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I'm finally coming around to thinking that it is starting. About three years ago people were screaming bubble because YC companies were getting $4m or $5m valua

I'm finally coming around to thinking that it is starting. About three years ago people were screaming bubble because YC companies were getting $4m or $5m valuations and I wrote the following: "The truth is this: Bubbles don't exist without my aunt's mutual fund getting involved or my next door neighbor getting told to mortgage his house to invest by his financial advisor. Web 1.0 was all about IPOing on the nasdaq and fleecing the public with business models that disregarded profit. This time around things are different. At every stage of the process you see startups with business models. Guestlist, Github, FreshBooks, heck even Groupon, are making nontrivial money relative to the valuations and expected future growth." And the money is starting to come in from my Aunts pension fund (Facebook buying instagram because they knew they were going to have her money within a couple months). Just barely starting, so we've got probably 2 to 4 years before the pop actually happens. But what are we supposed to do while it is happening? We can warn people for a while, but it won't change anything. Get money while you can, build a warchest like paypal did and get ready for the winter of 2015 to 2018.

AznHisoka 15y ago
Or you can just concentrate on building a sustainable business, and worry about more urgent things that will affect your business, rather than the macro-trends.
- DrJokepu 15y ago
  But "macro-trends" always affect your business even if you are building a sustainable one. Even if you have no investors, if your clients are suffering, you are suffering. If your clients' clients are suffering, you are suffering. If your clients' clients' clients are suffering, you are suffering.
  - loganfrederick 15y ago
    You're right, but a truly valuable and sustainable business/technology will be one that clients consider worth paying for even when they are suffering. There aren't necessarily a lot of modern tech companies that would survive this test though.
- izak30 15y ago
  Agree or not, that's what DHH is saying here. It's harder for sustainable businesses to hire talent, when talent is getting paid more at places with enormous valuations. This of course falls down if the large valuation and the large pay are justified by things like large revenues, or value to those with large revenues.
  - edwinnathaniel 15y ago
    Sometimes I just wonder: what "talent" are you guys talking about? It's almost as if there exist a group of fresh-grads who just completed their CS degree but can magically write a better compression engine or a revolutionary protocol that is better than TCP.
    - billybob 15y ago
      Why does "talent" have to mean "incredible geniuses"? Lots of companies need programmers who are "pretty good," whatever that means to you.
      - randomdata 15y ago
        Or do they? If you look at the big industries of the past, they came with real time constraints. In agriculture, for instance, if the work wasn't completed in time, the food would spoil. While skilled farmhands are more valued, in the absence of them, anyone off the street will be given the job simply because it has to be done one way or another. What are the consequences to not building on your technology by a certain date? Maybe your competition will beat you to the punch. Maybe the costs that could be saved by implementing the software will continue to be expensed. Beyond that, not a whole lot. This leads us to a situation where just having anyone on the job is not viable. It is prudent, in many, cases for a business to simply wait until someone who is "top talent" is freed up to do the work. Simply knowing how to program isn't going to be enough.
    - mcguire 15y ago
      What is this "completed their CS degree" stuff you're talking? That's ancient school.
borism 15y ago
It won't last a year with several parallel bubbles (one on the other side of Atlantic, another on the other side of Pacific) imploding.
- eande 15y ago
  strong pointers without back up info
  - redthrowaway 15y ago
    The Euro faces, if not demise, then a near-certain restructuring that will ripple through global financial markets. China is also showing blemishes on its shiny economy, which was entirely foreseeable given their rather suspicious pegging at an 8% growth in GDP year on year. It won't collapse, but it will definitely cool considerably as even the politburo can't continue to justify building cities with no one in them just to pad GDP.
ereckers 15y ago
I agree with the "next door neighbor" allegory. There's only a "bubble" when we can identify a bag holder. That almost inevitably winds up being the plebs, whether it be the general population or via government bailout (still the people). I'm not sure if anyone has yet identified who would be the bagholders in this "bubble", because a bunch of rich guys at Andreesen or Sequoia sure aren't it. You need a vehicle for the commoner to piss away their money. I don't see that yet. Maybe in a couple years, when your local community KickStarter has you pulling money from your 401K to invest in corporate backed internet startups will they have a way to start to attract Joe the Plumber's wealth. And with that, a "bubble" comes with it the psychological idea that it's RISK FREE money. That you can borrow money now, sell later and cash out the gains as your investment surely grows. Add to that the real actual feeling that you'd be stupid not to do it (because everywhere you look people are making money off this). That's when we've got a bubble. When someone can point out a large, wide, gullible, set of people with no access to real fundamental information willing to give up their money through a simple mechanism (stock markets, housing, etc..) then folks, we've got a bubble.

AznHisoka 15y ago

Or you can just concentrate on building a sustainable business, and worry about more urgent things that will affect your business, rather than the macro-trends.

DrJokepu 15y ago
But "macro-trends" always affect your business even if you are building a sustainable one. Even if you have no investors, if your clients are suffering, you are suffering. If your clients' clients are suffering, you are suffering. If your clients' clients' clients are suffering, you are suffering.
- loganfrederick 15y ago
  You're right, but a truly valuable and sustainable business/technology will be one that clients consider worth paying for even when they are suffering. There aren't necessarily a lot of modern tech companies that would survive this test though.
izak30 15y ago
Agree or not, that's what DHH is saying here. It's harder for sustainable businesses to hire talent, when talent is getting paid more at places with enormous valuations. This of course falls down if the large valuation and the large pay are justified by things like large revenues, or value to those with large revenues.
- edwinnathaniel 15y ago
  Sometimes I just wonder: what "talent" are you guys talking about? It's almost as if there exist a group of fresh-grads who just completed their CS degree but can magically write a better compression engine or a revolutionary protocol that is better than TCP.
  - billybob 15y ago
    Why does "talent" have to mean "incredible geniuses"? Lots of companies need programmers who are "pretty good," whatever that means to you.
    - randomdata 15y ago
      Or do they? If you look at the big industries of the past, they came with real time constraints. In agriculture, for instance, if the work wasn't completed in time, the food would spoil. While skilled farmhands are more valued, in the absence of them, anyone off the street will be given the job simply because it has to be done one way or another. What are the consequences to not building on your technology by a certain date? Maybe your competition will beat you to the punch. Maybe the costs that could be saved by implementing the software will continue to be expensed. Beyond that, not a whole lot. This leads us to a situation where just having anyone on the job is not viable. It is prudent, in many, cases for a business to simply wait until someone who is "top talent" is freed up to do the work. Simply knowing how to program isn't going to be enough.
  - mcguire 15y ago
    What is this "completed their CS degree" stuff you're talking? That's ancient school.

borism 15y ago

It won't last a year with several parallel bubbles (one on the other side of Atlantic, another on the other side of Pacific) imploding.

eande 15y ago
strong pointers without back up info
- redthrowaway 15y ago
  The Euro faces, if not demise, then a near-certain restructuring that will ripple through global financial markets. China is also showing blemishes on its shiny economy, which was entirely foreseeable given their rather suspicious pegging at an 8% growth in GDP year on year. It won't collapse, but it will definitely cool considerably as even the politburo can't continue to justify building cities with no one in them just to pad GDP.

ereckers 15y ago

I agree with the "next door neighbor" allegory. There's only a "bubble" when we can identify a bag holder. That almost inevitably winds up being the plebs, whether it be the general population or via government bailout (still the people). I'm not sure if anyone has yet identified who would be the bagholders in this "bubble", because a bunch of rich guys at Andreesen or Sequoia sure aren't it. You need a vehicle for the commoner to piss away their money. I don't see that yet. Maybe in a couple years, when your local community KickStarter has you pulling money from your 401K to invest in corporate backed internet startups will they have a way to start to attract Joe the Plumber's wealth. And with that, a "bubble" comes with it the psychological idea that it's RISK FREE money. That you can borrow money now, sell later and cash out the gains as your investment surely grows. Add to that the real actual feeling that you'd be stupid not to do it (because everywhere you look people are making money off this). That's when we've got a bubble. When someone can point out a large, wide, gullible, set of people with no access to real fundamental information willing to give up their money through a simple mechanism (stock markets, housing, etc..) then folks, we've got a bubble.