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I appreciate Sam's perspective. He has much more experience with startups and identifying businesses that solve real problems. My perspective is somewhat naivel

I appreciate Sam's perspective. He has much more experience with startups and identifying businesses that solve real problems. My perspective is somewhat naively stuck in the viewpoint of a software engineer who used to deliver pizzas. When I was a pizza delivery driver I made under-the-table minimum wage, $8 per hour. It was very clear to me where that money came from. People would order an everything pizza for $20, we'd subtract the cost of ingredients (mainly cheese), absorb some profit for the business, and pay our salaries out of the remainder. As a software engineer making upwards of $50 per hour, I question where my salary comes from. If I worked for FB, Google, or Pinterest, surely it'd be from advertising revenue. But isn't there AdBlock Plus, AdBlock, and uBlock? I install uBlock immediately after downloading a new browser. I think anyone in tech does the same. Which makes me worry about Twitter, Reddit, and Snapchat. These apps are mostly used by people under 40 who are tech-savvy. They are all in the red (maybe Twitter is green now?), but they plan on making money through advertising. Their prime user base knows about AdBlock. What happens when ad blocking is ubiquitous? That's one way the bubble could burst. Here's another. I work for a company that's venture-backed. My salary comes from venture capital. We've spent the past few years building a healthcare product that's finally gotten some traction. There are currently major incentives for hospitals to adopt emerging technologies. These governmental initiates have made it easier for us to approach customers. Federal funding fluctuates rapidly and while it may be advantageous to start a health tech company today, that could change depending on election outcomes and other spending. Our investors are keenly aware of this situation. Should the environment shift, they would be unlikely to perform another investment round. Venture capital is not a sure footing to build a business on - at least not as sure as selling pizzas. And I think this defines my idea of a bubble. Too many venture-backed companies with extreme evaluations that are planning on making money someday using strategies that worked in the past (e.g. advertising), or assuming that the next round of capital will be there should their plan fail.

hullo 12y ago
The use of the web has continued to expand at a much greater rate than the use of ad blockers, even if it were true that everyone in tech installs one (they don't). And now mobile web grows at a great clip each year as well. I imagine use of ad blockers is much lower on smart phones; in particular given the large share of market non-jailbroken iPhones have. I gather it's possible for Android, but I haven't seen enough folks talking about it for me to believe it's that common.
austenallred 12y ago
> Venture capital is not a sure footing to build a business on - at least not as sure as selling pizzas. You're right, of course, in that technology is not as predictable of a need as pizzas. But pizzas also aren't very hard to make or sell. They're a commodity, which means demand is always there, but it's tough to differentiate and make real money in them (because competition drives prices down). Google and Facebook, on the other hand, are monopolies of sorts. (Don't believe that? Ask Google Plus). While there are many different factors involved (and there are companies on much-less-secure footing than Facebook, Google or Pinterest), I think it's dangerous to extend the anecdote of, "I download adblock" to the rest of the human population. I don't use adblock, and I'm relatively tech savvy. Nor do most of my friends. So let's look at the ad-supported companies right now, but let's talk real numbers, not speculative ones. Facebook brought in $3.85B in revenue during the last quarter of 2014. Google reported consolidated revenues of $15.42 billion for the quarter ended March 31, 2014. Those aren't hand-wavy "maybe someday" numbers, that's cold hard cash. Reddit, while much more nascent as far as making actual money goes (they would argue they're playing the long game and not optimize for earnings right now) brought in just over $8 million. They're not quite profitable, but they're not far either. There are a lot of forces that change whether or not something is valuable and what the venture financing market look like, but this time (as opposed to 1999) there are a few companies that are bringing in incredible amounts of real revenue.
positr0n 12y ago
The vast majority of software engineers work for boring enterprises or small businesses that supply software/services for boring enterprises. These software engineers are creating real value in exchange for their salaries, often only a few degrees removed from the buying and selling of real physical things. If you are working for a advertisement-backed, consumer-facing company wondering why you have such a lofty salary, part of the reason is simply because those companies need to compete with these more boring businesses to attract and retain engineers. I know that doesn't reply to all of your comment, but it's a good thing to consider that I often forget myself.

hullo 12y ago

The use of the web has continued to expand at a much greater rate than the use of ad blockers, even if it were true that everyone in tech installs one (they don't). And now mobile web grows at a great clip each year as well. I imagine use of ad blockers is much lower on smart phones; in particular given the large share of market non-jailbroken iPhones have. I gather it's possible for Android, but I haven't seen enough folks talking about it for me to believe it's that common.

austenallred 12y ago

> Venture capital is not a sure footing to build a business on - at least not as sure as selling pizzas. You're right, of course, in that technology is not as predictable of a need as pizzas. But pizzas also aren't very hard to make or sell. They're a commodity, which means demand is always there, but it's tough to differentiate and make real money in them (because competition drives prices down). Google and Facebook, on the other hand, are monopolies of sorts. (Don't believe that? Ask Google Plus). While there are many different factors involved (and there are companies on much-less-secure footing than Facebook, Google or Pinterest), I think it's dangerous to extend the anecdote of, "I download adblock" to the rest of the human population. I don't use adblock, and I'm relatively tech savvy. Nor do most of my friends. So let's look at the ad-supported companies right now, but let's talk real numbers, not speculative ones. Facebook brought in $3.85B in revenue during the last quarter of 2014. Google reported consolidated revenues of $15.42 billion for the quarter ended March 31, 2014. Those aren't hand-wavy "maybe someday" numbers, that's cold hard cash. Reddit, while much more nascent as far as making actual money goes (they would argue they're playing the long game and not optimize for earnings right now) brought in just over $8 million. They're not quite profitable, but they're not far either. There are a lot of forces that change whether or not something is valuable and what the venture financing market look like, but this time (as opposed to 1999) there are a few companies that are bringing in incredible amounts of real revenue.

positr0n 12y ago

The vast majority of software engineers work for boring enterprises or small businesses that supply software/services for boring enterprises. These software engineers are creating real value in exchange for their salaries, often only a few degrees removed from the buying and selling of real physical things. If you are working for a advertisement-backed, consumer-facing company wondering why you have such a lofty salary, part of the reason is simply because those companies need to compete with these more boring businesses to attract and retain engineers. I know that doesn't reply to all of your comment, but it's a good thing to consider that I often forget myself.