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OMG THE TECH BUBBLE SKY MAY BURST - a discussion

Discussion in 'Streetwear and Denim' started by Biggskip, Apr 15, 2016.

  1. msg

    msg Senior member

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    @venividivicibjThere's a world of difference between a company that's a billion dollar revenue (or whatever) and someone like MSFT or Apple who have $50 billion in cash in the bank. Sure, over 15 years, these companies may diminish but a recession or a bubble won't put them out of business. Also, don't confuse VC valuation with real revenue when you're trying to draw an analogy to past failures
     
    Last edited: Apr 16, 2016
  2. venividivicibj

    venividivicibj Senior member

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    I'm not (was thinking of yahoo). My main point was that, while these guys are giants, and Apple may have 60BN in cash or whatever ATM, but in tech if you stop innovating, you get passed real quick (Ex -MySpace)
     
    Last edited: Apr 16, 2016
  3. msg

    msg Senior member

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    MySpace is not analogous to any of the tech companies that actually make stuff, like Apple or MSFT. The service companies like Goog or FB are conceptually "closer" and maybe more precarious because they're dependent on clicks and likes, but their momentum and inclusion in daily life is unprecedented. They have so much money available to them. The mistake people make it to assume that Goog or FB are models of sucess for other companies; they are not, they are exceptions. Similarly, Twitter will never be a $10 billion company, but it is massively successful compared to everyone else around it. The fundamental mistake is to believe these companies are models for sucess; they are exceptions. As for Yahoo, look how long it's taking them to fail: over a decade.

    The argument above is that a tech bubble will cause problems for the industry. That's simply not true in general. Yes, the smaller tier companies will hurt, many will go out of business, but the big ones will be just fine. Innovation is important, critical even, but if you understand the financials of these companies and how tech had become so entrenched in life and, more importantly, business you'll understand that there are very few past analogies that hold when taking about be big companies. DEC is the closest example, but the world is widely different now, as are the financials. So it's a poor analogy at best.

    Software is eating the economy and will continue to do so, across bubbles and recessions. Some guy in a past discussion was trying to reduce tech to a bunch of people building apps, that's a mis-understanding of what the industry is and how people and business use tech and where the money is; there's no fucking app for AWS.
     
    Last edited: Apr 16, 2016
    1 person likes this.
  4. the shah

    the shah Senior member

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    I was thinking the same thing initially but realized msg talking about very short timelines. Sure over half a century almost 90% of Fortune 500 companies have disappeared but most of that didn't happen in the span of a night. Some miscalculated steps led to bad business decisions and probably much slower deaths than small recession-hit companies.
     
    Last edited: Apr 16, 2016
  5. venividivicibj

    venividivicibj Senior member

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    Ah okay - I was thinking along the same lines as you shah.
     
    Last edited: Apr 16, 2016
  6. sinnedk

    sinnedk Senior member

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    Completely agree with you about the big companies being exceptions. My concern is more centered around startups and ones that ended up being a bust in their IPO (groupon comes to mind). The companies that went bust in the IPO didn't close shop but they aren't successful either. Once those fall they'll hurt a bit but definitely won't slow down the economy. What will is a big outside factor that @LA Guy was talking about. Once that happens the smaller start ups and bust ipos (sorry don't know what else to call em) will pull some things down.

    I hope the Big tech companies will just react and swoop everyone up through buy outs.

    Honestly who the F knows but when things are going so well they are bound to have a correction, the questions is not necessarily when but how big will this correction be. And mind you correction is not a recession.
     
  7. LA Guy

    LA Guy Opposite Santa Staff Member Admin Moderator

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    I see that @sinnedk beat me here by a second. Well, I'll move his post here.
     
  8. sinnedk

    sinnedk Senior member

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    dammit we are in a new thread now ....
     
  9. LA Guy

    LA Guy Opposite Santa Staff Member Admin Moderator

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    Shit happens.

    Incidentally, I would agree with the big 5. But that is literally 5 companies (maybe add a 6th,) and even those have fundamental issues. Google's core proposition, for example is that better data analysis will make it's advertising offerings better. This is really a statement of faith rather than of fact. No, it will not go belly up if there is a bubble burst, but the mystic that sustains it may be gone. And if anything happens to google, entire industries will feel it, hard.
     
  10. Find Finn

    Find Finn Senior member

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    Shouldn't this thread be in CE. :alien:



    You can't put Apple into the app/tech bubble equation, as they sell physical products, unlike companies like fb, instagram etc., so they are far less likely to be hit, if a tech bubble bursts, people will still need phones, computers etc.

    Tech companies get sold and valued far above, what they ever will be able to earn and most have 0- little earnings even though they are valued at 10+ billion. As an investment those companies are bad business, it doesn't matter that everyone uses snapchat, whatsapp, instagram, twitter, tumblr, reddit etc., if they don't make money and if they don't create a yield for the investors they won't be able to get funding. Their main Achilles heel, is they only make money as long as they get traffic and clicks, if they get overly commercial the users will migrate. This is an issue for all online firms, the next big thing is able to kill you within months.

    Regarding apps I firmly believe there is a point, where the market is saturated and the world only needs so many Übers. Speaking of Über a lot of the new apps/services operate in a legislative grey zone in most countries and as legislation catches up, some of them will decrease in value and even die, just see how many countries Über has been banned in and drivers arrested. There is also the elephant in the room called tax, should they be taxed in the country the app is sold or?

    As I mentioned earlier the real issue is the Chinese economy and Russia, those two countries are far more likely to create a wide spread financial crisis and when the Chinese economy bursts it will hit everyone. The Chinese and foreign assets can very easily break real estate markets like NY, Miami, London, by having a fire sale to liquidate assets and then the snow ball is rolling. If Putin wins the election and keeps playing with his muscles he could easily start a war.

    The big PE firms invest in cycles and in some markets, they have already halted real estate investments.
     
  11. Find Finn

    Find Finn Senior member

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    Do you know how VC works?

    Most of those funds are investing in anything from bio tech, to space tech.
     
    Last edited: Apr 16, 2016
  12. Mr. Moo

    Mr. Moo Senior member

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    Check this out: http://nvca.org/pressreleases/58-8-...-in-2015-according-to-the-moneytree-report-2/

    Specifically, this section: "As has been the recent trend, the Software industry continued to receive the highest level of funding of all industries in the fourth quarter, receiving $4.5 billion going into 369 deals for the quarter, despite being down 24 percent in dollars and 17 percent in deals compared to the third quarter. For the full year of 2015, Software was up 8 percent in dollars, but down 5 percent in deals, compared with 2014. Four of the top 10 megadeals in the fourth quarter went to Software companies."
     
  13. Find Finn

    Find Finn Senior member

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  14. byAsum

    byAsum Member

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    "I used fashion tech startups as an example because it's an industry I actually know about." --I would love to hear more about this, which examples and thoughts and stats (revenues...).

    As an engineer slash designer, in many ways I should be doing something more in the fashion tech space. And it could be a future possibility still, I would love to if I could find something I felt very genuinely excited about. But honestly, I'm not a fan of many wearable techs and fashion tech startups. I do think it's going to keep growing and such, I just don't feel great confidence or am excited about a lot of it. Somethings seem potentially cool/smart in the moment but I question if its just a hype and if it will last. A lot of existing wearable tech stuff turn out to be more disappointing than not. (Somethings are just better simpler.)

    I also have yet to see a fashion crowdfunding space thrive. Not just for basics like t-shirts, shirts and jeans, but more fashion where varying small designers can crowdfund small collections. I know there's some but nothing has really taken off. My guess it is a quantity and fan base issue.. crowdfunding needs a sizable crowd but small designers have very specific small audiences, especially at the needed higher price points. But still, if I can run one on Kickstarter (and I chose there cause its still the best platform despite the fashion category being a tough one), it would be better at a more fashion-focused one--one where ppl are fashion enthusiasts and its a norm to try new fashion brands (than just new tech brands).
     
    Last edited: Apr 16, 2016
  15. troika

    troika Senior member

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    How is this in any way surprising? Even with the downturn software vs any kind of hardware is easier to manage without as much overhead, production, inventory, and prod dev response. I'd also be interested in YoY numbers as Q4 is always low in expenditure
     

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