubble and the fact that it was so traumatic (we're still discussing it aren't we?) also helps preventing it from re-occurring.

MrMan 15y ago
One of the reasons it is different this time, but still a bubble, is that there is tons of cheap money flowing around the globe, and sophisticated investors are desperately looking for returns. Hedge funds have had big outflows in the last 3 years. That (risk-seeking)money has to slosh somewhere. The total size of the hedge fund world is larger than in 1999-2000. Also, the concentration of advertising dollars that flows through a few key companies - Facebook, Google, Microsoft, etc., is significant. Ad spending basically drives this whole thing from the revenue side. In 1999 there was less of this money in absolute terms and also the ad and marketing folks had not yet learned how to target ads to users online. So ads + Quantitative Easing (hope I am not getting too fast and loose here but this is shorthand) means that worthless companies like Instagram can seem strategic to ad delivery platforms like Facebook. And there is so much extra risk capital chasing deals that $1B is nothing to throw away. PG has been in the right place at the right time, but just because he and his partners do things differently in their business does not mean that the macro picture is not the most important factor. edit - we have not matured we have just gotten better at online advertising and marketing. But that is arguably a great efficiency for the post-industrial service economy.

by motti_s 15y ago

MrMan 15y ago

One of the reasons it is different this time, but still a bubble, is that there is tons of cheap money flowing around the globe, and sophisticated investors are desperately looking for returns. Hedge funds have had big outflows in the last 3 years. That (risk-seeking)money has to slosh somewhere. The total size of the hedge fund world is larger than in 1999-2000. Also, the concentration of advertising dollars that flows through a few key companies - Facebook, Google, Microsoft, etc., is significant. Ad spending basically drives this whole thing from the revenue side. In 1999 there was less of this money in absolute terms and also the ad and marketing folks had not yet learned how to target ads to users online. So ads + Quantitative Easing (hope I am not getting too fast and loose here but this is shorthand) means that worthless companies like Instagram can seem strategic to ad delivery platforms like Facebook. And there is so much extra risk capital chasing deals that $1B is nothing to throw away. PG has been in the right place at the right time, but just because he and his partners do things differently in their business does not mean that the macro picture is not the most important factor. edit - we have not matured we have just gotten better at online advertising and marketing. But that is arguably a great efficiency for the post-industrial service economy.