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A startup bubble is the best thing that could possibly happen. Look at it this way. There are plenty of talented engineers, designers, and entrepreneurs out th
by zweiterlinde 14y ago
A startup bubble is the best thing that could possibly happen.
Look at it this way. There are plenty of talented engineers, designers, and entrepreneurs out there trying to build the next big thing. Due to the incredible scale and reach of the internet economy, those who succeed will become fabulously wealthy. But most will fail (or at least not reach that scale) due to various circumstances---a misstep in execution, a superior competitor, our simply bad luck. There are certainly many small successes, but success or failure can seem like an incredibly binary event.
Why should engineers shoulder that risk? That’s the raison d’etre of finance and investment. Let those with capital take on the risk, and give the engineers enough security so that a “failure” doesn’t put a talented person out of the game. If every startup that demonstrates that it execute on an idea and can clear some threshold of viability gets a reasonable exit, then the investors will still get enough Facebooks to generate a good return, and the startup teams are much less captive to chance and fortune with respect to whether they can pay the bills or not.
- dodo53 14y agoIt's not about whether third party investment is a good idea, it's about whether the valuations third parties make are reasonable or based on hype. The cost of bubbles is in talent misallocation - could talented people be producing other things of more enduring value?
- zweiterlinde 14y agoI don't disagree, but I would suggest that if the "successes" are worth billions upon billions, then even "failures" are quite valuable as well, at whatever point in the processes they are still indistinguishable. As hard as economic value is to quantify, "enduring value" is even harder. So I won't even attempt to make judgments on that front.
- sethg 14y agoIn a tech bubble, capital does not chase engineering talent; it chases whatever shiny thing resembles the last shiny thing that made headlines. And when the bubble bursts, the entire sector goes hungry for capital, even companies which, in a more sober market, would be recognized as good prospects for growth.
- gaius 14y agoAKA the AI Winter...