11 ms·

pretty weak argument. 'This isn't like the 2000 bubble, because we have more internet users now'? If you really think there's nothing wrong with tech valuation

pretty weak argument. 'This isn't like the 2000 bubble, because we have more internet users now'? If you really think there's nothing wrong with tech valuations, please show me ONE company in another industry that has no revenue and 16 employees, yet is worth $3-4 billion (Snapchat)

wentkenko 13y ago
I completely agree, there app is a fad.
- rgbrenner 13y ago
  > there app is a fad. My post really has nothing to do with Snapchat specifically. Snapchat could just as easily be Instagram -- which also had no revenue when it was acquired by Facebook for $1 billion.
  - seiji 13y ago
    The current model is "build your house next to a billionaire's house so they'll acquire you to stop any potential encroachment."
    - adventured 13y ago
      This is one of the best descriptions I've read of the concept.
      - seiji 13y ago
        Inspired by Real Life Events™.
  - gaius 13y ago
    How much revenue does it have now?
    - rgbrenner 13y ago
      don't know.. they haven't released the numbers AFAIK. But it's not really relevant IMO... Is there another industry that will pay out $1 billion for a company with no revenue (and no patents)?
  - wentkenko 13y ago
    Yeah I just believe that you can only go so far with an app that is used to send funny pictures to your friends, the fun will eventually die. It just seems to be the same Ron Conway and group going money going round in a circle with a lot of these companies.
seiji 13y ago
It's proto-singularity economics. We have no reference frame for what something is worth when a billion people use it and it only takes two people to run it. Even with no revenue, it's worth something, right? Imagine when one person can create a platform 90% of humanity relies on. What is that one person worth? What if that product has no revenue because the owner can extract all value on-demand by extorting/blackmailing The Man at will based on collected personal information?
- rgbrenner 13y ago
  This is the same argument that was used in the dotcom bubble -- profits don't matter because tech is different. The fact that it's being trotted out again as justification should worry you.
  - seiji 13y ago
    But, tech is even different-er now. Go back to 1999 and build a website supporting a million concurrent users. How much hardware do you need? What are your fixed costs? What are your engineering costs? How do you even market your thing? Now do the same today. What's different?
    - yongjik 13y ago
      The hardware cost is low, as is the barrier to entrance. And the users' expectation is higher. To attract today's users, you still have to be better than your competitor's website. The fact you can easily build a website for millions doesn't mean it will actually see millions of visitors.
  - adventured 13y ago
    There are two primary differences between 1999 and now in consumer web: 1) there's a massive advertising market now that works; 2) for 99.999% of web sites, it has gotten drastically cheaper and easier to operate, and over another five or ten years, will become nearly free (what will $10 buy at Digital Ocean in another five years?). Traffic and resource demands for most web sites will not keep up the value proposition improvements we're seeing, it'll push the cost toward zero. Those two differences have in fact changed the landscape. I can run a couple person startup that generates millions in ad revenue now, with exceptionally high margins. Plenty of Fish is the most famous example of this. Techmeme essentially worked like that, as another example. Hacker News could be like that, if PG wanted it to be. Point being, it's now drastically easier to monetize traffic long term, compared to 1999 (when the ad market was tiny, backwards, poorly standardized, difficult to utilize, and not very developed for all industries / segments).
DanBlake 13y ago
Hi, I think I give a pretty fair argument about this towards the end in comparison to broadcast.com In short, yes- Back then the bubble was based on the hype that people were coming. The hype now is that the people are here. Again, compare the 500k (thousand, not million) users of broadcast.com (and 5.7b sale) to snapchat and it becomes less frothy. Like the stock market, valuations are set on what others are willing to pay. You may not use snapchat (I dont either) but you cannot deny the fact of its massive usage. Yes, Its unmonetized- But people are valuing it where it is because another large company is very likely to pay that much to acquire it. Valuation = how much something is worth to another buyer. Everything in this world has a fluid cost to it, so everything goes through ups and downs. But there is no static valuation, only a constant ride of ups and downs.

wentkenko 13y ago

I completely agree, there app is a fad.

rgbrenner 13y ago
> there app is a fad. My post really has nothing to do with Snapchat specifically. Snapchat could just as easily be Instagram -- which also had no revenue when it was acquired by Facebook for $1 billion.
- seiji 13y ago
  The current model is "build your house next to a billionaire's house so they'll acquire you to stop any potential encroachment."
  - adventured 13y ago
    This is one of the best descriptions I've read of the concept.
    - seiji 13y ago
      Inspired by Real Life Events™.
- gaius 13y ago
  How much revenue does it have now?
  - rgbrenner 13y ago
    don't know.. they haven't released the numbers AFAIK. But it's not really relevant IMO... Is there another industry that will pay out $1 billion for a company with no revenue (and no patents)?
- wentkenko 13y ago
  Yeah I just believe that you can only go so far with an app that is used to send funny pictures to your friends, the fun will eventually die. It just seems to be the same Ron Conway and group going money going round in a circle with a lot of these companies.

seiji 13y ago

It's proto-singularity economics. We have no reference frame for what something is worth when a billion people use it and it only takes two people to run it. Even with no revenue, it's worth something, right? Imagine when one person can create a platform 90% of humanity relies on. What is that one person worth? What if that product has no revenue because the owner can extract all value on-demand by extorting/blackmailing The Man at will based on collected personal information?

rgbrenner 13y ago
This is the same argument that was used in the dotcom bubble -- profits don't matter because tech is different. The fact that it's being trotted out again as justification should worry you.
- seiji 13y ago
  But, tech is even different-er now. Go back to 1999 and build a website supporting a million concurrent users. How much hardware do you need? What are your fixed costs? What are your engineering costs? How do you even market your thing? Now do the same today. What's different?
  - yongjik 13y ago
    The hardware cost is low, as is the barrier to entrance. And the users' expectation is higher. To attract today's users, you still have to be better than your competitor's website. The fact you can easily build a website for millions doesn't mean it will actually see millions of visitors.
- adventured 13y ago
  There are two primary differences between 1999 and now in consumer web: 1) there's a massive advertising market now that works; 2) for 99.999% of web sites, it has gotten drastically cheaper and easier to operate, and over another five or ten years, will become nearly free (what will $10 buy at Digital Ocean in another five years?). Traffic and resource demands for most web sites will not keep up the value proposition improvements we're seeing, it'll push the cost toward zero. Those two differences have in fact changed the landscape. I can run a couple person startup that generates millions in ad revenue now, with exceptionally high margins. Plenty of Fish is the most famous example of this. Techmeme essentially worked like that, as another example. Hacker News could be like that, if PG wanted it to be. Point being, it's now drastically easier to monetize traffic long term, compared to 1999 (when the ad market was tiny, backwards, poorly standardized, difficult to utilize, and not very developed for all industries / segments).

DanBlake 13y ago

Hi, I think I give a pretty fair argument about this towards the end in comparison to broadcast.com In short, yes- Back then the bubble was based on the hype that people were coming. The hype now is that the people are here. Again, compare the 500k (thousand, not million) users of broadcast.com (and 5.7b sale) to snapchat and it becomes less frothy. Like the stock market, valuations are set on what others are willing to pay. You may not use snapchat (I dont either) but you cannot deny the fact of its massive usage. Yes, Its unmonetized- But people are valuing it where it is because another large company is very likely to pay that much to acquire it. Valuation = how much something is worth to another buyer. Everything in this world has a fluid cost to it, so everything goes through ups and downs. But there is no static valuation, only a constant ride of ups and downs.