

If History is any Guide, You’ve Got Two Years - Thun
http://blog.thomvest.com/youhavetwoyears/

======
wccrawford
Looking at those charts, it looks like he could have claimed the same thing 2,
4, and 6 years ago and would have been wrong each time.

Things never fell back to the 1994 level. In fact, it looks like they didn't
fall too far below where they're at now.

I was a lot more worried about a tech bubble -before- I saw those charts.

~~~
ChuckMcM
I read it and noted to myself the danger of looking at charts :-) People want
to see patterns, so they see patterns.

I find all the bubble analysis really interesting from a human psychology
point of view. On the one hand, if it is a bubble and you're not part of it,
your safe, be happy. On the other hand if its not a bubble and you're not part
of it, your still safe, you will perhaps be less happy later when you realize
what you missed but hey, that's how it goes.

Markets have up and down cycles (booms and busts) which is why we have terms
for investors like 'bear' and 'bull'. If this is a scary thing then do the
safe thing, learn one or more trade skills, put your money in FDIC insured
savings accounts, only buy real estate you are going to live in for 30 years
or more, and don't spend more money per year than you earn. Pretty straight
forward.

I wonder if there was all this hand wringing and teeth gnashing in the 30's
when the country was suffering through the Depression.

~~~
maigret
And so many people mean it's a bubble, it can't be one. Real bubble are not
seen by much people, except when they blast. Everyone knows the 2000 crash
now. How many bubble repeated themselves in the same scenario in the modern
history in a 10y timeframe?

~~~
maigret
I'd like to see some counter arguments against that. Please discuss instead of
downvoting.

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goo
This post is interesting because it illuminates a formula that I hadn't been
aware of.

1 - pick something HN already agrees with and then add some graphs.

2 - explain that the graphs are indicative of the concept that HN agrees with.
Regression analysis is not required, and if it were, fudging the numbers would
be perfectly acceptable.

3 - add an overly dramatic title, and post to HN!

I really miss the downvote button, but since it doesn't exist anymore I'll
complain instead.

History does not repeat itself. Concepts from history do, and lessons can
indeed be learned. But looking at graphs "in general" and pointing at where
they look similar is wrong at best, and a fantastic way to lose tons of money
at worst.

~~~
derrickpetzold
To be fair without downvoting perhaps your insightful post wouldn't exist and
some poor fool would be running around thinking he has two years.

~~~
goo
ahaha, perhaps I was a bit harsh. :)

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mikeocool
History is maybe not a great a measure in this case. In the late 90's/early
2000's the entire US economy was in a major boom, not just the tech industry.
Then in 2000 the economy came crashing down, as economies tend to do about
every 8-10 years. The bottom falling out of the tech sector was a fairly
significant contributor to the downturn, and then 9/11 happened shortly there
after further hampering the recovery process. The US federal reserve worked to
stimulate the economy by keeping interest rates. The economy started to
flourish again in the mid-2000s. But then those low interest rates greatly
contributed to the next crash when the housing bubble burst in 2008 (8 years
after the last major economic downturn!).

As the graphs in this article show the tech industry has recovered at a fairly
constant rate since 2000. There was a drop in funding in 2008, corresponding
to the drop in the rest of the US economy. The tech industry managed to bounce
back from the that incredibly quickly, resulting in what everyone is now
saying is a bubble.

However, looking at the entire situation, not just the tech industry, we're in
wildly different economic times now than we were in 2000. The US economy as a
whole is still fairly depressed, while the tech sector is sort of an anomaly
that's doing extremely well.

It's certainly a possibility that this is a tech bubble that'll burst and drop
the tech industry back in line with the rest of the economy. However, to look
at history as a guide once more, it's much more likely that the rest of the
economy will continue to recover and enter boom cycle (which shockingly also
happens roughly once every 8-10 years) and catch up to the tech industry. At
which point a lot more than just tech companies and investors will have a lot
of money to spend. Until, of course, something else triggers the next major
economic down turn sometime between 2016 and 2020.

------
dkarl
I used to work for a couple of guys who are running their own scientific
computing startup and are still in business after more than ten years. They've
been very good at finding people who can benefit pretty quickly from their
work and who pay them to develop it further. I haven't been in contact with
them in a while, but as of a year ago, they've been working on the same core
technology for ten years and developing it further every year. There's no need
for speculative funding, because they create R&D plans that result in
commercially useful, albeit prototype-quality, products.

They're very special in that they have a lasting technical edge, or you could
say they've gotten lucky. I think major companies that could compete with them
think the technology they're using is so hard to work with that it's a
permanently boutique business, but they have always had a cautious eye towards
scaling the business, and I don't see any reason why they can't accomplish it
someday.

~~~
invalidOrTaken
I'm curious about them. Mind providing a link?

~~~
dkarl
No web site :-) Partly because they're old-fashioned, but mostly because they
don't want any attention. When I worked for them, they didn't even let me tell
my friends what industry our customers were in. When I do a Google search for
the company name, the only hits that come up are a patent and a resume for a
guy who worked for them before I did. They've apparently opened up a little --
a previous Google search for them showed they had joined an industry
consortium, which by their standards is practically a debutante ball -- but I
haven't been in touch with them in over a year, so I don't want to presume
anything.

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amirmc
Google cache version:
[http://webcache.googleusercontent.com/search?q=cache:sx1uHnu...](http://webcache.googleusercontent.com/search?q=cache:sx1uHnuOQVQJ:blog.thomvest.com/)

(edit: seems the site is back now)

(edit2: maybe not)

~~~
Thun
Thanks for posting the cache, unfortunately we hosted the blog on a Canadian
web host who couldn't handle the traffic spike. Going to migrate tomorrow, but
in the mean time appreciate the backup.

------
amirmc
The basic premise here seems to be along the lines of "The environment looks a
bit like it did a couple of years before the bubble burst" and then a leap-of-
faith "...therefore you've got 2 years"

I don't find the argument as laid out particularly convincing, though it's
nice to have data to look at.

------
dstein
But if you bootstrap and find customers willing to pay for your product you've
got a lot longer than that.

~~~
smithbits
It's true, but you'll be competing with bubble-based companies for talent. Why
do I want to work for a reasonable, growing small business with it's customers
and profits when I can get twice as much money in San Francisco working at
some venture funded startup? And if any of those startups are in your market
space they will be offering your customers products and services at below
market rate in an attempt to grow revenue without worrying about profits. Now
they can't do that forever, but can they do it for long enough to wipe out
bootstrapping companies?

~~~
sethg
Kenan Systems, where I worked a decade ago, might provide a cautionary tale.
Kenan Sahin built the company up into the 800-pound gorilla of telecom billing
software without giving up any of his equity in it. Then he looked at how he
wanted the company to expand, looked at the competitive environment, and
decided that he needed more capital to avoid being leapfrogged. So he sold the
entire company to Lucent, whose CEO was on an acquisition spree.

Unfortunately, Lucent was at its peak when it bought Kenan Systems and,
briefly, everything started unraveling within a year of the acquisition.
Lucent eventually sold the Kenan division to CSG, which later sold it to
Comverse. A friend of mine, who had joined when it was still Kenan Systems,
was laid off a few months back; her co-workers told her she was lucky to be
laid off while the company could still afford to give her a decent severance
package.

------
IsaacL
For me, the graph seems to follow almost perfectly the hype cycle you get with
every new innovation (the main deviation being the dip around 2009, courtesy
of the Great Recession). My belief is that web-based apps are entering the
"plateau of productivity" phase, and we won't see a second internet bubble.

There _might_ be a second internet bubble if certain internet-related
innovations seem sufficiently novel to start new hype cycles. Maybe a social
bubble (not too likely, but could happen in the next 2 years) or a
mobile/tablet bubble (a bit more likely, but will take 4 or 5 years to burst).

Of course in the decades to come we'll see 3d printing bubbles, nanotechnology
bubbles, commercial space flight bubbles, and more. People always get
overexcited about new technology - the more potential the technology has, the
more over-excitement.

------
erikpukinskis
The only people who need to think like this are scam startups.

If you have good fundamentals (traction, revenue, defensibility, market
strategy) there is always money available for you.

The only people who need to worry about catching the bubble are those who are
trying to get funding without doing the work of building a business.

------
neelm
The other perspective is that a good number of very successful companies were
founded in a recession / downturn:

[http://www.kauffman.org/newsroom/the-economic-future-just-
ha...](http://www.kauffman.org/newsroom/the-economic-future-just-
happened.aspx)

[http://blogs.hbr.org/silverman/2008/08/why-downturns-
breed-b...](http://blogs.hbr.org/silverman/2008/08/why-downturns-breed-better-
innovations.html)

[http://www.resourcenation.com/blog/famous-companies-that-
wer...](http://www.resourcenation.com/blog/famous-companies-that-were-founded-
in-an-economic-recession/3265/)

There are a lot of lists like this.

------
bh42222
When thinking about bubbles, I like to turn the question around and ask
myself: Is it possible to grow for many years without any bubbles?

I would say no. And that is why while I suspect what we're in is no where near
as big as the .COM bubble was, the road ahead is also not smooth. But then
gain, ups and downs are also nothing new or worth worrying much about.

The very early stages of .com 2.0 produced some of my favorite startups. And
the most optimistic part of me is curious about what great things will rise
form the ashes of this/next bubble.

------
gojomo
History doesn't repeat, but it rhymes. Although every cycle is different,
there will always be people who call a top too early, and others who predict
further expansion on the eve of a crash.

There are similarities to 1998: enough of a boom that's unlike safe historical
value-anchors to make the skeptical scared, but also enough novelty to suggest
continuing upside as the opportunities are explored.

The recent memory of the dot-com boom, and the general malaise in the rest of
economy, changes the expression quite a bit. Are we hiding the exuberance that
would otherwise signal excess, and thus don't realize how late in the cycle it
already is? Or are we proceeding at a measured pace, keeping perceptions
closer to sustainable valuations, meaning we're still early in a now longer,
slower cycle? I wish I knew for certain.

~~~
chopsueyar
Twitter just celebrated its 5th birthday? Is it profitable yet?

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Vivtek
That is a handwavy graph if I've ever seen one.

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joejohnson
Those opening sentences are a grammatical nightmare. I like the piece, but
that's a harsh opening... might want to fix that.

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lucisferre
As always past performance is not an indicator of future performance.

