
Maybe we're in a bubble but it doesn't matter - zaveri
http://justinkan.com/maybe-were-in-a-bubble-but-it-doesnt-matter
======
socialist_coder
Justin is fundamentally missing what people are saying the bubble is. From my
perspective, no one is arguing that high tech and programming _won't_ be more
and more important in the future.

"Anyone who tells you that you shouldn’t be in tech, or that the current
market situation will create an oversupply of people in tech, is doing you a
massive disservice."

Who is saying this? I don't think _anyone_ is trying to dissuade people from
getting high tech skills.

I believe that the bubble consists of the massive amount of startups that do
not actually provide a valuable service. Do we really need another social
network or sharing site or "X for Y"? No, we don't, but it seems like 90% of
the startups getting funded by incubators are just rehashes of that.

I believe that point is explained very well here:
[http://scripting.com/stories/2012/04/19/itsDefinitelyABubble...](http://scripting.com/stories/2012/04/19/itsDefinitelyABubble.html)

The key points are here:

========

2\. We're bundling young people into things called startups, and selling them
to investors for ever-increasing amounts of money.

3\. In an effort to bring more suckers in, they just passed a law that makes
it legal to pimp these startups to people who don't know anything. You will be
able to take their investment by swiping a credit card. Probably using a $4
billion valuation Square dongle for an iPhone.

4\. They have started incubators in every major city on the planet.
Unfortunately it hasn't been stylish to learn how to program for a number of
years, so there aren't that many programmers available to hire. And it takes
years to get really good at this stuff.

5\. Even if they could find enough programmers, there aren't that many
businesses to start to satisfy the demand for investment vehicles. A lot like
the situation with mortgages in the last bubble. So the VCs and angels and no
doubt some very shady folks are putting together deals with people who can't
program with no actual idea for the business. Don't look to Y-Combinator,
they're the quality act here. But there are incubators in every city from
Santiago to Beirut.

========

The most important sentence there is "A lot like the situation with mortgages
in the last bubble. So the VCs and angels and no doubt some very shady folks
are putting together deals with people who can't program with no actual idea
for the business."

And that is the bubble. Startups being founded with people who can't program
with no actual idea for the business. Just like the last mortgage bubble.

And to be fair to Justin, I think twitch.tv is great. It is novel, has a clear
path to monetization, and provides a service that people actually want. We
need more venues for professional gaming and twitch.tv is a great step in that
direction.

~~~
olalonde
I'm not a big fan of protecting people from themselves. Who are you to tell me
I shouldn't be allowed to invest in a startup because I'm too dumb to make
that decision for myself? Whether or not you are right about the bubble is
besides the point.

~~~
scarmig
Well, aside from well-meaning paternalism... everyone who overextended
themselves with a too-large mortgage did it of their own free will and
hypothetically were only screwing themselves. But when things go to shit, the
effects of a large number of people screwing themselves spill over to a bunch
of complete innocents (well, people who are innocent of everything except
existing in our contemporary economy).

~~~
olalonde
I agree with your observation but I still disagree with the conclusion that we
should protect people from themselves for the simple reason that _people do
not have a responsibility towards the economy_. If half Silicon Valley stops
going to work tomorrow, the economy will unquestionably take a massive hit.
Should we have a law preventing people from stopping going to work? If
Zuckerberg decided not to build Facebook, should he be held accountable for
all the jobs he could have created but did not?

~~~
scarmig
In practice for this particular instance, I agree with you on the correct
policy position: the amounts of real-world money that would be being put at
risk are small compared to the real estate bubble, and the financial nervous
centers of our economy are more insulated from this bubble than the one in
2008.

I do think your general principle for appropriate government action is too
strong and leads to some questionable results, but that ends up getting too
involved in abstract political principles for this particular thread.

------
mtoddh
It's funny to look back at news articles when past bubbles were forming and
compare it to the articles that are popping up now about startups. It's hard
not to see similarities. Take this 2005 NYT times article, titled "Trading
Places: Real Estate Instead of Dot-Coms", for instance
(<http://www.nytimes.com/2005/03/25/business/25boom.html>):

'Premonitions of a bubble on the verge of popping do not ruffle those who are
bullish on real estate. In Miami, Ron Shuffield, president of Esslinger-
Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with
demand from baby boomers and foreigners would prolong the boom indefinitely.
"South Florida," he said, "is working off of a totally new economic model than
any of us have ever experienced in the past."'

It seems like a lot of the same kinds of thinking in Justin's article, "we
might be in a bubble, but for you it doesn’t matter. The reality of the world
is that software, specifically Internet enabled software, is becoming a part
of every business. Marc Andreessen said “software is eating the world,” and by
that he meant that as time goes on, every industry is becoming a software
industry...You want to be in the tech game, because in time it will be the
only game in town."

------
rpeden
When I read things like this, I have to wonder if the people saying it are
really naive or sheltered enough to believe it:

"You want to be in the tech game, because in time it will be the only game in
town."

Well, no...because tech won't be big enough to employ more than a relatively
small percentage of the population. And it won't matter that companies want to
pay tech workers to help automate people out of jobs. Because once everyone is
unemployed, no amount of tech will keep a company in business if nobody is
making enough to buy its products.

Without a doubt, things are going to change. Just like they always have. Some
industries will gain, and some will lost. Some people will find their skills
in high demand, and some will find their skills obsolete. We won't, however,
end up in world where you either work in tech or you're unemployed.

~~~
rscale
It's an especially odd statement coming from the founder of a company that
employs people to run errands for other people.

~~~
justin
I guess my point was that I'd rather be the guy making the software that
directs people around running errands then one of the guys running errands. To
that end, I needed to have software engineering and product skills (otherwise
I wouldn't have had the opportunity to even be in the position to start this
company).

To the grandfather's point, I might be naive but when we automate away large
numbers of people's jobs of course we will have to figure out some sort of
wealth redistribution to give those people spending power (we do this right
now in social welfare). However, my bet is that if you are one of the people
doing the automating you'll be a lot better off than one of the people on
welfare, because we've never in the history of humankind had perfect wealth
redistribution.

------
dgant
Another point to add to Justin's:

Few skillsets grant you more of an ability to be self-reliant than the ability
to understand and write software -- even if there's no job description written
for what you do, or no company who will hire you. In almost any field of
entrepreneurship, if you have tech savvy which your competitors don't, you
have an inherent advantage against them and an ability to crack open the
market.

Are you a DJ or party promoter who understands SEO/SEM and social media?
You've got a leg up. Are you the only person in your area who understands both
fashion apparel supply chains and software? You could be providing immense
value.

~~~
AznHisoka
I don't think knowing how to write software is needed to understand SEO/SEM

~~~
dgant
True. I could have been more careful with my phrasing.

The original point, stated differently:

Understanding software and the modern web -- even short of being able to write
it -- can still give someone a sizeable advantage in many fields.

------
jjb123
> Most people aren’t self aware enough to realize what is happening that is
> making their jobs disappear: a strong trend in software automation to make
> business processes more efficient.

This reminds me of a really helpful salesperson at the Apple store that was
really excited/proud to tell me that you can now walk in and purchase an item
without ever talking to a salesperson...

~~~
mitjak
I'm guessing he was excited because he knew very well that the majority of
people at an Apple store have no idea what they really want to buy and need
the salesperson's expertise. Probably the same reason that BestBuy hasn't been
killed by Amazon yet.

~~~
jjb123
Right, I truly think it was genuine pride for the excellent addition of
technology to the process. The guy rocked, but the point remains - the
addition he's excited about will likely result in frictional unemployment in
his particular position.

------
JumpCrisscross
This article conflates two issues: the secular trend that is "software eating
the world" and the local trend which is a valuation spike.

» _The truth is that the technology sector as a whole over any length of time
is a positive-sum game_

Actually, no - a bubble means people aren't investing on fundamentals but on
momentum; the expected value of the investment is negative. If we were in a
bubble (as in bubbles past) we wouldn't be in a positive sum game. Saying that
it would be a net positive game over "any period of time" is economically and
empirically ridiculous.

I happen to believe that we are not in a bubble. But if we were it would
matter - it would mean that when the bubble pops opportunities in the field
would decrease in frequency and magnitude. Since career scars early on have
more persistent effects than displacements later in life it follows that an
aspiring tech star cannot ignore the market realities of what they're going
into.

We are mortal, we can't just ride the secular trend. The local time scale
matters, too.

------
spwert
> News sites with a better grasp of how the Internet works, like HuffPo or
> Mashable, are worth hundreds of millions.

I've been wondering - when all the old media inevitably die off, where are
these aggregators going to find their content?

~~~
jonny_eh
Most articles you see in traditional papers are not original. We're going from
offline news aggregators to online news aggregators.

------
JVIDEL
The first thing you have to do to understand why bubbles happen is to stop
believing everyone in it is being 100% rational.

The reality is that for most investors the vague notion that they might be
missing a great opportunity far outweights any well documented evidence that
they are walking into a sinkhole.

Many investors from the dotcom bubble simply left the market and new ones took
their places. If there's money to be made some people will always be there, it
doesn't gets more complex than that.

So basically you shouldn't stay out of tech right now just like you shouldn't
stay out of tech in 1998. You should've done that in 2001 when everything
started to collapse. Funny that Justin mentions Amazon because that company
took a nosedive back then.

Question is, how long we have until the next 2001?

When that happens many people, including "negationists" and wantrepreneurs
will GTFO from tech as fast as they can rip the copper wire from their office
walls.

------
BlackNapoleon
Theres just so little value in the stuff being produced. Its absurd.

Where are the people who are designing actual tangible items?

Why is so much of this stuff only fluff and entertainment?

~~~
rabidsnail
Because the parts of the economy providing food and housing take up a small
fraction of the total work available to be done. The rest of the work (ie
surplus) can go to one of three things:

1\. "Storing food for the winter". R&D to prepare us for challenges we'll face
in the future. Ex: alternative energy research. This sort of thing is
extremely difficult to fund in a capitalist society. We need more of it.

2\. Waste. Accounting and lawyering and sales and such.

3\. Entertainment. Everything from movies to luxury goods.

If given a choice between 2 and 3, I'd pick 3 any day. I'd like for there to
be more of 1, but I guess that makes me a socialist :).

I don't see any functional difference between a Farmville cow and a ceramic
cow that sits on a mantlepiece. They have exactly the same practical use, but
one cost way more energy to produce than the other. My argument for how
Farmville will save us from global warming is a post for another time.

tl;dr: Value is what the market says it is, not what you say it is.

See also:
[http://www.slate.com/blogs/moneybox/2011/12/12/let_them_eat_...](http://www.slate.com/blogs/moneybox/2011/12/12/let_them_eat_food_preparation_jobs.html)

~~~
conover
Accounting and practicing law is a waste?

~~~
rabidsnail
Have you ever met an accountant that gets up in the morning excited to get to
accoutning? Have you ever heard someone say: "Today is my lucky day! I get to
go see my accountant!"?

I'm not saying they're not necessary. But if the economy were a mechanical
system, law and accounting would be the friction between the belts and the
wheels that produces waste heat.

~~~
megrimlock
This may sound crazy, but there are people drawn to accounting or insurance
who are simply numerate, who love numbers and precision and carefully
designing rules that accomodate the fascinating special cases of the real
world, and who do enjoy that kind of work. It sounds dreary and gray, and we
like to scoff at it as bean-counting, but it does appeal to a certain detail-
oriented mindset that isn't all that far off from some forms of engineering.

Here's another view: Accounting is the instrumentation that lets you make sure
the machine (the business) stays calibrated, and that the inputs match up to
the outputs.

------
olalonde
On the other hand, there might come a time where software becomes so important
and pervasive that it won't make sense anymore to call yourself a software
engineer or a software company. I'm guessing there was once a time where the
next big thing was to become a mathematician. However, mathematics has grown
so central to so many fields that very few people nowadays call themselves
mathematicians or dream of building mathematics companies. I wonder if
programming will not simply become an increasingly important tool within other
disciplines or if everyone is really just going to start studying CS/software
engineering. This is probably more an argument on semantics than a rebuttal.

~~~
moistgorilla
I completely agree with this post, soon people are going to open their eyes
and programming will be taught from elementary school to high school. Not
being able to program will be equivalent to what being illiterate was.

~~~
randomdata
I agree, but I'll point out that programming has been part of the curriculum
in this locality since at least the time my dad was in high school. He tells
of writing programs on punch cards. We started with BASIC when I was in
elementary school.

Despite that, I don't know of anyone who I went to school with that could
write a single line of code today. Of them, I do have one friend who is also
in the software business, but his skills lie in other area of production. He
admits he cannot program.

For your vision to come true, programming will have to become much more
fundamental, to the point that something else will have to be cut. Which other
subject should get the axe?

------
cjmauthor
I thought I would add some support for the argument of choosing the tech
sector as a career. If you look at the statistics it seems that 5 out of the
top 10 jobs of 2012 according to this survey is in the tech sector with
software development being number 2. And the estimations for the coming years
are pretty staggering. Tech is probably not a bad field to be in, lucky me, I
think. [http://money.usnews.com/careers/best-
jobs/rankings/the-25-be...](http://money.usnews.com/careers/best-
jobs/rankings/the-25-best-jobs)

------
ecubed
Really insightful article, especially for someone like me: a EE/CE student
wondering about whether or not the current trends in tech jobs will continue
into the future. I know I can get a job when I graduate in either hardware or
software design, but I've been uncertain as to how quickly the industry will
saturate and whether or not jobs will still be around (or pay well enough to
be satisfied with the additional educational investment) in 5-10 years. Glad
to see some insightful, well-informed confidence in the future of the
industry.

------
mukaiji
Software is indeed eating the world. What's going to devour it?

HARDWARE + SOFTWARE.

think nest, tesla (yes, it's a huge software play), and the like.

------
jonny_eh
I agree 100% with the article, but to me it disagrees with the headline. He's
arguing that we shouldn't worry because we're not, in fact, in a bubble.

------
adavies42
proof positive we're in a bubble: <http://wag.com/>. <http://pets.com/> is
back!

~~~
aristus
Wag.com (and soap.com, diapers.com, etc) are wholly-owned, very profitable
subsidiaries of Amazon.

