
Ask HN: Is there an over supply of tech products and services? - masslessness
I&#x27;m a keen follower of the tech scene, especially all the great stuff that comes out of Silicon Valley and the rest of the world. Something that puzzles me is the sheer volume of projects and startups that are launched and receive funding.<p>Surely not all of them are able to generate any sustainable revenue that is long-term. What&#x27;s the value to the creators therefore who sink countless hours into creating them and to investors who pour in so much money?<p>There&#x27;s only so many consumer eyeballs and wallets in the world, it almost seems the supply of products and services is unimaginably over supplied to a fixed demand? Or is that the wrong way of looking at it?
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patio11
_There 's only so many consumer eyeballs and wallets in the world, it almost
seems the supply of products and services is unimaginably over supplied to a
fixed demand?_

Are you of the impression that the demand for, I don't know, B2C cell phone
apps is fixed in 2014 to the same value it was in 2007? If you (sensibly) do
not agree that the iPhone failed to change the underlying demand for cell
phone applications, consider the possibility that we are, in fact, crushingly
undersupplied for B2C software. This would counsel people buying positive
expected value lottery tickets as soon as the startup founders can print them.

What's in it for a founder when you could go get a job at Amagoobooksoft
instead? That's a fair question. One: you will not have to work at
Amagoobooksoft for a little while. Two: you may improve your eventual position
at Amagoobooksoft by doing a startup versus simply applying to them today.
Three: you may invent the next WhatsApp, and end up with several billion
dollars in your pocket. Four: for a certain psychograph of developer, there
are non-pecuniary advantages to running a startup in a manner similar to their
being non-pecuniary advantages to doing the Peace Corps for some people.
("Change the world!") Five: You may, accurately or not, perceive that you are
presently not likely to receive an offer at Amagoobooksoft, but accurately
perceive that "Nobody can tell me I'm not ready to do a startup" and
rationally calculate that this is a better way to build skills and
reputational capital than e.g. getting a job at Burger King even if the money
is roughly similar.

P.S. The Mobifotosocialgames For White And Asian Geeks space is a small
fraction of the total market for software, though you wouldn't know it from
"the tech scene."

~~~
masslessness
So sure, the demand in and of itself is growing, but it's in contrast to the
huge supply that it seems almost fixed.

Regards "the tech scene's" narrow focus, what kind of software does the rest
of the world need? I mean what problems can software really solve? And to get
a better understanding of how we as developers can do anything about it, what
is it exactly about software that allows it to do that?

~~~
mechanical_fish
Don't be fooled by the huge apparent "supply". That's like counting up all the
five-paragraph essays and unsold screenplays in the world and concluding that
we have an oversupply of great writing.

What we have is a huge slush pile, 98% of which will prove worthless in the
end _except_ as a practice exercise for its creators. (Which is valuable, of
course, just not valuable to the customers.) Because the bottleneck is the
market. That's where the culling happens.

Like the majority of screenplays, most products are dead on arrival because
they can't be effectively marketed. That _is_ in part because the marketplace
is crowded, but again: Don't mistake the stacks and stacks of App Store
offerings for a saturated market. It's just a market choked with weeds.

One of the things the world needs is better software markets. The fact that
you can't hear people screaming about their terrible software, or see and
count the money that they would potentially pay for better software, is a sign
of the market's ineffectiveness.

~~~
rmc
> _What we have is a huge slush pile, 98% of which will prove worthless in the
> end_

Don't forget Sturgeon's Law[1], "90% of anything is crap":

> The phrase was derived from Sturgeon's observation that while science
> fiction was often derided for its low quality by critics, it could be noted
> that the majority of examples of works in other fields could equally be seen
> to be of low quality and that science fiction was thus no different in that
> regard to other art forms.

[1]
[https://en.wikipedia.org/wiki/Sturgeon's_law](https://en.wikipedia.org/wiki/Sturgeon's_law)

------
caio1982
The people you talk about, those who will eventually fail more than succeed
because of hardcore vast competition, should instead look for the rest of the
world first and only then to Silicon Valley. Silicon Valley might seem over
supplied as you say, but the rest of the world is just waiting for great
ideas, nice solutions etc with its wallet full of foreign money. So no, I
don't think there's an over supply of tech products and services. What we
currently have, in my opinion, is an over supply of few-years-old-companies-
trying-to-hit-a-homerun in a crowded business place (the US).

~~~
czbond
Perfectly stated!

------
thehoneybadger
Your asking the question and stating its puzzling is why (I mean this in a
civil way, my rant is directed at the general populace).

Technical people typically use a technical approach to solving a problem,
which is not always the best approach. Technical people generally make poor
historians. Decisions are a-posteriori, through personal experience and
personal failure. Knowledge must be internalized so it becomes intuitive. But
this very step is an act of specialization. Expecting the non-specialized
market to understand, on faith, this masking of technical complexity, is
strange. See, e.g., object-oriented design patterns, geek-speak, a hacker-news
comments echo chamber, etc.

There is relatively little value placed on documentation vs
performance/correctness. Products are rarely user-centric. There are too many
black box APIs. Dumb questions are frowned upon. Gross assumptions are made.

"New" products are quite often not actually new. They are merely evolutionary,
not revolutionary. They merely add to the market, or slightly expand it,
instead of defining a new one. Just another person internalizing some jargon
and slapping a price on it and then proclaiming PEBKAC as if he/she said
something insightful. This is not innovation.

The value to creators is to learn a new skill set, merrily hacking away at
trees, and chopping down the right tree using brute force luck, a rather naive
traveling salesman. For some reason the hard problems are considered easy and
the easy problems are considered hard. The difficulty of achieving simplicity
is under-appreciated. You solve some technical problem, and stop there,
thinking you have won. But this is not the end, this is the beginning. The
problem never was minimizing big-o or memory efficiency. The problem was, and
is, messaging; the communication of the solution.

Investors recognize market saturation and look at evolutionary innovation as
low hanging fruit. "Killer" products are harder to create and higher risk.
Demand is more fixed in evolutionary space but demand can be uncovered when
entering revolutionary space. The problem is not Wile's proof of Fermat, it is
explaining the value to everyone. Explanation is the messaging channel.
Properly encapsulating the complexity of a problem is the difficulty. Properly
recognizing the problem is the difficulty. Implementing it is the easy part.
Much of nerd culture (including myself) has this backwards, through no fault
of their own (INTPs are introverted, formal analysis is prized).

------
k-mcgrady
>> "Surely not all of them are able to generate any sustainable revenue that
is long-term."

This is the same with any real world, brick and mortar business. 9/10 small
businesses fail within the first year. The chances your business or product
will succeed is very small. Entrepreneurs often go through several failed
businesses before they get one that succeeds. How you define success is also
important. It's much easier to create a sustainable SAAS service which you can
maintain yourself and pays you $50-70k per year that it is to take funding,
grow to 1 billion users, and make money.

------
api
It's an innovative market, which means people are trying a lot of things.
Given that, there's always going to be an "oversupply" of things that don't
work or don't solve a problem anyone really cares about. The only time you
don't see such an oversupply is in a market where nobody is trying anything
new... such as automobiles from about 1960-1970 until the 2000s (hybrids).

No errors means no trial is happening.

------
zokier
There is great oversupply of _everything_ in the western world. I think it
probably is a significant factor in the major (societal) problems we are
facing.

~~~
dkyc
If there is demand for an oversupply of _everything_ (which there apparently
is, otherwise the oversupplying companies would go bankrupt), it no longer
fits the definition of oversupply.

------
atroyn
You're right, not all of them will succeed. Most will fail, in a proportion
greater than 80% of all funded projects. In the consumer space, this is an
even higher number.

The thing is, it's impossible to know in advance with certainty which will
fail and which will succeed. But the ones that do succeed create an enormous
return on all that sweat and money. Investors try to pick winners, but even
then it's acknowledged that the majority of even the best portfolio will not
make a large return.

From the founder's point of view, building something on your own that people
genuinely want is an amazing education - even a small amount of success makes
a founder far more valuable and goes a long way to expanding their
possibilities to try again.

------
projectramo
Technology improves existing products and services; its like a multiplier.
Technology reduces cognitive load in interacting with a service, improves
immediacy and responsiveness and so on. There is an over supply of "tech"
products and services if there is an over supply of quality in products and
services.

For example, do you think of Uber and AirBnB as two tech products? Or do you
think of Uber as brokering (and therefore improving) transportation
availability using tech and AirBnB improving housing availability using tech?
After Uber was created, AirBnB wasn't an additive "tech" company.

So its not the "tech" part that is key to a company's redundancy but the
"goods and services" part.

------
PaulHoule
I think a general theory of it is that once in a while somebody comes up with
something people really value and it expands the market and then me too
competitors pile in and soon it looks like what you say.

The way to make it BIG is to find an untapped market and be the first to
really serve it.

One example I would look at is that health and fitness trackers are crowded
but a lot of suffering and lost productivity is caused by chronic pain of
various sorts, there is no safe and effective drugs, no end of scams, but
perhaps it is the kind of problem, like cystic fibrosis, that can be defeated
with intensivity. For instance if you see a physiotherapist he or she might do
the right things but only 1/10 as much as you need.

------
fataliss
I have the same feeling, especially in the mobile world. If you look at the
App store and the stats about how mobile devs are making money it appears
clearly that most of the apps are failures financially speaking. When you have
hundred thousands of free games, you better come up with a deadly addictive
smart buzz generating game if you want to make any living out of it!

But then there is also an other point: how people see things. Let's take the
"To do list" example. None of my friends and coworker are using the same app,
they all are die hard fans of their app. That's what happens when everybody
comes with it's vision of how the to do list should be done. You end up with
hundreds of app doing the exact same thing and they will almost all find their
users, because nobody agrees on what should be the standard. That is inherent
to software and human nature, lots of the startups are not creating anything
new, just re-implementing their version of something they think must be done
differently!

That being said, as the number of startup grows and the number of garbage
projects/products grow you see also crazy ambitious and life changing stuff
emerging. I think the analogy to the gold rush made by an other guy here is
very pertinent! While most people are ending up with a handful of dirt, some
rare lucky diggers got trucks full of gold! The economical dynamic created by
the Startups in SV and everywhere else is bringing wealth to the US like
crazy. Eventually everybody benefit of it to some extent. But that's only my
opinion.

------
GuiA
People are giving you the starry-eyed entrepreneur version, which builds its
rhetoric on how they're "changing the world", how they're motivated by
learning and pushing the boundaries of what's been done and what is possible,
and so on and so forth.

Here's a counterpart explanation that some may consider a bit more cynical,
built after some time in SV working for early stage startups, advising some
early stage startups, and even founding (!) such a startup.

The short story is that all of this is essentially a giant economic Battle
Royale of sorts, with VCs and investors acting as puppetmasters at the top and
raking in all the actual money. When you have an entrepreneur such as
Zuckerberg or Page/Brin who emerges at the top, it's purely an unintended side
effect of this. The people who are really bringing in the big bucks are
VCs/investors/incubators/etc (with the real estate and media companies coming
in in second place).

Silicon Valley now is a far cry from the Silicon Valley of the 70s-80s that a
lot of people have in mind when thinking of startups (and even then, I have
feeling it may have been oversold- but I wasn't there). SV today is an
extremely large industry, with lots of money to be made, where every startup
is touched in some way by the underlying finance behemoth.

The procedure is simple: take bright kids in their late teens/20s, sell them
the dream that they are the smartest in the world and the intellectual elite
(the easiest way to get them in that mindset is to get them to apply to be
part of a super exclusive, hard to get in club- sorry, "incubator"), that they
too can change the world with just some Javascript code, 14h days filled with
Mountain Dew, and a $500k seed round. Let them battle it out on the market,
and acquire customers any way possible. Most companies will die in less than
24 months, often in shitty circumstances (users lose a product they may have
relied on in less than a few months' time, employees get fired with no notice
or explanation some random Friday afternoon, etc.).

But the 0.1% of startups that makes it out is more than enough for investors
to get back many times what they put into all the other startups (cf. YC
numbers, for instance), so this doesn't bother the investors in the slightest
(they can give out dozens of $500k seed rounds and not have their wallet
dented in the slightest. They basically have infinite money in a roulette game
where the top prize is a Google or a Facebook or a Whatsapp).

There are a few older founders who know how to play the game and how to
actually turn it to their advantage, whether good or bad (for the good kind:
cf Nest. for the bad kind: cf Color Labs). But by and large, SV now is 20
years old slaving away for the promise of "making an impact on the world" and
"being the next Mark Zuckerberg".

The good news is that if you're aware of all of this and not too dumb, you can
make a good living in Silicon Valley (be sure to save money on each paycheck
no matter what), and it can be a great start to your career. The bad news is
that it's also easy to fall for it, and find yourself at 35 having worked only
for early stage startups that have failed, leaving you with 15 years of work
and very little in terms of these silly little things some people like to call
"career growth" and "retirement plans". I've seen engineers starting to hit
the mid-late 30s, realizing that they're not good enough to make the switch to
finance/management or to a larger, more secure company. Some of these people
move away to other cities where they can aspire to a more stable career
(taking a major pay cut, but gaining things like a 401(k) ), while others keep
playing the startup game hoping that the next one will be the one that brings
them $10M in options and a VP title.

Caveat emptor.

~~~
dba7dba
"The people who are really bringing in the big bucks are
VCs/investors/incubators/etc (with the real estate and media companies coming
in in second place)."

During the California Gold Rush (1848–1855), few actually got rich from gold.
The ones who really got rich were the ones who provided services (bar,
housing, food, etc) to the people rushing in to find gold.

History does repeat itself.

~~~
Detrus
To continue the analogy, most people chasing gold then did it with little
shovels, sifters and human eyes. Today gold is mined with massive machines,
extracting invisible specks of dust from hundreds of tons of sand.

The market of visible gold nuggets or quick MVPs may be over-saturated. Gold
diggers invest a minimum of thought, equipment, know their chances are getting
slimmer and depend mostly on luck.

Very few startup gold diggers can try a different approach, because it's all
about starting with minimum capital and preparation. Big capital got
mismanaged too often, so there's an over-correction.

------
avelis
> What's the value to the creators therefore who sink countless hours into
> creating them and to investors who pour in so much money?

The value oftentimes goes beyond a monetary gain but important lesson's one
can learn professionally and personally. When I helped start Promoter.io my
professional output increased significantly. For investors and founders this a
community that can really help others and itself to further the advancement of
idea's and execution.

> There's only so many consumer eyeballs and wallets in the world, it almost
> seems the supply of products and services is unimaginably over supplied to a
> fixed demand? Or is that the wrong way of looking at it?

While this might be true it leaves much undiscussed. Most of the time it takes
one evolution of technology to lead us to the next great invention. It takes
time to understand where opinions lie with our current iteration of technology
to realize where the next idea should take us. An oversupply lets me know that
we are actively experimenting to try new things.

It isn't easy but is very rewarding.

------
dkyc
pg weighed in a while ago on this in his essay "Why To Not Not Start A
Startup" (March 2007,
[http://paulgraham.com/notnot.html](http://paulgraham.com/notnot.html)). See
point 8:

 _" A lot of people look at the ever-increasing number of startups and think
"this can't continue." Implicit in their thinking is a fallacy: that there is
some limit on the number of startups there could be. But this is false. No one
claims there's any limit on the number of people who can work for salary at
1000-person companies. Why should there be any limit on the number who can
work for equity at 5-person companies? [3]

Nearly everyone who works is satisfying some kind of need. Breaking up
companies into smaller units doesn't make those needs go away."_

[more in the essay]

~~~
stretchwithme
As more and more human labor is automated, its inevitable that companies will
get smaller.

Determining what people need and how to fill those needs will never go away.
But these organizations will get flatter, as more of their inputs can be
purchased in the marketplace instead of needing to be manufactured precisely
as the needed for a final product.

Companies that are built on platforms, such as the Internet, these inevitably
get simpler and partially more alike as their platform gets richer and easier
to use. More will be using AWS, for example, instead of hiring people to build
and manage a data center.

And then there's Apple, which has demonstrated that there are still complex
products that can be better integrated when you control more of the supply
chain. It can switch both hardware and software to a new processor without
coordinating with dozens of companies.

------
vijayr
I think the oversupply is only for educated, young professionals with money
(just how many photo sharing, project management etc apps do we need?). There
are lots of problems that can be solved at least a little, with tech - but
they aren't being solved, as there is just no money/glory in them. There was a
link on HN some months ago, where the author puts it more clearly, with
examples etc. I can't find the link now, will keep looking

