
This Tech Bubble Is Different - turoczy
http://www.businessweek.com/magazine/content/11_17/b4225060960537.htm
======
strlen
I sympathize with this view, but the very example given contradicts the thesis
that this bubble will leave no technology in its wake.

Hadoop was developed at Yahoo, an advertising supported company. Some of the
most interesting contributions (HDFS sync, RaidNode, AvatarNode) have come
from Facebook, an ad supported company. Hadoop's architecture itself is
inspired by the MapReduce and GFS papers from Google, another ad supported
company. This shows that the premise is false: there is indeed technology
transfer from the "hot businesses" to other companies and academia. Hadoop is
the prominent example, but not the only one: many contributions to the Linux
kernel come from Google, both Google and Facebook have also contributed
extensively to MySQL.

The ad ranking and recommendation algorithms themselves are also by no means
trivial, much of the work that goes on in that field (machine learning,
information retrieval, natural language processing, large scale graph
processing) is applicable elsewhere. The "math wiz" college graduates working
on these fields, are going to be able to apply the skills they build
elsewhere. Not to mention, the stock options, even if we assume modest
outcomes, could pay for many a Ph.D. for engineers who wouldn't otherwise
afford to take the time off from industry.

There are also products like GroupOn that don't seem to be technology driven
at all, but that can change rather radically (e.g., Amazon's move from a
technology consumer, to a producer of their own technology, to a company
selling technology to others).

In other words, one doesn't have to sell technology to businesses in order to
build technology that benefits others. There's nothing wrong with selling
technology to businesses (and if I were to start my own company, I'd start one
that does that, because I understand e.g., distributed databases and market
for them better than I understand, e.g., machine learning and consumer
marketing), but there's nothing wrong with providing an ad supported service
to consumers, as long as interesting and universally applicable technology
gets built in the process.

~~~
6ren
A nice thing about Google is that its interests have been aligned with the
public good: more internet access, more websites, more blogs, more webapps.
(Their interests are now diverging a bit, as they try to extract more personal
information. Facebook did a nice trick where people actively give them their
personal information...)

Not sure if the alignment is as deep for Facebook - more people with internet
benefits them, but does more internet content?

------
aksbhat
"Hammerbacher looked around Silicon Valley at companies like his own, Google
(GOOG), and Twitter, and saw his peers wasting their talents. "The best minds
of my generation are thinking about how to make people click ads," he says.
'That sucks.'"

I loved this quote, I also had a similar experience. In past I had an
internship in a similar role and pursued few projects on mining communities in
large social networks. However luckily I got an amazing opportunity of working
at med school/hospital affiliated with my university. I now apply similar
algorithms, but now I help radiologists and physicians.

Lets hope that in future the methods that are developed for optimizing ad
clicks could probably be useful in some other field. E.g. how IBM is now
planning to use Watson in healthcare. My guess is that a lot of algorithm used
in developing Watson, were developed for ranking Ads. Closer home, I use a 55
node Hadoop cluster for processing 19 Million annotated PubMed abstracts.

~~~
ma2rten
Hey, I think I read your paper in class. Amazing how small the world can be
sometimes.

------
edanm
I don't agree with this article.

Just because a lot of time is spent working on "non-interesting" problems,
technologically speaking, like Facebook and Zynga, doesn't mean that there
aren't plenty of startups who _are_ working in more technologically-impressive
fields ( _). The entire article is completely anecdotal.

To make things worse, it explains how Groupon's only tech innovation is "cute
email". But I don't understand why people call Groupon a (technology) startup.
It's just a company. A fast growing one, sure, and that relies on some
technology (like every other company in the world). But it's not a tech
company at all.

_ I'm not saying that Facebook isn't impressive, technologically. I think
Facebook has a lot of things to offer, e.g. scaling, building the world's
largest real-time chat system, impressive amounts of work into user
interfaces, and, as the article mentions, impressive amounts of work into
analyzing user behavior.

~~~
daniel1980fl
it is tech company. core of their functionality is an algorithm (no matter how
simple) that lets its company to function.

------
swombat
You gotta be kidding me. Social media will leave nothing behind? How about a
communications infrastructure spanning the whole world and connecting people
to both friends and other people of interest in real-time, no matter where
they are (in the bus, in the street, at home, at their computer), enabling the
most rapid spread of information ever seen, and potentially enabling the world
to start functioning as a sort of "human computer", with intelligent sensors
and intelligent nodes (people) and lightning fast communications between them?

How can you point at that and say that Twitter and Facebook are wasting their
time?

~~~
leon_
> How about a communications infrastructure spanning ...

tcp/ip? The infrastructure has been here for a long time. The reason why
people start to "connect" with everybody now is because computers and mobile
IP devices are becoming really cheap. People would be still communicating in
realtime without twitter, facebook, co. SMTP, IRC and IM protocols were here
before Mr. Zuckerberg knew how to spell PHP.

~~~
swombat
Those were computer-to-computer, not people-to-people. The only people who
could use those were technical.

Facebook, Twitter, et al, built a communication infrastructure between people.
That's about much more than just programming or designing computer
communication protocols.

It's a common fallacy from programmers to think that the hard part of "build a
system for 100 million users" is the programming.

~~~
leon_
Strange, my nonprogramming mother can send emails without problems. (And finds
Facebook horribly confusing.)

~~~
swombat
Emails are a very unproductive way to handle communications between hundreds
of people in your social network. They provide no ambient awareness of what's
going on with the people you know.

They were people-to-people communication infrastructure, sure, in the same way
as a dirt road is a road. But there's a big difference between an 8-lane
highway and a dirt road, and there's as big a difference between email and
twitter. Both are a kind of infrastructure.

------
dougabug
"Hammerbacher looked around Silicon Valley at companies like his own, Google
(GOOG), and Twitter, and saw his peers wasting their talents. "The best minds
of my generation are thinking about how to make people click ads," he says.
'That sucks.'"

Man, I love that quote. Advertising is a pestilence. The real problem with ads
is that they invariably take the form of insincere communication. As such,
they are fundamentally at odds with the open and thoughtful (on a good day)
nature of the Internet.

------
bad_user

        The best minds of my generation are thinking 
        about how to make people click ads
    

Best minds of any generation have always thought about ways to make money.

That doesn't mean that the world doesn't benefit from side-effects.
Information is at your fingertips because of companies like Google and Yahoo.
Staying connected is easier then before because of companies like Facebook and
Twitter.

And speaking about infrastructure; since 2000 lots of cool things happened,
like cheap cloud-computing (EC2, Rackspace) or open-source projects that can
kick start your company straight at Google-scale if needed (Hadoop). Not to
mention research papers that happened because of these companies.

~~~
mironathetin
"Best minds of any generation have always thought about ways to make money."

Sorry no!. Some of the very best still do science.

~~~
wh-uws
Which is generally funded by and for money

~~~
aksbhat
Not true, "most" of the research gets funded by NSF, NIH, DARPA, ARPA, Naval
Research. Of course there are companies such as IBM research, Microsoft
research but they are few.

By money and for money generally gives you High Frequency trading bots.

------
gersh
Throughout much of history many top scientists have devoted their lives to
finding better ways to kill people. Advertising is merely a more humane
alternative.

------
andymatic
"The four most expensive words in the English language are 'this time it's
different.'" - John Templeton

~~~
qq66
Those are also, at times, the four most profitable words in the English
language...

------
necrecious
The headline is terrible. The idea that much of the value generated in
startups is by quants optimizing numbers is interesting.

The critique that web companies don't leave a technical legacy is not really
valid. Most businesses don't leave a legacy.

------
varjag
If social really did help to tip the scale in the Middle-East revolutions,
that alone was worth it.

~~~
chadgeidel
I agree completely. The question is, what factor did sites like
Facebook/Twitter play? It would be nice if they were proven to be clear
contributors.

------
edoloughlin
Humanity does seem to have a predilection to devoting its brightest minds to
unproductive activities. How much better would the world be today if the hot
job of early medieval times was medicine instead of producing manuscripts?
Science instead of theology? Science instead of stock market analysis? Just
repeating a pattern...

~~~
Dn_Ab
This post is not fair to history. First, many theologians of old were first
rate thinkers. Although much of their work was practical (philosophy in this
case heh) they made contributions to logic, physics and uhm philosophy.
Perhaps you have heard of William of Ockham or Thomas Aquinas? As for
manuscripts, this was before the printing press so making manuscripts was
vital to knowledge spreading. Note that in this time Fibonacci and Copernicus
lived.

Finally, although things were slow in Europe, during this time the arabs,
persians and indians layed the foundations of and invented some of the
greatest inventions in the history of the universe including: positional
decimal numbering, zero, and algebra. As well as furthering calculus,
geometry, astronomy and number theory. Arabic medicine also maintained and
made some contributions to the state of the art of greek and roman times.

[http://www-gap.dcs.st-and.ac.uk/~history/HistTopics/Arabic_m...](http://www-
gap.dcs.st-and.ac.uk/~history/HistTopics/Arabic_mathematics.html)

[http://www-gap.dcs.st-and.ac.uk/~history/HistTopics/Zero.htm...](http://www-
gap.dcs.st-and.ac.uk/~history/HistTopics/Zero.html)

------
galactus
I liked this quote:

"The best minds of my generation are thinking about how to make people click
ads. That sucks."

~~~
seiji
It may have originated with FSJ:

    
    
        And you know what? There is something really evil about taking thousands 
        of the world’s smartest young people and using them to sell online text 
        ads more efficiently. Really. Think of all the really interesting and 
        important things that this pool of brainpower could be addressing.
    

April 2008: [http://www.fakesteve.net/2008/04/google-putting-up-fence-
and...](http://www.fakesteve.net/2008/04/google-putting-up-fence-and-gate-
to.html)

------
varunsrin
The content seems very anecdotal - I see a lot of conclusions being drawn from
a few examples in 'hot' startups like Facebook, Zynga & Color which represent
only a fraction of SV startups (and are possibly outliers).

------
dpapathanasiou
I admit to not having read the article yet, but every time I see "this time
it's different" it's a warning sign of delusion.

------
hans
yup, and this time it's mostly about unwinding desktop/workstation motifs, as
well as single app as moat, apps are now fluid points of integrated services.
we're going to learn how to unwind our boxes into all kinds of things. it
feels like more of a baroque bubble, emotionally we'll change ... and that
leads to opportunities.

------
michaelochurch
Different? _Different?_

Here's some reality surrounding certain socioeconomic fads, including the
"technology bubbles" we'll see intermittently for the next 100+ years since
technology is becoming the only economic force that really matters. The
visible winners and value-harvesters are usually idiots who got lucky. We look
at what they're doing and we say, "When the tide goes out, those lucky, no-
talent assclowns will have left us with nothing." The people getting invited
to the "hip" parties and the most exclusive events at SxSW are generally what
you'd expect in the era of social douchebaggery: people who are too busy
partying to get real work done.

Okay, okay; but something else happens, and there's a silver lining here.
While all the hipster douchewizards scramble for visibility and credit and the
image of "A-player" status, progress still continues. Somewhere under all that
smoke are the invisible people who are the _real_ A-players, usually taking
home a "B" or "C" outcome. You rarely hear their names (sometimes you do, but
there are too many of them for more than 0.1% of them to achieve real
notability) but they're the ones doing actual work and building great things.
And in 2025, when all the "social media" robber barons are either washed-up
billionaires or washed-up and penniless, the work that the _real_ A players
are doing right now will still matter. The applications of their work may have
died out, but their work will still be around and people will be putting the
ideas to better use.

~~~
danielnicollet
your view is a bit dramatic but probably closer to reality than anything else
I have read in this thread. The so called A-players taking B and C outcomes
also gradually increase their power and influence in the infrastructure of
what the net economy has become because they are able to win in almost every
cycle. The hipsters, usually only win once and then fade away from fame ;-)

------
ares2012
Yes, that's true. It's 2011, not 2006 (Web 2.0 bubble) or 1999 (Dotcom
bubble). Totally different.

~~~
turoczy
I'll admit. The headline belies the actual content. Which wasn't so flippant
or off-putting.

~~~
bruce511
"This bubble is always different"... Right up to the moment when the people
involved lose everything and start eying their office windows and wondering if
they open...

Bubbles exist because human nature is the same yesterday, today and tomorrow.
Not every tech company collapsed in 2000 - but the weak ones surely went to
the wall. Those with solid business models, and profitability are still going
strong. Not everyone will fail this time around, but it looks like serious
money will be lost.

As long as the companies going under are pre-IPO the ones most affected will
be VC's. After IPO it'll be Joe Public. Thanks to Sarbannes-Oxley there's far
fewer companies going public though, so perhaps that's at least one good thing
to come from that ill-advised adventure.

~~~
jerf
You should generally read the article before commenting. You should _really_
read the article before replying to a comment about how you ought to read the
article!

~~~
ares2012
That is assuming that you don't read the article and still post a flippant
remark.

------
nika
I've been investing for a long time. I've lived thru two bubbles already- the
dotcom bubble and the housing bubble. I lost money in the first and made a
killing in the second.

I won't say whether this is a bubble or not, but the number one thing I look
for is businessweek (or newsweek) saying that "things have changed!" A
mainstream publication putting the bull market on its cover is the prime
indicator that it is a bubble and that it will be a painful crash.

It is almost a cliche.

The real bubble right now is in the dollar. We've been able to inflate, an
export that inflation, for nearly 100 years, and we got away with it because
of military might and manufacturing might (and bretton woods). 2 of those 3
are gone and the last one is losing respect rapidly. It is gonna be a
bloodbath when those dollars come home to roost. (and it will kick off a
bubble in gold.)

Maybe the bursting of this "tech bubble" (if we're in one) will be the trigger
that causes the end of the dollar bubble.

Unfortunately I'm not aware of business week putting the dollar on the cover
and saying "This time its different". (But maybe one of their covers for gold
will count.)

~~~
powertower
The interesting thing about the gold market is that there is 40x more "paper"
gold ownership then there is actual gold in the world.

They can do this because the rules say if someone calls in their gold, they
can just give them the value of it in dollars if there is not enough metal to
cover it.

------
borism
This Time is Different: A Panoramic View of Eight Centuries of Financial
Crises

[http://www.economics.harvard.edu/files/faculty/51_This_Time_...](http://www.economics.harvard.edu/files/faculty/51_This_Time_Is_Different.pdf)

~~~
mattmanser
Read the article. Your comment makes no sense at all, the title is ironic.

