5 ms·
the Silicon valley of the last 15 years was a 0% interest rate phenomenon, going to take a long time for normalcy to return after a decade of distortion to orga
by ren_engineer 3y ago
the Silicon valley of the last 15 years was a 0% interest rate phenomenon, going to take a long time for normalcy to return after a decade of distortion to organic market forces
- sf_rob 3y agoAlso these companies are reaching financial maturity. It's going to be the next generation of companies to be trendy/fun/excessive IMO.
- groceryheist 3y agoYes. It is time for laid off seniors to take these exit packages and incubate the next generation. Be ready to draw financing when rates fall in Q3 of 2024.
- baq 3y agoDon’t be so sure about that… rates will fall sharply in a recession, otherwise inflation will run hot (see today’s print!) Rates market prices in the average outcome, but the distribution isn’t uniform nor Gaussian.
- chickenpotpie 3y ago> Don’t be so sure about that… rates will fall sharply in a recession, otherwise inflation will run hot What? Lowering interest rates raises inflation. > See today's print Can you link? Not sure what your talking about
- groceryheist 3y agoOfficial USA inflation numbers ticked up slightly in December.
- alfalfasprout 3y agomostly driven by housing which has a 12 month lag and has dropped significantly in the last 6 months.
- tuckerconnelly 3y agoHow does 0% interest rate actually affect this though? Are that many companies actually funded on debt now? Or are are sales down because their customers were purchasing with debt?
- zooq_ai 3y agoIt's a knock on effect. Most software companies sell to other software companies and VC funded startups
- ketzo 3y agoFair question, but there's a pretty direct line. ZIRP means that huge capital managers (sovereign wealth funds, pension funds, 401k managers, etc.) get very, very little money on the super-safe stuff they like to buy. They need to make returns somehow, so if a VC is promising them 15% returns, that sounds quite promising compared to T-Bonds that return 1.5%! But over the last two years, the yield on super-safe investments now looks more like 6, 7, 8, 9%. That makes a high-risk investment like VC much less attractive, by comparison. If VC is less attractive, less capital flows to their funds; smaller VC funds means much more discerning, stingy startup investment.
- Ekaros 3y agoYou can get debt cheap to fund investment. Other side is that lot of money is always searching for some kind of return. With rates going up that money can go back to boring bonds, either from governments or even big reliable companies that are unlikely going anywhere. No need to gamble it anymore on tech companies.
- ojbyrne 3y agoCompanies evaluate ROI for projects against the "risk-free" interest rate. When that interest rate rises, fewer projects are viable.
- mempko 3y agoWhat do you mean by 'organic market forces'? All interest rates are decided on, from what we have now to 0%. All markets are designed, with rules, regulations, and tax laws. Markets are a technology, they don't come from nature. Markets are an intentional product of governments. Anthropologists haven't found a single stateless society that voluntarily chose markets.
- IggleSniggle 3y agoHave anthropologists found any stateless society? Whether it's mother, father, grandma, brother, there's always an older person that sets the rules and expectations (and enforcement, the key quality of a state) for youngsters, even if indirectly. In order for what you say to have meaning, "stateless" would almost tautologically require "no market." But clearly states are themselves a natural aspect of aggregate human behavior in resource limited environments.
- mempko 3y agoYes, Read the Dawn of Everything by David Graeber and David Wengrow.
- rchaud 3y ago0% financing and you're making losses year after year after year? Maybe it's time to return the money to the shareholders instead of playing musical chairs as the S.S. ZIRP sinks.