
The drivers of big tech’s growth are losing momentum - SQL2219
http://charleshughsmith.blogspot.com/2019/06/is-tech-bubble-bursting.html
======
nugget
Not a chance. There’s still so much inefficiency in so many legacy industries.
Software will continue to eat the world for decades to come.

~~~
nineteen999
That statement was even more true when the last tech bubble burst early this
millenium.

[https://en.wikipedia.org/wiki/Dot-
com_bubble](https://en.wikipedia.org/wiki/Dot-com_bubble)

That bubble formed because of inefficiencies and excessive speculation in the
tech market itself after a period of extreme growth.

I'm not necessarily agreeing with the article that we have arrived at that
point in the cycle again, but I'm not as sure as you that it won't happen at
all. And I'm pretty sure I'm not the only one.

~~~
dev_dull
In other words, it’s one thing to say the platitude is true, it’s another
thing to time it.

------
ksajadi
You might want to say Silicon Valley had a good run or software as a service
had a good run or mobile apps had a good run. But this is essentially saying
the end of tech is here. That’s like saying everything is now invented and
there is nothing new to be discovered.

~~~
Barrin92
That's not at all what the author is saying. He's saying that consumer
attention and convenience has hit its limit. That's not the entire field of
technology.

Energy clean and too cheap to measure, faster construction, new modes of
manufacturing, new medicines, efficiency of engines, new modes of
transportation and propulsion and so on. You can easily imagine an entire
array of things that would materially improve our lives and improve
productivity through the entire economy, applicable even in rural places.

What has probably reached its end is the zero-sum rent seeking enabled by
platform owners and attention merchants. Maybe the Silicon Valley investors of
this world will go back to the scifi of the 60s and try to come up with
inventions that touch the physical world instead of continuing to pump money
into the cyberpunk version of the future we've been trying to emulate for the
last 20 years.

~~~
roymurdock
We are currently seeing more of a diffusion of technology outside of the first
world and a regression to the mean across economies than the breakout
productivity growth we saw in the US/Europe/Japan post WWII

So productivity growth is definitely happening globally, but generally by
bringing existing tech to new geographies (usually combined with cheaper labor
input and less regulation), or adapting existing technology to legacy
processes in industrialized economies

Investors are not returning to scifi of the 60s, just take a look at the
latest YC demo day: loan due diligence, direct to consumer B2B platform,
"AirBNB for electric chargers", online sales academy, contractor onboarding
software - tech is truly focused on picking some huge TAM market and taking x%
of that market from legacy competitors by having a narrow focus and adding
"tech" to the offering [1]

The lucrative place to be right now is private equity - there's so much money
floating around for buying and selling companies right now ($2TN in uninvested
"dry powder" at end of 2018). Why invent new products and companies when you
could simply buy an existing business and cut costs to attain or boost
profitability

[1] [https://techcrunch.com/2019/03/19/best-of-y-
combinator/](https://techcrunch.com/2019/03/19/best-of-y-combinator/)

------
nonbel
> "The race isn't to maximize profits, it's to survive the inevitable
> deflationary spiral in prices as competitors are forced to pass along cost
> savings to customers to retain market share."
> [https://www.oftwominds.com/blogmay19/tech-
> deflationary5-19.h...](https://www.oftwominds.com/blogmay19/tech-
> deflationary5-19.html)

Is this supposed to sound horrible?

~~~
human20190310
Maybe. If Uber and Lyft both ride their excellent technologies down to penny-
stock share prices, because even good technology just barely keeps companies
in business, then anyone who expected to profit from their success might be
disappointed.

~~~
freyr
Allow me to present the world’s smallest violin.

We’ve forgotten what “good technology” means.

~~~
bsder
While I'm certainly no ridesharing apologist, Uber/Lyft have raised the bar
_significantly_ in terms of forcing drivers to do basic things that cabs
simply failed to do in most places:

1) Actually freakin' show up.

2) Not take the lifetime of the universe showing up

3) Accept credit cards

4) Clean their car occasionally

I can go on ...

If Uber/Lyft completely flame out, I would not like to see these things go
back to the way they used to be.

~~~
freyr
They're use products, I just wouldn't call them "technology."

The technology is everything that enables these apps (GPS, mobile chipsets,
cellular technology, mobile OS, etc.).

------
zby
My ambivalent take:

Lot's of the big tech is just user interfaces (Uber, Airbnb, even Netflix).
There is some utility in better interfaces - but overall their market power
comes from squeezing the suppliers (see
[https://stratechery.com/2017/defining-
aggregators/](https://stratechery.com/2017/defining-aggregators/) and my
assimilation of it: [https://hackernoon.com/aggregators-
bffd36063a72](https://hackernoon.com/aggregators-bffd36063a72)). This is a
market inefficiency and it will be eventually fixed somehow.

But it is not everything - because we can automate more and more stuff beside
user interfaces, this will grow.

~~~
kochikame
Uber and Airbnb are more than just user interfaces. They actually unlock
economic potential that was previously left unused.

It's not like all those cars and drivers and spare rooms were being used for
anything else before, or offered through some other "interface"

I'd argue that they created both the supply and the demand, so in effect an
entire market. That's rather more than an interface

~~~
zby
I agree that they do unlock some economic potential - but still they are just
user interfaces. They don't own any of the physical facilities and they don't
do any sophisticated computations - all they do is matching offers and that is
just user interface.

User interface is not rocket science. They did unlock some economic potential
and they have been rewarded for this - but the equilibrium state is when
return on investing in Uber and investing in a physical facility (a car used
as taxi or for Uber) is the same. An app (Uber market cap $40B) cannot be
worth more than a factory (Ford market cap $9B) forever, because app is easier
to produce and if it is worth more now - then this attract competition that
will drive this down.

------
lawrenceyan
Yes, because clearly technology consists solely of only web services and
mobile apps. No other technical advancements and inventions exist or will ever
be built. This is quite literally the peak of humanity folks.

We've done everything possible and there's absolutely nothing left for us to
imagine, discover, or create. /s

~~~
roymurdock
That's not what the author is arguing, he's simply stating that a main driver
of this tech cycle - matching platforms for the sharing of private assets such
as Uber and AirBnB - is running into problems, with appetite decreasing in
public markets for companies that show (slowing) user growth with no clear
path to profitability. A valid point.

What remains to be seen is the second claim - "the fantasy that AI and machine
learning will generate trillions in profits"

While I tend to agree that ML/AI are generally deployed to save costs rather
than increase revenue and create totally new categories of products, there are
definitely still a lot of brownfield opportunities in legacy tech for data
scientists to tackle and automate

This also ignores the huge opportunity for cloud service providers to take
compute-as-a-service business from legacy on-prem/datacenter biz as well

But I would challenge you to think outside the sarcastic box and propose what
you see as a few of the main technological drivers of productivity growth that
are currently popping up in tech

~~~
lawrenceyan
What really needs to be answered here is why you suddenly stopped putting
periods at the end of your sentences after your first paragraph.

On a more serious note, if you're genuinely interested, just take a look at my
historical posts/comments on HN. I post all the interesting articles I see
from my personal feed on here.

------
ColinWielga
At some level Mors law is the ultimate driver of tech growth. It's not looking
so hot.

~~~
nonbel
I think AMD figured it out with chiplets actually... most software isn't even
written yet to take advantage of cheap massive parallelism. That is an entire
direction to grow after single thread performance flatlines.

------
turk73
Smith is not that good a prognosticator. He's better than Howard Kunstler,
who, despite having his finger on the pulse of certain recent trends, has
completely misunderstood the underlying factors causing those trends. Smith is
much the same way--a Boomer who has a Boomer world view. To be true visionary,
you have to be able to effectively set aside your own biases, something which
we are all guilty of having difficulty with. You have to let the clues take
you to conclusions that you aren't comfortable with--something that today's
liberals are exceedingly bad at doing. Their indoctrination does not allow
them to chart a different course, they end up headed straight for the rocks.

I think the smartphone fad is going to die down. The uptake rate of purchased
apps has got to be kind of dismal right now. It had novelty, now it doesn't.
Frankly, these phones are nothing but a pain. My 9-year old son has a phone,
he doesn't care. My teenage daughter uses some social media but the kids are
very wary of all of it having heard the horror stories and lived a few of
them. Telemarketers have utterly wrecked voice to the point where I never
hardly answer my phone anymore. Their bullshit has cut us off from each other
instead of bringing us together. Either it dies or we die.

His other point, financialization, is correct. But the issue there is that all
these companies were created to chew up money, not to better humanity. Our
priorities are what are all out of whack here. We could have spent all the
capital far more wisely, but it got allocated to sexy "disruptive" ideas like
Uber and Airbnb instead. Meanwhile, air travel sucks, traffic jams are way up,
and honestly, the US is headed to a 3rd World nation status because we haven't
invested in the things that really matter. Thus, in the midst of this
extravagant tech expansion, we have very little to show for it. Just money
down a hole. A kind of Keynesian money-sink situation.

Uber does stand out as terrible disruption. Cab companies had it coming, but
every day now I drive amongst these asinine Uber/Lyft stickered vehicles and
it just seems so...amateur. It's amateur hour. The tech behind it was cool,
but the actual, rubbe-meets-the-road aspect looks so completely idiotic to me.
For people who drive so much, they sure as hell aren't very good at it,
either!

~~~
icebraining
> The uptake rate of purchased apps has got to be kind of dismal right now.

On the contrary, all indicators point to big YoY increases. As an example,
"during the week starting on Christmas Eve, a record number of customers made
purchases or downloaded apps from the App Store, spending over $890 million in
that seven-day period." Other sources are talking about overall 25%+ revenue
increases for both Apple's and Google's stores.

------
SmartTix
Absolutely, yes. As indicated by the terrible stock performance after the IPOs
of Uber and Lyft. This is literally the market in action.

~~~
viscanti
> As indicated by the terrible stock performance after the IPOs of Uber and
> Lyft.

The Lyft price is down but it looks like Uber has kept pace with the overall
market since their IPO. I think we'd struggle to find many people who would
define "keeping pace with the market" as "terrible stock performance".

