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For Silicon Valley, the Hangover Begins (wsj.com)
82 points by vanderfluge on Feb 20, 2016 | hide | past | web | favorite | 77 comments

Is it just me or does it seem like a lot of media outlets really, really want to see a big tech downturn? I want to say to the collective writers ofthe WSJ, the NYT, and everyone else, "stop trying to make a bubble happen, it's not going to happen."

I get that a bursting bubble would be dramatic, and would make for lots of compelling stories. But there are plenty of other exciting and interesting things going on in tech these days! There's no shortage of dramatic tales that aren't quite as simple as "those crazy Californians are finally getting their due!"

I mean, I get it. Journalists gonna journal. But still.

Anyways, sorry for the rant. Please continue reading the comments as you were.

In addition to widespread tech worker antipathy, people expect history to rhyme. People know what a tech bubble story sounds like, and they'll buy tickets for the sequel. Eventually everyone will realize that it's not a tech bubble, it's an asset bubble that was intentionally inflated to buy us time to prevent a depression, but we didn't do much with the time.

http://www.federalreserve.gov/newsevents/speech/bernanke2012... (Search for "portfolio balance channel," the mechanism by which our monetary policy achieved the stated goal of asset price increases.)

> Eventually everyone will realize that it's not a tech bubble, it's an asset bubble that was intentionally inflated to buy us time to prevent a depression, but we didn't do much with the time.

Seriously. Overlay the S&P 500 over that graph of "Median valuation of U.S. startups". They look mighty similar.

This just isn't true. You can see the Reuters VC index is up around 300% since the sector got flooded w capital.


Newspapers in particular were butchered by the World Wide Web and Social Media. Paper advertising revenue is roughly a third of what it was a decade ago. That revenue paid the salaries of a lot of journalists... Of course the ones left hate us!


Is it really that unbelievable that people are getting concerned with totally, for example, a gif image platform getting valuations in the hundreds of millions range?

I don't have any data, but it might be that Giphy class companies have more or less the same investment share percentage today as they used to before. It's just that the total investment pie grew. There's plenty of useful companies investors put their money in today.

Heck, I think now might be the first one in a long while that venture investors put up money for moonshot type of ideas.

I think journalists like to predict doom because imminent disasters scare people and get pageviews.

Exactly. It's at least to some degree clickbait. Imagine reading an article that goes something like this: "stock market is down since its all time high which lowered a little bit some of the valuations of some startups but it's not a big deal". It's quite likely that a lot fewer people would click on and read that article. That's just how we are wired

There's also a bit of Schadenfreude and people who have non tech non professional careers probably just want to watch the spectacle from the sidelines and also hope it will stabilize housing prices stop eating into jobs and stop upsetting life as we knew it before software began eating the world.

I dunno. These sort of things have been quite destructive. I am not calling the tech sector a tulip market, but the Dutch tulip mania stands as quite an incredible event. It effectively ended Holland as an imperial power.

It also inspired "Picture This" by Joseph Heller, which is worth reading.

>It effectively ended Holland as an imperial power.

That's quite an exaggeration. What ended Holland's foray into imperialism was the Anglo-Dutch wars which started fifteen years later in 1652.

I'd have chose "oversimplifiction" well ahead of "exaggeration".

But yes, yes, yes. I could not agree more.

Heller's book is the last thing I'd read on it, and it emphasizes the economic well over the... naval.

As an American, we tend to attribute military success to economic power.

Yeah, from my perspective it's actually getting better, but that may be due to exp increases, and not necessarily just the job market being awesome.

I regularly talk to potential side job people and the amount I can ask for my experience is definitely favorable to my financial status.

Unless the Internet, computers, and electronics are forgone for some alternate form of data storage and retrieval; as long as I stay up to date, I'm pretty much guaranteed a job.

I am moving into "big data", so machine learning, data storage and transfer. It's actually really fun, and it seems to be the direction to take if you want to stay current.

It seems like thinking computers are swiftly replacing human workers in the work force and so it seems like a good plan to be able to program those machines ;)

Automate all the things!

It's a push because of the presidential election.

The republicans like it because "business is going to be terrible if you elect a democrat" (or a commie!)

Sanders likes it because "big business hates me! A vote for me is a vote against the establishment!"

Clinton likes it because anything that makes Sanders a legitimate opponent means a longer and more active donation cycle, and more young people and black people voting come the general election (and despite what they say now... they are all going to be clinton supporters in a few short months.

Journalists report on things that are happening. People resist this idea like nothing else in the universe, but really, it's true. There are objective data to support the conclusion of a slowdown in the tech industry. I'm sorry if this upsets you.

It's a bit of both: journalists try to find anything that makes for a good, compelling story as it's happening.

Now, some things can be seen in advance to make for good, compelling stories; some journalists have already written a piece in their heads about certain topics, long before the news actually comes out.

But nobody is reporting things just because they want them to be true. People are just jumping to report things now that they "finally" are at least a little bit true.

Maybe it won't need to be dramatic. Maybe a relatively slow and natural deflation.

Media can raise awareness so it's not a needle pop.

Seriously? When the entire country has been forced to endure decades of stagnant wages, crippling debt, and the two major presidential candidates are a socialist and a fascist, you are surprised that people want the most babied, prima donna group of workers to ever walk the earth to get their comeuppance? An entire group of engineers who complain about 6 figure salaries and how hard it is to live on them?

I'm one of the group, I'm exactly the person I just described, I'm just not shocked in the slightest.

Couldn't have said it better for the most part. I think, though this isn't a bubble, the land of fairytales and unicorns (i.e. Silicon Valley) is finally coming to terms with the economic reality that the rest of entrepreneurs in the U.S. live in.

It was inevitable at some point for this to happen - just look at railroad technologies in the 1870's and dozens of other examples since then. The internet, and associated technologies, are beginning to mature, and thus business models must begin to rise to meet a new standard - a profitable and sensible one.

Silicon Valley did a lot of great things for this country, but it gets out of hand when, for instance, relatively simple apps coded over little more than a few weeks start to command hundred-million-dollar valuations (or more) with no revenue and no path to profitability just because of the geographic location of the company headquarters.

trump is an opportunist and a douchebag, but not a fascist. Sanders might be left-wing but far from socialist by any non-us standard. Left wing in the US is at most "center" by EU or some other countries.

Actually with the cost of living and rate of taxation for singles in California it actually is difficult to live off 6 figures. Hollywood talent who actually generate much less wealth than we do get residual income, I live in a studio apartment off 6 figures but my friends who work as hollywood creatives generate far less profit but because of their strong unions are able to buy homes in Los Angeles.

It's the feeling of total entitlement amongst those six-figure engineers that is the issue, not necessarily the salary. Take, for instance, the whole 'tech bro' debacle and others like it.

I have an extremely hard time believing that living on six figures is difficult when I manage easily at <$50k. Yes, in the SF Bay Area.

What people mean is "it's tough to live an upper-middle class life in SF on six figures".

By what metrics are engineers the most babied in the world?

Certainly by metrics of the Silicon Valley PR machine that pays them, would greatly prefer to pay them less, to blame them for the housing crisis, and to use as a debate piece for advocating for infinite H1Bs (but certainly not green cards - those employees have rights).

But not by any real metric. Go walk around an open-office plan filled to the brim with programmers, then walk into a VC office with their mahogany desks and high ceilings and private offices. Check out a law office where you'll see similar things. Look at actual salary data. Lawyers make significantly more than engineers, despite the "shortage" of engineers and "surplus" of lawyers (since this always gets brought up - yes, elite Stanford programmers who work at Google make more than some podunk law grad, but that Stanford law grad still does better, and the average programmer is paid less than the average lawyer). Doctors are 9 out of the 10 highest paid positions in the country. Police, firefighters, and teachers get paid actual overtime with pensions that pay out almost their whole salary after they retire, and have infinitely more job security. On the other hand, tech workers seem to think uncompensated 24/7 on-call is a badge of honor, just like spending all your free time doing even more programming to keep up with the endless tech skill treadmill. So why exactly are tech workers on the top of the list to see fail, other than us taking the blame and devilization for the failure of SF residents to properly plan housing and economic growth for years and trying to preserve the "character of the city" over making practical decisions?

Tech is a great career and compared to many people in this country who have been totally fucked over, we have it great. But this trope that tech workers are so spoiled because they give us a ping-pong table and catered lunch while paying us less than many other white-collar professionals is overdone, so drop it.

And what come-uppance do we deserve? Because we have jobs building products people use and value, that we show up to every day, that makes us deserve some retribution? Because we reasonably point out that six figures in the Bay Area is nowhere near an extravagant lifestyle, which anyone who knows anything about the cost of living would agree with?

The biggest problem I see is too many engineers jump on this self-flaggelation train without thinking critically about it or how it hurts them.

The real reason people keep calling "bubble" is because they're unimaginative. It happened before, so it's easy to just say the same thing will happen without really thinking about it. And yes, they say "this time it's different" in every bubble, except in this "bubble" there is no real indication that there is a bubble, and all these market corrections and beatings tech companies take that are pointed to as the existence of a bubble actually prove the direct opposite, because in real bubbles it goes up really fast based on speculation and comes down really fast in a spectacular crash. Tech has been slowly but consistently growing for years and occasionally takes some corrections and downturns, which is like any other market and nothing like a real bubble.

By what metrics? Job availability, for one. Can you provide an example of another profession where someone with 2-3 years of experience can quit their high-paying job and have recruiters calling the same day to entice them to a new one?

Education requirement, for another. Your examples all require advanced degrees from prestigious schools, multiple years of low wage grunt work, and/or a proven track record before hitting the high salary mark you seem to think is the default. Meanwhile, 22 year olds graduating from college with a CS degree and zero years of experience are getting six figure offers.

Work environment, for a third. Think you can be a doctor and work from home when you feel like it, or have Nerf wars with your coworkers after grabbing a beer from the office-provided kegerator?

SF and SV engineers are spoiled. Spoiled by market conditions that have combined to make right now an unprecedented good time for people who like writing code. Meanwhile, the other 98ish percent of Americans continue to get a poor deal. That's no one's fault, it's just the way economics has gone over the last few years. But it's no surprise that a large number of people want engineers to have to work with the same conditions as everyone else. I mean, can you really say with a straight face that someone writing yet another version of Tinder or whatever is providing more "value", as you put it, than a teacher?

Tech workers have it better than many, worse than some. But hardly the most spoiled ever.

If you're the type of person who values kegerators and nerf wars more than salary, benefits, and professional status, then I can see how you would have your perspective. I can only guess you're much younger than some of us. Personally, I'd rather finish my work and leave the office to go home and buy my own beer with a bigger paycheck than act like I'm in a frat-house.

As for comparing someone writing a dating app to a teacher, I in no way implied that programmers create more value than teachers, or that somehow salary directly reflects the value people contribute to the world. But I think both contribute some value, and neither deserves to get demonized for just doing their job or even advocating for their own interests.

I don't know if there is actual widespread resentment towards coders. I doubt it (outside sf of course) but regardless, the desire take down people who have good jobs and salaries, rather than spread the wealth to all is just the worst of human nature.

Engineers to the brim are the backdrop, the least important component of the stage. Startup ecosystem is one of the holes where roaming capital is sunk. Who benefits? VC, lawyers, bankers (smart ones). Engineers? Who gives a shit about them. They are part of the decoration, dangled in front of investors, like animated gif. It is all a game of collecting money from investors. So don't be too hard on yourself.

Doctors and lawyers, on the other hand are a monopoly, with artificially high entry barrier.

Teachers, firefighters, police... Another monopoly on grand scale. A separate topic...

It all comes down to various monopolies and extraction of funds from public through them.

Having said that, I believe that engineers, albeit being used in startup scam as a bait, still are one of the last few free market forces left, where no credentials matter, where there are no bars or societies, just skills and experience.

I suppose another factor about programmers is that they're nerds; raising nerd status upsets the natural order.


Trump is an opportunist and a demagogue, but he's certainly not a fascist.

The office environment in the picture looks terrible. Not only is it open plan but there seems to be barely enough room to setup a couple of screens and a laptop.

Agreed, it looks absolutely miserable. I would really like to see an end to the era of open work spaces, or at least shared desks. Is anyone aware of a study comparing the productivity of developers in these types environments to ones that provide a little privacy?

Not specific to developers, but this article, The Physical Environment of The Office, reviews several studies of impact of office-type on office workers:


Absolutely, there is a way to do "open floorplans" right, and that right there is not it. Bigger desks and even some spacing away from neighbors is critical. The style of open floorplan in that picture seems more suited for a call center.

(please please HN, let's not turn this into another open floorplan vs office discussion)

And laptop on a silly stand right in front of every person, while they have two perfectly fine screens and separate mouse and keyboard.

Think of the customers.

The lead company in the article, Practice Fusion, is an electronic medical records service for medical practices. With their system, everything is on Practice Fusion's servers; the local equipment is just a web browser. If the company ceases operation, they can export patient charts in CCDA format (which other medical records services are supposed to accept). But the office records for billing aren't standardized. If they go under, the transition will seriously upset the operations of thousands of medical practitioners.

Yeah, that's why we've been saying "Don't put everything in the cloud" for the past decade.

This. As a consumer and professional I've become progressively more resistant to putting anything in the cloud for fear that any service I use and value will be 1) acquired and closed, or 2) go out of business. Any platform we use in the cloud is an investment...learning how to use it effectively, transitioning all our related content to it, etc...so when they go down it's often non-trivial to find an alternative and adopt it. The transition costs can add up. I think the reality is that people (consumers and businesses) will spend a lot more time and effort vetting new apps and platforms before investing in them as users. This means that new startups will need some serious legs and a way of explicitly addressing these underlying concerns. They may have to put aside a large chunk of capital just to be able to say explicitly that they have an operational five year or ten year plan. Otherwise users like me won't use the next cool thing because the odds are very good it won't last even a year. Part of the value of the really big successes like Salesforce is that they are clearly not going anywhere. Where I work we've invested in using a machine learning model deployment service which makes it relatively easy to expose our models as API endpoints, but since it's a product offered by a startup I know I'm hyper aware it could shut down any day out of the blue. If that were to happen we'd have to find another service to transition to, trial their product, and adapt all our stuff to it (potentially lots of new code to write and lots of learning how to use their platform effectively). It'd literally set us back months. Yes, potentially good for my job security, but who wants to fiddle with that kind of stuff. I want to move forward, not back or sideways. So yeah, the startup world needs to come to grips with this. I suppose what we might see in the future is a lot less VC funded startups, and a lot more bootstrapped startups which organically grow much more slowly. But even these startups will need to buckle up for a much longer growth trajectory because they'll have to overcome the idea that they might just shutdown.

How is it that the hangover just "began"? Public markets have been trashing prominent tech IPOs for several years now. Groupon? Zynga? Ring a bell?

Love how in the medias eyes if it's not a massive boom then it must be a huge recession.

tbh, vc's apply the same rationale before investing. no?


oh ok. good.

Feel like they're blowing this way out of proportion. Uber and Airbnb are doing perfectly well and from the looks of it Uber will IPO at $100-$150 billion easily.

If only there were a way to bypass that paywall.

Try the 'web' link right under the HN title to perform a Google search for the article. The 'web' link resolves to: https://www.google.com/search?q=For%20Silicon%20Valley%2C%20...

This used to work for me, but no longer does:


Manually adding the link into Instapaper worked for me.

Didn't work for me.

Still works if you use a new Chrome incognito window and search for the article.

Appears to be free. At least from my iPad

You could purchase a subscription.

Android w/chrome. Free to me


I'm on Chrome on a Mac. I clicked the web link on this page, clicked the SkyMag link on Google (the 2nd link for me after HN...your Google results may differ as I'm signed in), and then clicked their green Read More button, and got the full article on WSJ.

Risky, but it worked.

The funny part is that Phenomenal Fridays weren't that good. Ryan would get up and spew words at everyone and make fun of his son and his dog would piss on the rug.

Far better examples of companies who got indulgences right. PF sorta sucked as a corporate culture. To be COMPLETELY frank, it is probably better off now.

Lauren Burris was a glorified secretary. The CEO was a clown. The company actually has a shot at being a lethal competitor now.

You've got to write about something when you cover tech. It's like pulling a magic rabbit out of a hat.

There is no bubble. Investor speculation taking a down turn? Sure. But that's been happening for CENTURIES.

Please stop posting paywalled articles on Hacker News.

Amen to that.

Edit: Plus, this sort of hysterical article is bunk because there's metric ftons of angel money which renders VC/IB money, sovereign wealth and public IPO moot.

The guidelines state to post the original source. [1] They say nothing about pay walled articles.

[1] https://news.ycombinator.com/newsguidelines.html

look at the post just below this one: https://news.ycombinator.com/item?id=11134798

The paywall addon I was using on firefox stopped working on it too.

Google the article's title and click on it. WSJ articles referred from Google news search are free.

edit: As reported below, try turning off your ad blocker and/or using incognito.

That is no longer true.

Looks like they track the number of visits you've made to the WSJ in the past. If you use an incognito window you can still use the Google search results.

>If you use an incognito window you can still use the Google search results.

Nope. This stopped working for me about a month ago.

It depends on the article. Some of the articles it works for, others it doesn't.

It's only no longer true if you use an ad blocker. I switched off uBlock, and links from Google and shares work again. They made some kind of change that is ad blocker sensitive relatively recently. My friend who reports for WSJ confirms.

Worked for me. Are you sure?

Edit: It doesn't work when I try it in a regular tab, but it works in incognito on Chrome.

I'm curious, does anyone consider subverting a paywall (even if it's as simple as googling the article title in incognito mode) as being akin to media pirating? At least on an ethical level.

I don't find it unethical, but it's most likely against the law with the DMCA anti-circumvention clause. https://en.wikipedia.org/wiki/Anti-circumvention#Circumventi...

Also, telling people how to do it is probably against the clause also.

Most content I enjoy I'd be willing to pay for. For example, I'd be willing to pay a few bucks a month to Hacker News, if that's what it came to for support.

Just click the Web link under the article on HN

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