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Comment by baldfat | Hacker News Reader

> Because the only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity.

> In the tech bubble it was Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook, etc.

Umm I think there certainly is value in Facebook and all their apps of WhatsApp, Instagram and FaceBook. Just link bait article to me.

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I agree, it seems a bit like link bait. From what I understood, though, the author's point has some merit -- in stocks, you are at least always able to cash out, to change your mind, to have new priorities. In the modern form of start-up investing, your fate becomes inextricably bound with that of the start-up, with your only options being an eventual pay-out or loss of your investment. I'm not saying I think this indicates anything about a "bubble," just that (if I understood the article correctly) there is a distinct difference between the value modern start-ups provide and the value that a public investment provides.

You are basically talking about risk vs. reward, and bring up an interesting point. In the original tech bubble of 2000 the broad market ended up participating in highly risky investments without fully understanding the risk because every company was IPOing.

It is a much different environment today where the majority of the very high early risk is being shouldered by private investment. IMHO, this is how it should be and in no way is nearly as bad as the 2000 bubble.

You're misreading him. Those are examples of "an existing success story" that other startups are comparing themselves to.

Yes, nobody except Mark Cuban would consider broadcast.com a success story, but if I got rich off selling a company, I'd consider it a success too.

Why wouldn't anyone consider it a success? Broadcast.com was streaming movies in the 90s! It was way ahead of its time. Unfortunately Yahoo squandered it (and Cuban himself thought it was a dead-end business, oh how he was wrong).

The value of FaceBook acquisitions like WhatsApp and Instagram is somewhat recursive though, having been set by Facebook itself when it purchased them mostly based on the value of its own stock (itself a bet on future profits).

Facebook is profitable since at least 2009 http://amigobulls.com/stocks/FB/income-statement/annual

Gross Profit

2014 - 12.47 B

2009 - 330 M

Net Profit

2014 - 2.94 B

2009 - 229 M

The valuation is about 100 of those years of profit, which is a bit high IMO.

Yeah, how does Uber not have real value?

You misunderstand.

> In a bubble there is always someone with a “great” idea pitching an investor the dream of a billion dollar payout with a comparison to an existing success story. In the tech bubble it was Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook, etc.

He's not saying that Uber, Twitter, and Facebook have no value. He's saying that today's startups that are comparing themselves to these success stories are drastically overvalued.

He is says that most "Angel" investors have zero liquidity in their investments.

> Because there is ZERO liquidity for any of those investments. None. Zero. Zip.

I don't think that's the point. Uber is just going to decrease in value to some extent if the bubble bursts. Some companies, like amazon, survived the dot.com and became a phoenix. Uber would likely do the same, but it would just face some adversity in a turbulent credit market, maybe have to IPO earlier than it would like, etc.

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