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>the fact is everyone is hedging their bets and are diversified in a way (within tech) That is in no way diversification. And the correlation of investments wi

>the fact is everyone is hedging their bets and are diversified in a way (within tech) That is in no way diversification. And the correlation of investments within the tech world, when shit hits the fan, will be 1. >real revenues and profits Which of the companies are making profits? Look, I'm not calling for Tech Crash 2.0 either, but some people seem oblivious to how these things go down when they....go down.

austenallred 11y ago
> That is in no way diversification. And the correlation of investments within the tech world, when shit hits the fan, will be 1. Hence the "in a way." And your argument makes the assumption that tech, as a category, will collapse. > Which of the companies are making profits? "Tech" is a very big thing, but if we're picking random companies there are a few divisions: Public: Google makes money hand over fist, Amazon tries not to make profits (and almost accidentally brought in $20m last quarter) while their revenues grow exponentially. Facebook brings in billions, Twitter, the dark horse of this category, is still bringing in >$1B/yr in revenue. Ok, but those are the titans. Let's look at the YC companies: Airbnb, Dropbox and Stripe alone would make up for every dollar YC ever spent investing. But even locally, almost every company I talk to is choosing to raise money. Meaning, they have enough revenue to stay afloat, but elect to raise money to grow more quickly. These are companies raising little $2m rounds but are either profitable or could be if they needed to, but elect to grow quickly instead of become cashflow positive. (Admittedly, my company does not fall within that category). There may be overvaluation, especially at later stages, but the investments being made assume there is. They assume that some (or most) will fail, but that the others will make a multiple. Some money will be lost, but as long as the entire category of "technology" doesn't collapse altogether, it's not like 1999 again. And given the amount of real profits and revenues in the category of "technology," my contention is that there won't be, as Marc Andreessen puts it, an "earth-shattering kaboom."
- forgetsusername 11y ago
  >YC companies: Airbnb, Dropbox and Stripe AirBnb...maybe? I don't know, it's extremely popular, but faces interesting regulatory risk. I think it'll do okay. DropBox and Stripe? Competitive spaces. Maybe they make it, maybe they don't. I can't see them being "moated" (in the parlance of Buffet) leaders in their respective businesses. But I've been wrong many times. >"but as long as the entire category of "technology" doesn't collapse altogether" I guess that's our point of contention: I think it does go down together, rational or not. We just witnessed something similar in the oil industry. Everyone collapsed, whether they were big, small, hedged or otherwise not directly affected by the collapse in oil price. That happens in a panic because nobody can tell the extent of the risk. >And given the amount of real profits I agree that, as oposed to DotCom 1.0, companies are generating revenues. But, again, where are the "real" profits? Google, sure, but they are transitioning from growth to value. Facebook's are minimal. I don't think any other company you have named is making money. Granted, it doesn't necessarily matter for "early stage" behemoths like Uber or AirBnB, but that doesn't make the profit claim true.

austenallred 11y ago

> That is in no way diversification. And the correlation of investments within the tech world, when shit hits the fan, will be 1. Hence the "in a way." And your argument makes the assumption that tech, as a category, will collapse. > Which of the companies are making profits? "Tech" is a very big thing, but if we're picking random companies there are a few divisions: Public: Google makes money hand over fist, Amazon tries not to make profits (and almost accidentally brought in $20m last quarter) while their revenues grow exponentially. Facebook brings in billions, Twitter, the dark horse of this category, is still bringing in >$1B/yr in revenue. Ok, but those are the titans. Let's look at the YC companies: Airbnb, Dropbox and Stripe alone would make up for every dollar YC ever spent investing. But even locally, almost every company I talk to is choosing to raise money. Meaning, they have enough revenue to stay afloat, but elect to raise money to grow more quickly. These are companies raising little $2m rounds but are either profitable or could be if they needed to, but elect to grow quickly instead of become cashflow positive. (Admittedly, my company does not fall within that category). There may be overvaluation, especially at later stages, but the investments being made assume there is. They assume that some (or most) will fail, but that the others will make a multiple. Some money will be lost, but as long as the entire category of "technology" doesn't collapse altogether, it's not like 1999 again. And given the amount of real profits and revenues in the category of "technology," my contention is that there won't be, as Marc Andreessen puts it, an "earth-shattering kaboom."

forgetsusername 11y ago
>YC companies: Airbnb, Dropbox and Stripe AirBnb...maybe? I don't know, it's extremely popular, but faces interesting regulatory risk. I think it'll do okay. DropBox and Stripe? Competitive spaces. Maybe they make it, maybe they don't. I can't see them being "moated" (in the parlance of Buffet) leaders in their respective businesses. But I've been wrong many times. >"but as long as the entire category of "technology" doesn't collapse altogether" I guess that's our point of contention: I think it does go down together, rational or not. We just witnessed something similar in the oil industry. Everyone collapsed, whether they were big, small, hedged or otherwise not directly affected by the collapse in oil price. That happens in a panic because nobody can tell the extent of the risk. >And given the amount of real profits I agree that, as oposed to DotCom 1.0, companies are generating revenues. But, again, where are the "real" profits? Google, sure, but they are transitioning from growth to value. Facebook's are minimal. I don't think any other company you have named is making money. Granted, it doesn't necessarily matter for "early stage" behemoths like Uber or AirBnB, but that doesn't make the profit claim true.