
Y Combinator founder: there is no tech bubble - rhartsock
http://venturebeat.com/2011/02/17/graham-y-combinator-no-tech-bubble/
======
blhack
Well that was fast.

This actually reminds me of something that's been bugging me for a while.

If you're Mark Zuckerberg, or Paul Graham, one of the google execs, or
basically any high-profile tech person...do you still get to sit at the lunch
table with everybody else?

I love talking to people here on HN, or joking around on reddit. I used to be
_very_ active on slashdot, and had a lot of really interesting discussions
with people there. I can do this because nobody really cares who I am. If I
say that I think the iPad is stupid, it doesn't make the news.

So if you're Paul Graham, and you just want to jump into a discussion and
"shoot the shit" with people, how do you do it?

Especially if you're Mark Zuckerberg, do you not even get to use the product
that you're in charge of because _everything_ you say is going to be dissected
by thousands of bloggers and tech journalists? Do you still get to post to
slashdot without people thinking that it's an indicator of where facebook is
heading?

~~~
pg
I think if you're running a big company you have to be cautious about what you
say in public. If you're just an investor you can take more risks.

Spending a decade publishing essays that got port-scanned by forum trolls has
also helped. It has trained me to make sure what I'm saying is true before I
hit submit. (Or at least within a few minutes of hitting submit; I added the
delay feature to HN explicitly for this purpose.)

~~~
logicalmoron
I thought it was great that you dropped in on Hacker News — something like
this is exactly the kind of low-cost commentary we need from some of the
leaders of the valley from time to time.

I feel like there are at least a few disagreements about the state of a tech
bubble in the valley. I mean, the poll got a few votes, so it's an issue worth
noting — right? Then again, that probably comes from a significant amount of
inexperience on my end. But I feel like your opinion is valuable even outside
of the subset of the conversation in Hacker News. (Maybe we need a Bolzanno-
Weierstrass analogy for discussion within specific venues and the discussion
in the valley as a whole.)

I just think something like this is an easy way to get your opinion on the
matter without having to get in front of you and waste your time on an issue
that isn't exactly pressing. I mean, I don't know how I would feel if
reporters hounded me every day asking if I still believed there was a tech
bubble. But it's still an issue that obviously a lot of people care about and
like to read about.

Anyway, my two cents. But, like I said, I'm pretty inexperienced when it comes
to this whole "silicon valley" thing.

------
jburwell
My simple response is, "Denial is a river in Egypt." Paul Graham is not an
impartial observer in this debate. YC (and by extension him) are some of the
loudest advocates for the current startup generation. Should a bubble burst
around them, YC would stand to loose tremendously in money and prestige
regardless of the merits of their individual investments.

~~~
chc
The saying is actually "…not just a river in Egypt." The fact that the Nile
_is_ a river in Egypt is somewhat less enlightening.

------
barrybe
That's exactly what someone would say if there WAS a tech bubble! We're
doomed!

~~~
c2
Your comment is funny but true. People will always find rational reasons to
explain away sky high valuations. Even the first time around, Pets.com had a
very high market potential if it capitalized successfully on projected
internal sales growth rates and expanded to the size of the pet care market.

I take all these comments very very lightly. In my experience, the surest sign
of a bubble is when the non-savvy bench investors in your life start talking
about "great investment opportunities". When 9/10 people in your office are
buying a house as an investment opportunity, there is probably a bubble. When
9/10 of your office is investing in the secondary facebook market (or
something similar) chances are there is a bubble.

------
DanI-S
There may be no bubble, but there's definitely an echo.

~~~
mkr-hn
That's because the tech world is a giant parabola.

------
pessimist
The claim is that the people investing now are super smart guys like Yuri
Milner, so there is no bubble.

I'm mildly skeptical - Silicon Valley VCs appear to be as affected by herd
mentality as everyone else.

------
Swannie
All this talk of bubble misses the fact that there is _real growth_ happening
in the technology sector.

The growth is a combination of many factors, by mostly it seems, the
following:

* redistribution of services from a small office, small local market, to a small office but a global market. The models of today, aren't all that dissimilar to what they used to be, just the internet kills the road warrior salesman/support guys, and PayPal pretty much kills the international banking problems too.

* redistribution of premium telecoms based services from traditionally state controlled companies, to smaller, more agile and less restricted companies: this is a LOT of $$$. Look at the services that 5 years ago, people were talking about mCommerce - they are mostly online and ad-funded, app purchase funded (via Apple or Google, not the telcos), and soon to be Facebook credit funded.

* the depressed global market, making a traditional software engineering or marketing/sales job a riskier proposition, reducing relative risk of startups

* a generation of still young investors who have lived through a real boom/bust cycle, and stayed in the game, and understand at least one of the above factors.

Is there a bubble? Only if this growth collapses. I don't see any reason for
it to. The economy will start to recover, the markets for apps will stabilise,
and there will be some fallout, but don't confuse real growth for unfounded
growth.

(What about the Yuri Milner move? Well, knowing two YC 10 W founders, I'd put
whatever stupidly small % of his wealth was, of my own wealth into their
company ANY day.)

------
juiceandjuice
this is so meta.

I'm writing a post on HN about a article about a post on HN.

~~~
nhangen
Kind of makes you sick doesn't it?

------
jbhelms
Even if there is a tech bubble, so what. You just need to do due diligence
when dealing with a company. Does the company offer true value or is it a fad?
For example, FaceBook. yes, there are millions of people on there, but their
revenue source is from ads that have little ROI. Zynga is another one, how
long can you convince people to keep buying dresses for your virtual pig?

------
nchlswu
Except - unless I misinterpreted it - PG didn't quite say that. He pointed out
the differences between the tech bubble then and what's occurring now. Sure,
I'm nitpicking, but I think it's an important distinction. If there's a
bubble, it will surely be different than before and isn't it a bit early to
make sweeping predictions? PG didn't make any.

~~~
knowtheory
I am definitely skeptical of this article's conclusion.

Just because Yuri Milner and Mark Zuckerberg are poised to make a lot of money
doesn't mean that there are a lot of people out there who are going to hop on
tech stocks because they look hot and lose a lot of money.

It's certainly true that Facebook, LinkedIn and other tech companies are
_making_ something that has an impact on the lives of others, but that doesn't
mean that valuations aren't going to get horribly out of whack.

In fact, Zuckerberg and Milner stand to make a big pile of money if valuations
do get horribly out of whack. Just as the banks did during the mortgage loan
fiasco.

------
johnrob
Even if there is a bubble, who cares (in these parts at least)? Back in 2001,
you needed money to build a product. The bubble bursting meant no money, and
thus no product. These days a downturn won't prevent you from building
something.

------
clare
I haven't experienced the first bubble, so no context there. However at least
from my own experience with VC and angel investors, they are all quite risk
averse and insist on seeing solid traction/revenue befor even considering
investment. Among all the most popular sites, Twitter might be the only bad
example and exception here without a solid revenue model, whereas Facebook,
Linkedin, and Groupon all boasted a stellar revenue already. I do think the
investors have learnt from the last bubble and changed the mentality a lot.

------
p90x
Does this need to be said? Is there anyone suggesting that there is a tech
bubble like there was in 2000?

I mean that literally. Is there a single person on the face of the earth
voicing that opinion? Because I haven't heard it.

The tech bubble in 2000 was more than overvalued companies, over hyped
stories, and big promises. What I see now is the same thing that happens every
day in other financial sectors.

------
ccarpenterg
Thanks for the post. We don't want investors running away.

------
haploid
"It's different this time."

