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In Silicon Valley, Partying Like It’s 1999 Again
- brosco45 13y agoAnd soon, 2000/2001 again. People never learn.
- eruditely 13y agoAnd soon to 2026 again we will toast.
- bdcravens 13y agoOr maybe they do. Do you think the millionaires made in 1998 and 1999 were freaked out in 2000? (Assuming they just deposited the money) What you can learn from a bubble: it comes, it bursts, and in the meanwhile, you can generate enough wealth that it's not an issue. Arguments about the effect of bubbles is a macroeconomic debate; decision to go for a big paycheck is a microeconomic one and only tangential.
- saool 13y agomoney changing hands != generating wealth
- andyl 13y agoWonderful marketing hyperbole.
- rmason 13y agoThe media can't help themselves in writing another bubble story. They keep looking and looking yet they missed all the signs of the 1999 bubble completely. Is it a bit frothy? Yes, but the correction that is coming will not be nearly as severe. Those bulked up startups will crash if cut off from future funding. But a larger majority will just hunker down and bootstrap their way through it. That wasn't an option for most in 1999.
- icn2 13y agoIt looks not like 1999 at all. In 1999 one can easily find a programming job only knowing html. Today It seems that tons of graduates knowing very well Big O complexities, all kinds of cs fundamental algorithms still need to compete for a job.
- logn 13y agoNow you need to know html and 6-weeks worth of programming basics. The main reason experienced people compete so hard for jobs is that companies won't hire remotely and people don't want to move, and because founders and VCs don't pay good salaries. Still, finding a good job is fairly easy if you're talented.
- bonemachine 13y agoBut the point is that in '99 it was also fairly easy even if you were manifestly untalented.
- varelse 13y agoI would submit that most of the social media startups consist primarily of the manifestly untalented. The cream of that crop graduates to writing buggy and crashy IOS and Android apps. The very elite (ya know the ones that passed calculus and linear algebra) of that esteemed crowd sits through a few Coursera and/or Udacity courses and proclaim themselves data scientists. All of this has happened before and will happen again. PS Absolutely loving what this is doing to total compensation though.
- nfoz 13y agoNow you just have to be talented at producing garbage!
- ringdabell 13y agoperhaps, but you have a ton of people going through 10 week crash course "learn how to program" courses and pulling down decent jr dev jobs. there's a whole cottage industry around this, see: starterleague.com basic html+css with some passing familiarity with Rails/Jquery and some common libraries = 80K, $100/hour programmer bro. not too far off from '99...
- sgloutnikov 13y ago"YOU’VE REACHED THE LIMIT OF 10 FREE ARTICLES A MONTH Subscribe to continue reading" Come on NYT...
- nswanberg 13y agoIt's sad that the only numbers appearing in this article have dollar signs attached to them and that the quotes are all about people's feelings. This one has some numbers without dollar signs (and of course some with): http://gigaom.com/2013/10/18/how-has-vc-funding-changed-since-1995-charts/ http://gigaom.com/2013/10/18/how-has-vc-funding-changed-sinc...
- pedalpete 13y agoGreat link, the thing is, VC dollars or number of VC deals is no longer the predictor it was in 1999. So many businesses can build and last longer without VC funding that by the time these businesses are getting investments from VCs, they are already much further along the curve. So there likely won't be a VC bust like before, we need to start using a different metric, unless all we are concerned about is the health of VC.
- 001sky 13y agoVCs make $billion dollar companies. Billion dollar companies make bubbles. While I sort of agree with you that startups don't need a billion in capital, thats sort of beside the point. Bubbles need billions in capital, and bubbles need VCs. Or, at least thats another way to look at it. I dont think a single one of the ~40 billion dollar exits in the past decade has not had VC to goose the valuation prior to it going public (if not for absolute capital needs).
- pedalpete 13y agoI have to disagree with your 'Billion dollar companies make bubbles' assesment. Multi-billion dollar markets make bubbles, and the size of the start-up market is probably as large if not larger in dollars than it was in 1999, now it is just made of 10-100x more companies, so the total valuation of the tech market could be the same as 1999, but that doesn't absolutely have to be funded by VCs. 1000 smaller investors loosing their small investments has the same effect as 1 VC loosing their large investment, doesn't it? Think about the housing crisis, that was a bubble where hundreds of thousands of people over-financed by a small amount, and then couldn't pay back the creditors.
- coldtea 13y agoHere's a link to a text I think it's worth it (and relevant). It's a funny account of some 2005 hazy "Open Media" event, written by a photojournalist called Jim Lowne and titled "Party like it's 1999". Sadly the post is not up on his website anymore, lost to some restructure: http://pastebin.com/4qvDX9hd http://pastebin.com/4qvDX9hd
- patmcguire 13y agoIf they're right, it means the The New York Times has successfully predicted eight of the last two tech bubbles.
- deleted 13y ago[deleted]
- itcmcgrath 13y agoThat just broke my head. 8 of the last 2?
- CDRdude 13y agoThat would mean that the New York times has predicted a new tech bubble 8 times, and will be correct 2 times if this is a new bubble.
- desireco42 13y agoExcellent :)
- ChuckMcM 13y agoGreat bumper sticker in 2001 was "God, one more bubble, this time I'll SELL." Some interesting analysis I read was take $10K during the period of 1995 - 2000, invest it in tech stocks, sell them when it hit $15K, and invest $10K again in stocks, sell when it hit $15K, rinse and repeat. When the bubble bursts you lose all of your $10K investment, but in the last bubble you had put aside $25K in 'profits.' The point of the analysis was that sticking to goals and running your investing based on those goals was more effective in a bubble than 'going long' (as I did btw) The other key was that you did not try to 'amplify' your risk by selling and then investing all of the money you had ($15K after the first round) because that left money at risk. The money you pulled out had to go somewhere that was really solid (like an FDIC insured savings account or CD). Perhaps I'll get a chance to try that strategy this round.
- deelowe 13y agoThis is pretty much just dollar cost averaging, right?
- debt 13y agoMeh. Everything is moving online. Hype or not, that's what's going on. Snapchat? Well, kids don't watch TV anymore, but those TV ad dollars still exist. There's millions of kids and billions of dollars. Where is that ad money going to go? It's going to go into ad platforms provided by Facebook and Snapchat and Youtube and on and on and away from TBS and CBS and AMC, etc. Across the board, the money is moving laterally from one offline component of some infrastructure to it's online-only equivalent. It's happening now, and it's happening fast. The hype is real.
- sard420 13y agoYes, yet youtube is still advertising horror movies to my 2 year old watching kids videos. Other than Rockenblox I've barely seen a ad that is 'kid' related on kids videos.
- debt 13y agoBy kids I meant teens. Regardless, I've noticed the same thing on YouTube, they really need to fix that. Why are you running an add for car insurance on a video obviously geared towards children? I mean, why are you advertising at all on videos clearly geared towards children.
- ameister14 13y agoWith some of them it's based on the fact that your child doesn't have his or her own account, and likely they're advertising to you.
- murki 13y ago> I mean, why are you advertising at all on videos clearly geared towards children. Are you saying toys, video games, and movie trailers for children should not be advertised to children? To who then, to their parents?
- eterm 13y ago10 years of growing up watching gocompare or "compare the market" adverts means when they do turn 17 they'll instinctively know where to go for their cheap car insurance without a second thought.
- logn 13y agoIn the dot-com bust, one big problem was that with IPOs average folks were dumping their life savings in companies with no solid business and they got burned. Right now, that's not happening much. Crowd-funding might change that but hopefully it doesn't cause another bubble burst.
- kaeluka 13y ago"YOU’VE REACHED THE LIMIT OF 10 FREE ARTICLES A MONTH."
- psbp 13y agoGoogle the title.
- deleted 13y ago[deleted]
- WasimBhai 13y agoSitting here in Pakistan, this scares me. I remember back at the start of 2000s' when the bubble had busted, and Pakistani software industry which is largely doing work that has been out-sourced, going more or less dead. Really talented engineers were unable to find jobs, and the whole CS boom which had reached here too, died down. Now there are so many jobs, and not enough kids which is making universities induct even more students. In between all this, this talk of bubble busting literally freaks me out. When God forbid it happens, it will leave deeper scars than the 2000 one with many a stable careers coming to a sudden halt, and along with them their families.
- dclusin 13y agoI was a teenager during the the dot-com bust in the Silicon Valley (Palo Alto/Stanford to be precise). Even PhD's and extremely driven & accomplished people could not find jobs. They simply weren't there. In the event that there is a bubble in start up investing I don't think that it will be as bad as it was when and if it deflates. The primary reason I think this is because the amount of demand for skilled software/hardware workers has grown to such huge & global proportions that it is not possible for VC's to affect it meaningfully anymore. Although I guess you could have said the same thing about housing in the U.S. back in the 2000s.
- jurassic 13y agoI know things were terrible for everyone during the dot bomb era, but just wanted to say that PhD holders often have a hard time finding the right position even in good times. They are highly specialized and believe they should command a high salary, but employers are resistant to paying a large premium unless their particular expertise serves their business need. Since PhD theses are by their nature esoteric, this leads to an unfortunate mismatch in expectations.
- dclusin 13y agoThey were taking unskilled jobs or jobs they were extremely overqualified for just to make ends meet is what I was trying to get across. Several of my friends parents had to do this until things got better.
- mtrimpe 13y agoIt seems like this is not a bubble but a storm surge, with the 'wind' being the massive amount of liquidity looking for a positive return on investment. It's disproportionately being moved into IT because it's one of the few markets that still seems to have the ability to generate a positive ROI, although that's probably been priced in already by now. That would mean that when the market recovers and 'regular' investments like housing, construction, manufacturing, finance etc. start generating returns again the current craze will just die down rather than pop like a bubble. It seems to me like the difference between hoarding tulip-bulbs during the mania to get rich vs. hoarding them during World War II to have a source of food as a last resort.
- GuiA 13y ago> That would mean that when the market recovers and 'regular' investments like housing, construction, manufacturing, finance etc. start generating returns again That's a bold assumption in itself already.
- toomuchtodo 13y agoLogged in just to comment on this as well. Housing and construction? We already have way too many homes people can no longer afford either do to foreclosure or income limitations. Manufacturing? Have you seen where real wages are at? Maybe business capex, but there isn't a whole lot of disposable income at the moment if you have a family and make under $100K/year. And finance. Oh finance. Like we need Yet Another Financial Product To Fuck Us. Returns? Its hard to generate returns when the majority of your population is shifting towards retirement (in the US) and the wages of your up and coming audience/consumers (18-45) are anemic at best (if there at all).
- mtrimpe 13y agoIt's difficult to predict what the future bread-and-butter markets will be. Let's say that IT will account for 20% of a post-recovery economy. In that case replace my enumeration of a few markets by 'whatever makes up the other 80% of the market.'
- dpcheng2003 13y agoNope.
- VladRussian2 13y agowell, the bust will as usually happen when everybody finally start to believe and act like there isn't an end to the ride. We seems to be getting there, though not just yet. Huge up-and-coming developing regions - pretty much anything outside of US and Europe - will vacuum anything that tech can produce. The correction of tech industry from Western world to the rest of the world may be a little bit uncomfortable for those who miss it, i mean it is time to learn Chinese and Spanish this time not Java :)
- at-fates-hands 13y agoLet's make a parallel here. People go back and forth about global warming. . errrr. . climate change. Does it exist, doesn't it? My view is even if it doesn't exist, shouldn't we act like it is, just in case, so that if it really does exist, we can say we already mitigated the damage? You should really act the same way with these bubble stories. Is there a bubble? Maybe there is, maybe there isn't. Either way, shouldn't you just plan like there's a bubble to protect yourself? Snapchat is a great example. Although I can understand Snapchat's co-founder's altruistic view of life, in these time, you gotta take the money and get out while you can. If there is indeed a bubble, those billions will evaporate in a few minutes, never to come back again. At just think what other really cool stuff you could build several BILLION dollars. . . .
- dmix 13y agoI prefer acting on intelligence (data) not speculation, especially when it comes to how I spend my life.
- area51org 13y agoMuch better to use actual data. Snapchat is one tiny company in a vast ocean, and trying to pretend that its behavior somehow means we're in a bubble is ridiculous.
- tedsanders 13y agoIt's not like those billions will disappear. Selling Snapchat doesn't generate a billion dollars - it just transfers a billion dollars from one party to another. Everything new that Snapchat's founder will be able to do is something that the old holder of dollars won't.
- adam419 13y agoThat's one hell of a pascals wager if I've ever seen one
- mkr-hn 13y agoThe next bubble will slip in slowly under the radar to avoid all this introspection. It won't look like a bubble to enough people until it pops.
- Homunculiheaded 13y agoFrom the Investopedia: "In the year 1999, there were 457 IPOs, most of which were internet and technology related. Of those 457 IPOs, 117 doubled in price on the first day of trading."[0] We're not seeing this type of investor behavior at all right now (please correct me if I'm wrong). I personally am not really sure that FB and Twitter will ever find a way to make huge profits and become sustainable large businesses but looking at the market it's clear that investors share this uncertainty. And since anecdote is so popular when discussing bubbles, I still don't see "normal" people talking about how they're going to "make it rich!". I had people in 2007 telling me I was missing huge opportunities to get rich in not purchasing a home, house flipping shows were all over tv. In the late 90s I knew HS students that were trading stocks on the school library's computers during lunch. Don't get me wrong, especially when everyone I know in the non-tech sector is still struggling, I have anxieties that the party won't last. However looking around I see nowhere near the insanity I remember in 1999 and 2007. [0.]http://www.investopedia.com/features/crashes/crashes8.asp http://www.investopedia.com/features/crashes/crashes8.asp
- grey-area 13y agoI personally am not really sure that FB and Twitter will ever find a way to make huge profits and become sustainable large businesses but looking at the market it's clear that investors share this uncertainty. That's not at all clear to me, could you share your reasoning? There are many large SV companies with very high valuations and negative or very low profits in comparison. Companies like Twitter and FB look to me to have a lot of future profit baked into their current valuation - around 100 years worth in the case of FB, and infinite years in the case of Twitter or many other tech stars like snapchat - that's not very realistic and is pretty frothy. Ordinary people are taking a leap of faith and investing in these companies without solid profits to back it up. I'm not persuaded we're in a very rational market right now, given the doldrums the US economy is experiencing, which is a sharp contrast to the new stock market highs we have recently seen.
- deleted 13y ago[deleted]
- auggierose 13y agoI don't even need to read the article. Obviously, they have a point. And obviously, most of the comments here are along the line "THIS TIME IT'S DIFFERENT!". Lol.
- morgante 13y agoArticles like this are proof that there isn't a bubble. The defining characteristic of bubbles is irrational exuberance—everyone feeling that the sky is the limit. Instead, we have an environment where articles like this come out on a regular basis and I probably hear "when this bubble pops" daily. Everyone is afraid that we're in a bubble. So we're probably not in one. Be greedy when others are cautious. Since the pundits are cautious, it's probably a good time to invest.
- somberi 13y agoI am older than your average HN reader and had invested during the the 90s bubble, but luckily did not lose any money. The choir of the press sounds very similar now as it did before. I kept it aside and asked myself if I thought these companies were as valuable as they tout to be. I did not and went all in and sold. Asking myself the same question, I come to the same answer now. I asked my Dad (70 years old) if he clicked on any advert on Facebook or Google and he had not. Even car sharing companies that make about 6$ a booking need to do a lot of bookings before they turn as much profit as, say IBM. I am selling.