
Bay Area job market rebounds from earlier ‘false scares’ - MilnerRoute
http://www.siliconvalley.com/2016/11/18/strong-job-gains-are-reported-for-october-in-california/
======
twblalock
Every year since the current boom started, people have predicted that we are
in a bubble that is about to burst. Every year since then, that prediction has
been wrong.

It's pretty clear that most of these predictions have been motivated by
sentiment or mood affiliation (e.g. "these new startups don't really _make_
anything, techies are ruining San Francisco, so they must therefore be bound
to fail") rather than economic facts.

So, I just don't listen to those predictions anymore. If a slowdown, or a
slump, or a crash happens, I'm sure I'll notice it without the naysayers'
help. I'll start to worry when it becomes significantly easier to hire
engineers.

~~~
imh
I like all the constant bubble talk. As I see it, the more wary people are,
the less likely we are to collectively make dumb decisions that lead to an
actual bubble. It's not like any of this talk goes around with total
certainty.

~~~
jldugger
Making WebVan style bad investments because you can resell it is only part of
the problem. The other part of the problem is systemic: it only takes a few
dumb actors to make everyone act poorly. When AIG underwrote credit default
insurance priced premiums too cheaply for the eventual outcome, a lot of
people had no idea how widely distributed their mistake was -- because
contracts weren't tradable, and a number of firms were engaged in contract
type arbitrage, nobody had any clue what percentage of their liability traced
back to AIG. But it wasn't zero just because they never bought from them --
you needed to know your transitive exposure to counterparties to properly
offset risk.

Obviously AIG got to where it did because of a flawed system that allowed AAA
rated companies to issue insurance with no capital, but the analogy of a
system of largely rational actors making collective mistakes still holds. One
collective bubble argument in tech is ad driven. Every ad driven app & game
I've tried has been largely advertised other ad driven games. This represents
and form of investment -- spend ad money now and get back more ad money over
time. If a few actors are overly optimistic, they'll be outbidding other
advertisers and raising the return on ads.

Which can produce a couple of adverse feedback loops. Firstly, other companies
look at the going rate, and have no way of predicting a crash in ad rates. But
if the rate is high now, they will probably choose to produce more ad driven
apps. Second incumbent advertising networks (Google, Facebook) will derive
immediate benefit, and have extra cash to invest to support more opportunities
further out on the risk-reward spectrum. Thirdly, the optimistic actors
themselves have a sort of feedback loop -- if rates rise based on their
entrance, then their models may well predict rates continuing to rise.
Emboldening to buy more, and higher.

The trouble is, we don't know if this is the case or not. It seems possible,
but there's also a number of micropayment based games that might explain an
increasing ad rate. And we can tell ourselves that ad blockers are way less
common and less effective on mobile, so maybe we shouldn't expect desktop and
mobile markets to converge to the same place.

------
jknoepfler
I have yet to hear a substantial, quantitative argument that there is a tech
bubble looming on the horizon. I have read a lot of anecdotal slop about VC
capital drying up or a few big companies going sideways, but as the number of
tech startups grows, the long tail of "shocking, improbable" failures from
big-valuation companies that make the news will grow with it.

I do think the "shiny tech-hub" ecosystem is a little unsustainable, but it's
not without historical precedent in finance and banking, and has little to do
with the health of the tech economy.

No one's gut has magical predictive powers about the market, but humans are
almost universally prone to the mistake of thinking theirs does, especially if
they can find other people who share that impression. The illusion of
understanding is made much stronger by proximity.

~~~
roymurdock
[http://www.pwc.com/gx/en/technology/publications/assets/q3-2...](http://www.pwc.com/gx/en/technology/publications/assets/q3-2016-global-
tech-ipo.pdf)

Look at Unicorn IPOs, starting on p. 7:

"Unicorns made a comeback this quarter with Nets A/S of Denmark and LINE Corp
of Japan. Apart from these two, Unicorns have stayed away this year,
indicating market uncertainties...The number of IPOs increased primarily due
to the significant growth of low-value listings. The absence of large IPOs
from major markets indicates that the technology IPO market, while ‘open’, is
not very strong. Leaving out Q3’s two billion-dollar-plus IPOs, the average
proceeds for the other 18 was just US$105 million. Also, NASDAQ remained the
preferred exchange for smaller, cost-conscious technology companies.

In the last few quarters, the top technology IPOs have been launched in Europe
and Asia instead of the US, which has historically been a favored option for
big-ticket IPOs. In the last five quarters, two of the top three came from
Europe. The distribution of the top three IPOs for each of the last five
quarters (15 total) has been Europe with six, followed by Asia with four.

The larger tech IPOs from Europe tend to be from well established service
companies with a long history of stable earnings. As a result, their IPOs are
not negatively impacted by a difficult market."

So if you strip out established services tech companies, traditional liquidity
events for unicorns are drying up somewhat. Doesn't sound like a bubble,
unless all the hugely-valued private unicorns run out of cash around the same
time and flood the public markets, looking to raise equity funding. Of course,
this doesn't factor in other types of liquidity events such as acquisitions,
which have also fallen off recently [1].

Seems more like a controlled deflation/devaluation than a bubble to me, but
who knows. It's fun to watch if you're not too closely affiliated.

[1] [https://webforms.ey.com/gl/en/industries/technology/ey-
globa...](https://webforms.ey.com/gl/en/industries/technology/ey-global-
technology-mergers-and-acquisitions)

------
coldcode
The market is great, but everyone seems to just mill around from job to job
because no one from the outside can afford to live there.

~~~
lsc
>The market is great, but everyone seems to just mill around from job to job
because no one from the outside can afford to live there.

This... just isn't true for Engineers. In silicon valley, you can still get a
reasonable place for under $2500 a month, and even at SysAdmin wages, which
are rather less than SWE wages, that's doable for one person, easy for two.
It's still under the what, 33% of your salary you are supposed to spend on
rent, and as that's a percentage, and as your toys cost just as much here as
they do everywhere else, your toy (or retirement savings, depending on your
temperament) budget is huge compared to someone who spends 1/3rd of their
income on rent in a less-expensive and less-renumerative city.

Granted, for people outside of tech, it's gotta really suck; personally I find
it shocking that food and services around here are so cheap. How do they find
people willing to cook, drive, etc... at those prices? Are these all locals
who bought in when it was cheap? but for people within the tech industry, it's
a different deal than when I was growing up (in those days, being a nerd was
social death.) - but the outcome is the same. If you are willing to forego
kids, it's perfectly affordable to live here.

I mean, sure, you ain't staring a family unless you bought in a half decade
back or you are really top-end skill-wise, or you are two Engineers who both
plan on continuing to work, but that's what the locals want, and frankly, it's
fine with me. I mean, I'll vote for more residental construction every time,
but if locals what to prevent that, and present me with a child-free valley? I
ain't complaining.

~~~
santaclaus
> I find it shocking that food and services around here are so cheap

Food, cheap? By the cost of a beer index, the bay area is at NYC and DC level
prices.

~~~
lsc
But so is our rent, and I think silicon valley is harder to commute into than
those other places.

I was making a comment on how I thought silicon valley is affordable for
engineers, I don't really understand how the service workers make it, and I
was implying that the obvious solution would be to pay them more, and raise
prices accordingly.

Compared to the multiplier on rent, yes, I think food and services are cheap.

------
ChuckMcM
I got the same impression from driving around, it isn't slowing down much (a
friend of mine joked they could all be driving to interviews but statistics
suggests otherwise)

------
stevesun21
I guess this might be a good timing for employers think about how to improve
the lottery puzzle question based hiring process. I know a lot of good
software developers are under evaluated during interviews. In another side,
some developers got good job not because they know how to design solutions,
just because they are good at practicing questions from interview question
website, for instance, leetcode.

