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"The main difference between today and 1999 is that digital products are actually generating value in people's lifes. Please don't compare pets.com to WhatsApp"

Not all the tech companies that were hot in 1999 were like pets.com. Google and Amazon were amazing new things back then, and other companies like Dell, Sun and Qualcomm were also high fliers on the NASDAQ. (I'm old enough to have been an investor in 1999.)

I think the most significant difference between the 1999 bubble and today's situation is that today, many of the companies with astronomical valuations are not public. For example, if Uber's valuation tanks, some employees and some rich investors will unfortunately lose money, but most people will see little effect - if you have a 401-K invested in an S&P 500 index fund, you won't care too much. And the big public tech companies that are making money, like Google, Amazon, Apple and Facebook, probably won't be affected much if all venture backed companies disappeared tomorrow (except that their labor market would be flooded with developers). The NASDAQ might take a dip, but it won't be like 1999.

Pension funds and others do invest in these large companies, and that money does effect a lot of other people.

True, but institutions like these generally have a very small percentage of their dollars in high-risk investments.

Well Mutual fund money is flowing into Uber and the likes. So, there will be some impact on public money. Agreed, it won't be as bad as the 99 bust.

Since you didn't really experience, I'll tell you that Email, chatrooms, Ebay, Napster, being able to check stocks online, stupid stuff like that was amazing at the time actually...and a lot of the business models which would later go on to make money were being talked about at the time...but the technology had not caught up to the economic feasibility. You couldn't have a Youtube in 1999 because there wasn't enough bandwidth. Now what I think could be happening, using the 90s vs today heuristic you're suggesting...is that there is a massive amount of over-enthusiasm in AI where people think it's basically a magic box that you put stuff in, and you get Lt Commander Data on the other side...and there is no understanding or differentiation between what the different forms of machine learning, and what is technologically feasible, how hard it is to build, etc, that is going to cause a bubble because people don't want to miss out on AI, even though they don't understand what it is. That being said, there are many different forms of web and data tech...mobile, cloud, IoT, etc that you can invest and diversify in now...whereas the late 90s was a lot more monolithic - PC's and websites.

> the technology had not caught up to the economic feasibility.

Nowadays it often seems the other way around - the technology is there, but the economics are questionable. The disconnect between valuation and even the most optimistic revenue projections for something like a chat app or a picture-sharing site can reach two orders of magnitude in the wrong direction. The market for tech companies themselves has become completely disconnected from the market for those companies' products and services.

No, let's compare it to nonsense like SnapChat being valued at $16 billion. Pets.com generated value, PetSmart's $400+ million a year profit can attest to that market. Their issue was horrendous mismanagement of funds, and shipping stuff for more than it was selling. The biggest issue with companies then was going public.

I think writing off SnapChat as "nonsense" might be unwise. I'm 35 and even I enjoy sending snaps back and forth with my wife. (And I'm talking G-rated stuff; look what the kid just did, that kind of thing.) And I'm not even really the target demographic. It's a new communication paradigm, much like Twitter was. (A completely different paradigm, but similarly new.) It will likely have similar challenges. But it isn't just some "nonsense".

Why don't you just send it as a text message instead of having your child's moment deleted?

We send texts too - Google Hangouts actually - and take plenty of non-snap pictures, but you don't need to save everything in life. When you're hanging out with someone in person you're not recording every moment. Snapchat is kind of like a virtual version of that.

That's a hard question to answer precisely, but one I think about often. I use snapchat and text and gchat extensively, and I often wonder what it is about snapchat that makes it more convenient. As best I can tell it's two things:

1. The ephemerality makes me feel less self-conscious about the quality of the picture. It's going away momentarily, never to be seen again, so all I care about is conveying what is happening in the moment, not getting the perfect shot.

2. It's fast. Snapchat sacrifices image quality for speed to some extent, and the interface is faster and more fluid, particularly for broadcasting a snap to multiple people.

These things combine to make sending snaps feel very conversational. When I think of sending an image by text it feels like a hassle, and i'll only do it if it's a picture I want someone to have for more than 10 seconds.

I'm not sure if this explanation totally conveys my meaning, but in using it, it is quite clear to me that there is indeed something categorically different between snapchat and MMS texting, though it is admittedly somewhat hard to pin down what that is.

I get it, they are disposable pics. I'm in the camp that anything I take time to snap a picture of, isn't just some disposable moment that I want a super compressed version of. Far too much junk, overly compressed, and overly filtered pics as it is.

Ya, but to me, that is exactly the perspective taken by snapchat. It allows you to capture moments you want to convey to people in a throwaway sense, but frees you from keeping them around mucking up your digital environment for eternity.

It allows you to express yourself via images in a fundamentally different way. To simply photograph/record the thing happening in front of you because it was funny or amusing for a second, but not have to ask yourself the question "is this worth preserving forever?". It turns a snap into the equivalent of throwaway, idle verbal conversation.

Texts/instagram are the written letters of the digital age. Careful, considered (and if not, people think you're an idiot and look down on you). Snaps are in-person chatter. They don't have to be super meaningful or well composed, just the digital equivalent of "how about this weather we're having".

I don't know the answer to your question, but I do want to point out that there's something a little jarring about positing that its valuation is nonsense and wondering why its users find it valuable in the same thread. I don't get Snapchat either, but maybe that means I shouldn't poopoo it?

This is anecdotal but half of the time I've sent one it was never received by the other party. And, it didn't tell me it wasn't received, the other person just didn't receive it. I'm not sure if this is because it's going across carriers, across OSes (android to ios), or some other factors I'm not aware of. Snapchat just works.

I would say one-to-one "snaps" are relatively rare. People are usually blasting it off to at least a few people. Through text that's a lot more taps. If it's a group text, now you've probably annoyed a few people.

I know it's not popular in the us, but it sounds like a use case covered by whatsapp.

I wonder if it's mostly just network effect? Here pretty much everyone already has whatsapp so you just use that instead of registering/installing a new service/app.

The "nonsense" part is that SnapChat is valued at 16 billion. It's a nice service but certainly not worth that much money.

I was tempted to upvote you, as I also think Snapchat is nonsense.

But I have discussed Snapchat with the youngsters at my work. They all "get it" in a way that I don't seem to. And we use it for advertising, and it brings in revenue (our target market is aged 18-25).

The 18-25 group has proven app after app, that they have zero loyalty, and are the most likely to jump ship to the next great thing. I don't think there is really much to "get" about SnapChat, other than that it's currently the hot app to use. Again, this was a response to OP, who stated companies like Pets.com offered no value, when clearly they did. Their problem was horrible management.

I lived through it and yes, yes, yes... Today is nothing like dot.com. It was crazy... you had pre-revenue companies with no real working product raising series A, B, C, and then going public all within a year. Total unhinged market mania.

> you had pre-revenue companies with no real working product raising series A, B, C

Color[1]? Theranos? uBeam? Clinkle? Those crazy things are absolutely happening now, but the scale is important to know. (I don't know how the scale compares to the dotcom bubble.)

1. http://mashable.com/2012/10/17/color-shuts-down/

You cut off the most important part of his point:

"and then going public all within a year."

Companies went public without a working product? What are some examples?

Nanosys.

Very interesting, but didn't really help to make the point because:

1) it was founded after the tech bubble

2) it succeeded (or, at least, still operates)

3) had patents and a founding team with a string of successes in the industry

Magic Leap kind of fits into that model, I'm sure there are other better examples.

I was curious if you could tell me what value WhatsApp is actually providing? or for that matter facebook or twitter? Are they on the bleeding edge of scientific discovery?

I always felt they were like a social outlet for folks to waste time and their only revenue stream was advertising.

Actually, this - I believe - is the entire premise why we have no bubble this time around. It's because these companies are indeed on the bleeding edge of scientific discovery. The brightest minds in research work at these companies. The research and development that comes out of these companies, that create new open source work, and spawn out new markets in analysis, intelligence, economics - all of the work from these companies fuels growth for every other business out there who use any part of the technology stack to drive their business model. Just my 2 cents

I'll give you Facebook, and MAYBE Twitter. But WhatsApp is a messenger service, a space where tons of others have come and gone. I'm not sure what bleeding edge they are sitting on in regards to scientific discovery.

Facebook is worth more than all the major auto manufacturers in the world combined. It is worth more than Boeing and Airbus and General Electric combined.

Where do they make the majority of their money? Is it advertising? or is it investments that they have made with public money? I am curious what their profits look like that their valuation is 328 Billion dollars.

If you aren't being merely rhetorical just google for Facebook quarterly earnings

That's because the VW stock price crashed because of "Dieselgate". The VW AG's assets alone are worth €381.935 billion and they achieve a far higher revenue of €213.292 billion (VW AG) vs $17.928 billion (facebook).

There are 1.2-1.5 billion vehicles on the streets worldwide. Roughly 1 billion people use WA and roughly 70% use it daily.

There's clearly value because lots of people use it. You don't need any technical breakthroughs to create value. Possibly to monetize it but not to create it.

Btw. the underlying technology is pretty cool imo but that's besides the point. I mean they had what 30 engineers when they were bought (for about 500 million users)? Erlang yay.

No one is denying their proliferation, we're debating their "bleeding edge scientific discovery". What was the percentage of internet users that were on AOL IM during its peak?

It was the only messenger available for MOST platforms, including the then-dominant BlackBerry. It provided feature parity with BBM, including guaranteed delivery of prompt failure notices, which was a bigger deal then. It's why my friends and I started using it years ago.

>>I was curious if you could tell me what value WhatsApp is actually providing?

I used to think like this too. Then I went on an overseas trip with a group of thirty baby-boomers (parents' friends). What I saw blew my mind.

Despite the fact that most people on the group could barely use a computer, they were very savvy and frequent WhatsApp users. They had created a group prior to the trip and everyone was a member, and throughout the trip the app was used to coordinate meeting times, share cool finds, joke around and exchange photos taken with the rest of the group. If a sub-group split up from the main group for a few hours, they quickly created their own group within the app, and then discarded it after joining with the main group. All within seconds. Even the several 70+ year olds in the group were using it and having a great time.

Then I realized: WhatsApp is an easier-to-use, more reliable, more secure and free version of SMS. That's why it's a big deal.

Thanks for the write-up!

Outside of the U.S., WhatsApp has replaced text messaging for a massive amount of people.

I'm not quite sure what happened to make this possible, but I think one related factor has to do with prepaid cell phone plans being more normal and less the exception, and very conscious data usage.

Whatsapp is free, SMS is not (especially if texting across borders). Also easier to integrate media and have group chats in whatsapp.

But I would say "like SMS, only doesn't cost money even when sending abroad" is the killer feature in my extended family.

Ah, that's a good point. For the major U.S. providers, sending a text to an international number isn't any different than sending a domestic one.

However, sending a text message internationally — when I'm traveling to another country — is totally different and the rate is insane: $0.25/$0.50 per SMS/MMS sent. So they essentially force you to buy a special 30-day international texting bundle to be able to keep in touch with your friends back home.

The rates for data abroad from U.S. carriers are even worse: $60 for 300MB. I'm anxiously awaiting a "Whatsapp for cell data" style plan. How do you handle that?

Folks wasting time is exactly what their value is. It's people seeking amusement.

It's the first non-sms communication method that I see used everywhere around me, and all the time, and for everything.

Sure, email existed and even my grandmother started using it years ago. But email wasn't as ubiquitous to daily life.

Over here, WhatsApp is used by teachers to communicate with students, my driving instructor to set up appointments and let me know he's at the door, my parents to share random bits of their life in the family group, my friends to just meet up and have an ongoing pointless conversation, my colleagues to figure out who's in the office and when, people my various 'associations' to discuss when to meet and what to do, clients who want to know if I'm available, and so on.

The amazing thing is not WhatsApp as an app or what it's used for. It's the fact that everybody does it.

It's all about the interest rates.