
What to do if a bubble is starting - fjw
http://blog.samaltman.com/what-to-do-if-a-bubble-is-starting
======
weeksie
Bubble? I feel like people who are claiming that we are in a startup bubble
weren't really around in the 90s. Guys were getting paid $100/hour to do HTML.
Just HTML. Literally just HTML.

The excess was mind-boggling. In contrast, today it just seems like lots of
investors have found a good way to pump money into a reasonable risk pool and
extract value. Seems fairly sustainable.

In the 90s, companies were doing IPOs and their shares were skyrocketing from
public investment. For the most part right now it's institutional investors
who are a lot more qualified than John Q. Public.

~~~
austenallred
It seems odd to me that people are seriously talking about a bubble coming as
if it's never been talked about before. It seems to be once a month that
there's another article on TechCrunch decrying Silicon Valley as a bubble
after stumbling upon the party of some douchebag who watched The Social
Network and decided to snort cocaine in Palo Alto. But I quote Peter Thiel's
"Party like it's 1999" lecture:
[http://blakemasters.com/post/20582845717/peter-thiels-
cs183-...](http://blakemasters.com/post/20582845717/peter-thiels-
cs183-startup-class-2-notes-essay)

"Bubbles arise when there is (1) widespread, intense belief that’s (2) not
true. But people don’t really believe in anything in our society anymore. You
can’t have a bubble absent widespread, intense belief. The incredible
narrative about a tech bubble comes from people who are looking for a bubble.
That’s more overreaction to the pain of the ‘90s than it is good analysis."

In other words, if the majority of people believe there is a bubble, there is
not, by definition, a bubble.

Valuations for seed-rounds are frothy because there are a lot of investors
competing and looking for astronomical returns, but Series A is still hard to
come by. Just a couple days ago there was an article on HN about "avoiding the
Series A crunch," and today we have a "what to do in the bubble" article.

If anything is widespread, it's good old fashioned paranoia.

~~~
wwweston
> people don’t really believe in anything in our society anymore

Should I believe that?

(And is this another way of say "This time is different"?)

Is it actually _possible_ for people not to believe anything, in our society
or any society?

> In other words, if the majority of people believe there is a bubble, there
> is not, by definition, a bubble.

Does this go beyond first-order consequences? Is it also true that the more
people utilize the rationale to convince themselves that talk of/paranoia
regarding a bubble is a sign of no bubble, the more likely there can be a
bubble?

Also, there seems to be the assumption that when people realize there's a
bubble, they'll immediately engage in attenuating behavior. I think there's
evidence to the contrary -- that as long as people can see a way to continue
to profit from it (say, a critical mass of people believing everyone else is
the greater fool), a bubble can continue while being widely acknowledged.

~~~
jonnathanson
_" Is it actually possible for people not to believe anything, in our society
or any society?"_

"We are nihilists, Lebowski! We believe in nothing!"

Sorry, couldn't resist. :)

With all due respect to Peter Thiel, who is much smarter and more successful
than I am, I'm really baffled by the statement that "people in our society
don't really believe in anything anymore." And I am especially baffled by the
implication that this putative, ubiquitous nihilo-cynicism -- even if we
accept it to be true, which I don't -- _necessarily_ precludes the formation
of bubbles. Did people not believe in anything back in the mid-2000s housing
bubble? It seems as if they believed in housing, for one thing. The belief was
"widespread and intense" enough to cause a serious freakin' problem.

I'm going to give a guy like Peter Thiel the benefit of the doubt and assume
that I'm missing a lot for lack of context. But that quote, at least out of
its original context and so presented, is really strange.

~~~
wwweston
> "We are nihilists, Lebowski! We believe in nothing!"

:)

> With all due respect to Peter Thiel, who is much smarter and more successful
> than I am

Remember, these two things _sometimes_ go together.

Another guy who's more successful than many of us said “Success is a lousy
teacher. It seduces smart people into thinking they can't lose.”

> I'm going to give a guy like Peter Thiel the benefit of the doubt and assume
> that I'm missing a lot for lack of context

I'm a little less generous; my guess is that what Thiel says is _very smart
indeed_ in the context of boosting certain business interests and/or political
philosophies.

~~~
jonnathanson
_" my guess is that what Thiel says is very smart indeed in the context of
boosting certain business interests and/or political philosophies."_

Well yes, there's certainly that as well. I'd be hard pressed to say that
Peter Thiel has no vested interests in the status quo.

------
brianmcconnell
I've lived in SF since the early 90s and have been through several business
cycles. It feels like 1999 all over again, maybe 1998. A couple months ago I
saw an ad on the NY subway for a company that delivers dog food and pet
supplies to your door (deja vu anyone).

Property prices and rents in SF have spiked 30-40%, in some cases doubled, in
less than a year. Same pattern as with the NASDAQ in 1999-2000. This is
predictably driving the cost of doing business up, especially for companies
that need to pony up for an actual office, payroll, etc.

Of course the details are different from 1999, but it feels a lot like that
time. As Mark Twain said "History doesn't repeat itself, but it does rhyme."

~~~
wavesounds
I was still a kid then but in 1998/1999 was there active talk of a bubbles
like there is now?

I feel like we have had varying levels of bubble phobia for at least a year
now. It's starting to feel like it would be more surprising if there wasn't a
bubble then if there was.

And isn't the whole point of a bubble that people are bidding something up
unaware that it's value is fictitious? Which seems difficult if everyones
constantly talking about a bubble, no?

~~~
jonnathanson
_" I was still a kid then but in 1998/1999 was there active talk of a bubbles
like there is now?"_

Yes, and the prevailing counterargument at the time was, "But this time it's
different! The fundamentals of everything have changed, because...internet!"

If you look at historical bubbles, and particularly at historical technology
bubbles -- the South Sea Bubble, the Mississippi Bubble, the 1920s Bubble, the
bubbles of the mid to late 1800s -- "This time it's different!" has been a
pretty consistent pattern of denial. Typically there's a rational basis for
the exuberance at first, but this onto this basis is piled a whole lot of
speculative investment and fervor, wildly inflating valuations beyond the
boundaries of plausible expected return.

Some of that mass irrationality has to do with easy access to capital, and
some of it has to do with easy openings to capital _markets_. The latter is
usually required to really kick a bubble into high gear. [So the operative
question in this case is: what effect will the opening of private startups to
public investment have?]

Are we currently in a bubble? Really, really hard to say. I don't feel
qualified to make that judgment. But to answer your question, yes, most
bubbles have at least a few naysayers who are bearish on the situation. But
their voices tend to get drowned out, especially by those with interests in
keeping the bubble going.

~~~
ffrryuu
"We have reached a permanent plateau of prosperity."

~~~
dredmorbius
Nit: "Stock prices have reached what looks like a permanently high plateau."
Profesor Irving Fisher of Yale, autumn, 1929, 3 days before the great crash.

Quoted on page 70 of J.K. Gailbraith's _The Great Crash 1929_ which I _very_
strongly recommend to anyone.

------
aliston
"... a significant uptick in the number of parties, hot girls roaming bars
trying to chat with any guy that looks like he might be an engineer and
looking for a job..."

Is anyone else noticing this phenomenon? Apparently I'm not invited to the
right parties...

~~~
spectre256
Even if you aren't noticing it, you're not missing out.

To reuse a great Mel Brooks line, the girls have an opening they're looking
for you to fill, but it's not the interesting kind: at best a Sr Software
Engineer at some massive company writing Java on a team that "is just like a
small startup in a big company".

~~~
redblacktree
> is just like a small startup in a big company

That's my favorite line. It lets me know to run the other way. Often, when
people use that line on me, I ask about the equity I'll get as part of the
deal. Usually, it turns out that they want founder-level enthusiasm without
the pay.

~~~
vkou
My second job (For the software product arm a large investment bank) was
actually advertised like that.

The pay was great, and so were the hours & work environment.

Mind you, when I got the job, I thought I caught a unicorn.

------
physcab
"I was here in the Valley for the original Bubble, and the situation now is
nothing like that was. Back then people were saying there was a "new economy"
driven by the Internet, and that productivity was going to go up like a step
function, which justified higher p/e ratios for any company that could claim
to be a participant. If you had money to invest you felt like you had to have
most of it in the stock market, because money parked in bonds would miss out
on all this growth that was coming. Back in the 90s I was sure there was a
bubble happening, and was notorious for telling everyone to sell. And yet I
remember that even I thought it was dangerous to have money sitting in bonds.
I don't think that now, and I don't think anyone else does either. What's
happening now is a lot more localized. A few professional investors are paying
higher valuations for startups than they were a few years ago. But the number
of participants and the amounts of money moving around are both very small
compared to the 90s. Plus the companies are better. In the 90s, it was the
dumb leading the dumb: smooth-talking MBAs were raising money from hapless LPs
and investing it in startups run by other smooth-talking MBAs. Now it's Yuri
Milner investing in a company run by Mark Zuckerberg."

-pg [https://news.ycombinator.com/item?id=2231352](https://news.ycombinator.com/item?id=2231352)

~~~
7Figures2Commas
> And yet I remember that even I thought it was dangerous to have money
> sitting in bonds. I don't think that now, and I don't think anyone else does
> either.

I know PG's comment was posted 950 days ago but I'd be interested to know how
he feels about bonds now.

------
tsunamifury
When you are writing about the beginning of a bubble, you are likely midway
through it.

When people are starting to think a bubble might pop, likely it already has.

This is my third bubble I find they have more opportunity than downside with
one major exception: VC's in their blind hype turn fundraising into a wicked
market where silly unsustainable ideas are highly valued and solid business
opportunities are shoved to the side as boring.

~~~
jacques_chester
Which suggests that there is a profitable niche to look at. Call it value-
based VC.

------
beat
The real driver of a bubble is the idea of a "get rich quick" investment
mechanism that pulls in rewards out of proportion to risk, which inflates the
capital within that investment, which inflates the bubble. Are we there yet? I
don't see it.

When I think "bubble", I think of two - the old dotcom bubble, and the housing
bubble. The housing bubble was driven by those nasty CDOs, which produced
abnormal rates of return on AA/AAA securities, while leaving their value
vulnerable to problems with the sub-prime market. Money pours into the housing
market thanks to excessive returns, which both drives up housing prices and
drives demand for more mortgages, which reduces proper risk management... a
vicious cycle, til the subprimes start defaulting and the prices drop and then
the bubble pops.

The old dotcom bubble was driven by IPO money from unsophisticated investors,
so there was a massive push to get companies public as soon as possible, well
before they had solid business models. This drew institutional money into the
venture capital market, and again, things got all out of wack, and capital
supply was driving startup demand, and weak businesses were getting funding
they didn't deserve.

So the real marker for a bubble now, imho, isn't whether prices for early
stage startups are going up, but rather whether a lot of bad startups are
getting funded. Is that really happening? An increase in price suggests
otherwise. Supply and demand, people. Sure, demand may be up, but either that
increases price, or the market responds by increasing supply. And since the
number of quality startups is basically fixed, supply increase means
introducing bad startups.

And this doesn't even bring in other factors, like pg's marvelous observations
about how startups need less Series A money these days generally, and the rise
of super-angels, angel syndicates, and online tools like AngelList and Gust.

tl;dr Demand != bubble

~~~
JonFish85
> The old dotcom bubble was driven by IPO money from unsophisticated investors

Curious how the advent of companies like WeFund et al. will change this. As
much as people like the "feel-good" aspect of the common man being able to
invest in start-ups, I'm interested in seeing how this turns out. It's been
said a thousand times, but for every Facebook / Google startup there are many,
many more that crash & burn that simply don't make headlines.

~~~
beat
When I saw WeFund, I thought "Kickstarter for penny stocks!" Ugh. If this is
being done in a way that hordes of non-qualified investors are actually
getting stock, it could well handicap any startups that go that route, because
the professional investors they'll need in later, bigger rounds will consider
them toxic.

Consider what this does to the cycle... startups good enough to get real angel
money will probably be wise enough to not take on a bunch of high-risk
unqualified capital, and so they won't be on WeFund at all. This leaves WeFund
to the ones that are more idea than startup, not good enough to get in the
real capital game. So the likelihood of hits is very low.

So, how much money can be poured into the system this way? Not enough to
distort the entire market the way the dotcom boom did, I think. It would take
a million thousand-dollar investors to just get a billion, which isn't enough
to really kill anything - and $100M or less even less important in the big
scheme of things.

------
danielpal
A bubble occurs when prices are driven by view on the future that are
implausible or inconsistent. It seems that current high prices are mostly
driven by "investment" competition - meaning that startups can raise prices at
early stage because there are too many investors.

This doesn't seem to be happening at later stages (B rounds) or public
companies.

What this means is that returns for initial investors is going to be lower -
but it still might be sustainable. Companies usually will grow past +$15M when
they do well.

------
kjackson2012
If there is a bubble, it's most certainly not starting, it's ending. With the
Fed tapering imminent, and interest rates starting to rise, there's no way
that a bubble will be starting at this point. If anything, it will pop a bunch
of near-bubbles, like Bay Area real estate, rent prices, stock market, etc.

~~~
limejuice
There is no Fed tapering imminent. They just voted last week to keep the $85
BLN/month flowing on a 9-1 vote.

During dot.com bubble, the short term interest rate was 5%+ in 1998 and 1999,
and that didn't stop that bubble. The Fed only belatedly raised rates to 6% in
2000 when the bubble went parabolic.

The Fed is always slow to raise rates, and rates are at 0%. It could be years
before we are at 2% rates with FOMC incrementing 0.25% every quarter or so,
and 2% rates is still very stimulative. Right now, the Fed isn't even talking
about raising interest rates. They have only been talking about reducing the
$85 BLN/month $$ printing, but even that is on hold as of the last FOMC
meeting where they voted 9 to 1 to not taper.

The Fed still has the pedal to the metal, and have publicly stated they do not
see a bubble anywhere (just like they said there was no housing bubble back in
2006-2007). Don't get shaken out of the market just because the Fed talks
about tapering its $$ printing from $85BLN/month to $75BLN/month. The current
environment is still very stimulative for stocks.

If there is a bubble, it won't pop because of the Fed. It will pop after the
momentum is exhausted and it collapses from its own weight.

------
CodeCube
Thinking back to about 2007, I remember the frothy fervor surrounding all of
the new "web 2.0" companies that were coming on the scene back then. I thought
for sure that the tech industry was about to see another apocalyptic event as
the web 2.0 bubble popped. Thankfully, that bubble never popped (although
another one did in '08).

I think it's healthy for people to be paranoid of another bubble forming ...
it helps potentially keep it at bay. At least, that's what I tell myself :P

~~~
randomdata
I believe the "web 2.0" bubble did pop in 2008. However, we saw the rise of
the "app economy" at the same time. Anyone failing in the web 2.0 sector could
easily, and often transparently, pivot to the sudden demand for mobile
applications.

Whether that is a sign of the software industry maturing, or if it was just
plain good luck, remains to be seen.

------
dataisfun
Thanks Sam. I love your posts!

I think the rise in startup valuations, even at the early stage, while a bit
frothy (and definitely more so in the bay area) is driven by some structural
changes (i.e., the leverage allowed by the new tools which make development
cheaper/faster) and access to much bigger markets (mobile, anyone?).

"Hot girls" at the bar looking for a job are probably doing so because tech is
one of the few non-sucky sectors for young people.

Founders investing their capital in other startups doesn't strike me as so
weird, given how Angel List and Funders Club, etc. are making it ridiculously
easy to put a bit of money to work. Founders with disposable income used to
invest in public equities and bonds if they wanted to. Now, startups.

There are trillions of dollars still sitting on the sidelines chasing growth.
Not even a tiny fraction of that has been deployed to VC (mostly because the
returns, in aggregate, are still pretty bad). Should that happen, I might
begin to be a little apprehensive.

~~~
enjo
I think "hot girl" phenomenon he is referring to is girls recruiting
engineers. I've definitely noticed that happening among startups both in the
bay area and elsewhere. I know of one trendy startup that most definitely
employs one very attractive young lady in an "admin" role, but her primary
function is most definitely social recruiting.

------
moron4hire
This is why I firmly believe in living within ones means and not taking other
people's money. The only times I've seriously worried about money is when I
was deeply in debt. As soon as the debt was gone, I... became a much more
difficult person to work with... to put it one way.

------
twakefield
Bubbles are usually preceded by some regulatory or legislative change(s) that
fuels them. This legislation usually has good intentions but falls victim of
unintended consequences. For example, you can trace the housing bubble to the
easing of lending standards through the modifications of the Community
Reinvestment Act in the late 90s [1].

Legislation that creates new investments opportunities, coupled with cheap
capital is a dangerous combination. I would not be surprised if the new JOBS
Act [2] provides the spark and the Fed's loose monetary policy provides the
fuel that creates a startup bubble (quickly).

Companies like Angel List [3] and Wefunder [4] have been quick to recognize
this and take advantage of the new demand pockets the JOBS Act creates. Just
check out their home pages.

As Sam mentions, there may be some time before it bursts, but it's very tough
to figure out when it will be...and early stage company shares are not liquid.

[1]
[http://en.wikipedia.org/wiki/Community_Reinvestment_Act](http://en.wikipedia.org/wiki/Community_Reinvestment_Act)
[2]
[http://en.wikipedia.org/wiki/JOBS_Act](http://en.wikipedia.org/wiki/JOBS_Act)
[3] [https://angel.co/](https://angel.co/) [4]
[https://wefunder.com/](https://wefunder.com/)

~~~
bfe
Blaming the CRA has been extensively debunked.

[http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/13/n...](http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/13/no-
marco-rubio-government-did-not-cause-the-housing-crisis/)

[http://www.ritholtz.com/blog/2011/11/a-global-view-of-the-
ho...](http://www.ritholtz.com/blog/2011/11/a-global-view-of-the-housing-
bubble/)

[http://www.cepr.net/index.php/blogs/beat-the-press/the-
blame...](http://www.cepr.net/index.php/blogs/beat-the-press/the-blame-the-
community-reinvestment-act-industry)

~~~
the_watcher
Those do not extensively debunk the CRA's influence. At best, they split hairs
and show that CRA is not completely at fault and that we should blame Wall
Street. I'm on board with blaming Wall Street for a lot of the problems (they
went much further beyond rationally using the CRA's policies and instead went
whole hog into "lend to everyone!"), but this strikes of "Sure, the
legislation created perverse incentives and encouraged risky lending practices
(which unsurprisingly spiraled much further out of control than the CRA
intended into non-CRA covered loans), but the real problem is the people who
acted on these perverse incentives!"

~~~
jbooth
If you assume that every single CRA loan defaulted, and that every failed loan
in the entire housing market was a CRA loan (both assertions are far from
true), then the CRA would be responsible for a multiple billion dollar
problem. Maybe. Might be well under 1b when you consider that the homes are
re-sellable after foreclosure unless they burned without insurance.

On Wall St, we wound up with a multiple trillion dollar problem. That's tr-,
not b-, as in 1,000X bigger.

The CRA thing is ideological bullshit. I seriously do not understand how
anyone who passed 3rd grade arithmetic could buy into it.

~~~
scarmig
Note also that it's a perfectly fine position to have to think the CRA is a
bad idea while also recognizing how ridiculous the idea is that it caused the
bubble.

~~~
thecage41
It's a sad commentary that this point needs to be made, though.

------
scottallison
Great post. It was last year that there was a lot of chatter from everyone,
worrying that we were in a bubble. Since then the talk of bubble has
apparently decreased but the real signs of a bubble have accelerated, in
particular, crazy living costs.

Very worried to read that this is still happening:

"Companies raising money at $15MM+ plus valuations with no traction and no
real vision..."

------
wellboy
I think it's a bubble in terms of the people, many big egos. In these times
you should how to not have an no ego at all, if you don't have an ego, no one
can leverage that to make you do things.

The actual founder-founders, the inventors of the ideas however, are totally
aware of that situation and let the startup people with the big egos do the
CEO jobs while pulling the strings in the background.

It's not a bubble in terms of the actual startups, because it's all based on
users that actually use the apps a lot. The more usage an app has, the harder
it is to kill.

After the whole solomo, photo sharing hype, investors have become very
cautious, so I don't actually believe money is cheap now.

However, it's an ego bubble right now, startups get press before being ready,
pursue vanity metrics that actually will kill the company, their own startups
are growing over their heads.

So it's maybe a people/ego bubble right now, which could turn into a full
bubble, but time will show.

------
LiweiZ
There are articles talking about the possible bubble and they are easy to be
found. I would like to add just one thing: we are still in the biggest
recession and fiat money is printed like crazy. There has to be some places
those money flows into. And given the quickly shifting age, industries seem to
be broken in one way or another sooner than before. I agree with the author
that bubble is here. However, it might take longer than expected to burst. As
long as what we do actually delivers better value to customers, I believe we
can still survive.

------
pnachbaur
Sounds like solid advice to companies - what about advice for young engineers?

~~~
ChuckMcM
If you are a young/new engineer in a bubble you should recognize that excess
salary is a function of the bubble, not your actual value. To that end bank as
much excess salary as you can, (keep your personal burn rate low) and don't
set your internal 'value meter' by a company that so desperately needed
engineers they over paid for them.

I saw several engineers in the dot-com crush, graduate, work for a year at
some BigCorp, then go to work for a startup as "Chief Architect" or some other
vaulted title, lose their job when the crash hit, and then found themselves
unemployable at some really vaulted title and salary because they really only
had 3 - 4 years experience and it wasn't all that broad. That was sad to
watch. Don't be that engineer if this is another bubble.

~~~
pnathan
FYI, I've been seeing a variety of title inflation - lots of "Senior" styled
people without the 7-12 years of industry experience to back it up. This seems
particularly prevalent in the startup sector.

In my experience, YMMV, etc, etc. Just something I noticed in my looking for
work 1H2013.

~~~
hackula1
Titles are the cheapest benefit an employer can provide.

------
the_watcher
Very interesting to read his advice to be wary of hiring the day after his
post on the importance of hiring. These two posts aren't contradictory at all,
but those who read his piece yesterday and responded well to it should
definitely read this as well.

~~~
dasil003
I thought his hiring post was incredibly useful despite a couple disagreements
I had. This one on the other hand seems much less useful. The fact is a bubble
is only obviously in retrospect, and the forces that led to the dotcom bubble
(completely unknown potential of "The Internet" combined with a deluge of dumb
money due to easy IPOs and accompanying hype cycle) are no longer present, and
thus any future bubble will look completely different and the conventional
wisdom won't spot it coming.

~~~
the_watcher
I think I agree. I think this post works in complement to the hiring one
(mainly the treat your cash like the last you'll raise and the warning that
people are a huge expense).

------
arbuge
It seems to me to be a bubble of sorts, although a strange one. It mostly
seems to be centered around AngelList in general and the seed stage universe
in particular, where valuations of very early stage startups with cool videos
are totally out of whack with where they should be in my opinion. But because
the amount of money moving around at this stage is still pretty small - it is
early stage after all, so each deal is still tiny in absolute terms - there is
less of a bubble effect than one would expect. Reality might be harsh for
those startups when they come to long for bigger rounds in future though.

------
dm8
"a significant uptick in the number of parties, hot girls roaming bars trying
to chat with any guy that looks like he might be an engineer and looking for a
job"

That is a pretty bad strategy to hire from founder's perspective. Will
reasonably smart engineers like these strategies?

On a related note, a friend of mine was telling me that he saw someone (on
OkCupid) mentioning about contacting her only if you are engineer since her
startup is hiring engineers. Ha!

------
websitescenes
Oh man, I have these exact same concerns. There are people out there creating
start ups with useless products that only have value because someone invested
in them.

On the other hand, most of the start ups are expected to fail. The ones that
succeed generally have a big enough pay off that all the failed ones can be
shrugged off.

I think we are in transition where we could go either way. Investors know this
and that is why money actually has been tighter.

------
bfe
A permanent, secular rise in the maturity of the tech startup ecosystem (and
of "software eating everything") would exhibit many of the same signs of high
growth, or the same collection of Verhulst growth curves in disparate
indicators, as a bubble. Dev salaries, SoMa rents, and MBA hanger-on density
are probably useless in distinguishing between the two.

~~~
eli_gottlieb
In which case, we need _some_ distinguishing factor, because you just argued
for investing in a bubble ;-).

~~~
sillysaurus2
Investing in a bubble is a good thing, though. Without it we'd have no Paypal
(and hence no Musk).

~~~
bfe
It's great for technology and society. It's not great for you when you invest
your own or someone else's cash on the wrong side of the burst.

------
vibhugupta
Every bubble I believe gives opportunity to a selected few who can stand out
in terms of competition and competence. Definitely there's a lot of people who
will make a lot of money and get successful very fast..the billion dollar
question is to identify those companies among a 100 others which will fail or
do only meagrely well.

------
thrush
Would anyone mind elaborating on how the current bubble could compare to the
DotCom bubble? I could see them being similar because they are both related to
tech, but for some reason I don't feel too scared right now (the DotCom bubble
popping was pretty bad, right?).

~~~
enjo
The tech bubble of the late 90's was a fascinating phenomenon. It was global
and widespread. My grandmother had significant money in tech stocks at the
time.

The overall amount of money we're talking about here is MUCH smaller than
that. A couple of orders of magnitude at least. As such the effects of any
bubble popping aren't going to have widespread consequences here.

A major pullback in funding will definitely affect engineers. Jobs will simply
be a bit harder to find, but there are so many technology companies operating
outside of the startup funding domain that I don't think it will be terribly
impactful.

The worst case is we go back to like 2005, which isn't really too bad at all.

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Mikeb85
While I'm cautious to call anything a 'bubble', right now tech is looking a
bit over-valued, and the internet startup space is way too crowded... I'd
personally avoid investing in anything tech related, with a few exceptions.

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devanti
It would be more interesting if he could talk about how to take advantage of a
bubble

~~~
Afforess
That's easy. Keep plenty of liquidity, buy undervalued assets post-crash.

~~~
logicallee
That's one strategy. Plenty of liquidity means (literally) that you're rich.
So your strategy is 1) be rich 2) buy undervalued assets post-crash.

Your strategy is okay. For those set of assumptions I suggest you remove the
second step, which might significantly reduce your being rich. So, 1) Keep
plenty of liquidty. Buy nothing pre- or post-crash.

This has a very high probability of keeping you rich.

Now on to us mere mortals. In bubble times did you know you can actually start
a company with like a few hundred dollars, start delivering product and
getting users, and get investment to accelerate the process?

That way, you can build a company with cheap capital even if you're not
already "plenty liquid", as you might put it.

------
ffrryuu
We are already in the middle of a bubble, it'll shortly translate to huge
salary increases, you just need to job hop :)

This year average salary is up at least 15k from last year.

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minimax
If you are a startup and you think valuations are peaking, wouldn't it be
smart to raise as much money as you can while valuations are still high?

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camkego
Have you seen the ads purchased by Lumosity on cnn.com

This indicates to me there might be a little too much loose money floating
around.

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znowi
I shall bookmark this discussion and get back to it in a couple of years :)

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spindritf
> And no one is talking about a bubble anymore

Another great poster stopped reading HN.

~~~
tptacek
There's a subtext you're missing.

~~~
spindritf
Well, it's hard to know what you don't know.

------
maerF0x0
or feed it like wefunder.com will do .

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mkramlich
from the article:

"hot girls roaming bars trying to chat with any guy that looks like he might
be an engineer and looking for a job"

suddenly understanding the attraction of living in SF/SV

~~~
yid
> suddenly understanding the attraction of living in SF/SV

Don't get your hopes up. I've had drunken engineers come up to me in a bar
(Bourbon & Branch, no less) -- slurring words -- times I was sure they wanted
to hit on my girlfriend or start a fight for some reason, where after a few
seconds of direct eye contact, they pull out their phone and say "heeey maan,
want to try my app?"

