Not in my world and I live in the EU! People raise millions and 10s of millions here for stuff that is nonsense and cannot be done. As someone said already here: openai wrappers that do something intended in <5% of cases but the millions will solve that by insert-some-shite-fine-tuning-rag-bla.
And when at meet-ups people actually tell me that investors will pay whatever for an ai wrapper demo (I saw a few last month that were not even that; just faked) and a few $ charts.
I am not even sure if I find that good or bad. There are other things people invest into that have more problematic consequences.
For example I'd like to have someone explain me how housing can be both a good investment for rich people and a commodity people can afford — the way I see it these are fundamentally incompatible goals. One is about making housing prices go up, so your one investment gives you more profit, the other is about building enough to keep the prices stable (or even going down).
Funny you'd say that, that's exactly the conclusion (the housing market, i.e. investment opportunities, being the cause of the housing crisis, i.e. lack of affordability) in this video essay from Philosophy Tube 5 years ago: https://www.youtube.com/watch?v=qihG6AGjkRk
The problem is that currently (at least until the interest rates went up to a reasonable level) housing was a (too) good investment for the rich. Prices just went up and up without any added value.
This made houses expensive for the ones who wanted to buy a house to live in.
The main profit should instead only come from the actual building of the house, by a construction company, and selling it the first time to someone who wants to live there. This is where value add comes from.
Just slap a massive fine (I mean tax of course but that is just semantics) on any profits from a second or higher house. And dont start with the "you can't change the rules of the game in play"; sure you can, you just dont like it.
I always wondered why law didn't rely more in mathematics to regulate such dynamics. It is trivially easy to describe a formula which gives you a tax that doesn't impact the many have-nots while preventing perverse accumulation and still leaving enough slack in the middle to incentivise people to take part in a market. And anyone who disagrees: you can tweak the formula to any cutoff point, you can make it grow linear, logarithmic or exponential etc.
That being said, things like your solutions should always come with thorough check by a red team. E.g. what about the rich guy just forming a new company per property to evade that tax? So maybe it is smarter to bind that to an actual owner person. How will the shape of houses change if their count gets important (that could be how we get these cyberpunk-megabuildings)? Maybe it should be about rental units instead (or some other clever definition)?
Sometimes I wonder if the best solution wouldn't be to prevent companies from owning housing alltogether..
The thing is that the interest rates need to stay higher for a long time (many years). Many home owners and speculators have fixed interests on their loans. It is not until they have to be renewed that they feel the effect of the higher interest rates. So unfortunately it will take time.
Higher interest rates doesn’t fix this at all. The supply shortage is in available land (with the right permission/zoning/etc)
Higher rates will reduce the profit the land owner can take, but they also increase the costs to the builder who has to pay the bank more to borrow to build (before repaying after selling).
It doesn’t affect the affordability for the purchaser which is set as a given percentage of their monthly income.
Getting a grant isn't raising money from investors though. People assessing grant applications are looking for interesting, innovative (or not) ideas. They don't care about making a return. I would expect to see a wildly different set of projects getting grants than get VC money.
I am talking private money. Grants is a lot easier but are usually just tax breaks (you need to spend money first) so get vc money and then grants on top for the tax breaks.
10 years ago the entry level SWE salary for FANG was about 160k USD.
Today, about 100K GBP or EUR are still "senior" SWE salaries at a lot of non-FANG tech companies around UK and Europe.
In that time, the currencies have also cratered against the USD.
The question is, which is it? Do engineers generate so much value that they should earn hundreds of thousands or are US engineers overpaid.
Given that most the FANGs generate over 1.5M per employee I'm inclined towards the former. Europe/UK is just poor. Our markets are smaller, our dreams are smaller and we settle for lower salaries while around us everything else gets more expensive, land healthcare education and energy.
Companies here might not be making fang money but they are underpaying. You have to push harder and people here tend not to do that here. Most I know value their free time above everything and so they want easy ok paying work, not millions while working their asses off. If they don’t appear in the office or take an ad hoc vacation they don’t want to be yelled at. Personally I have almost always made fang+ money as developer (since the early 90s) in Europe. I am good at what I do but I also have a big mouth and I mesh well with c levels; we become friends usually. Unfair for my colleagues but it’s not like don’t tell them to speak up and bluff; they don’t want to mostly because they think it encroaches on their freedom (not sure if it does; in my company it doesn’t; just less shares).
It depends on the startup I guess, but for software/saas a few million seed gets you off and away: wages, bonuses etc are all a lot lower than what I see for sv. Especially if you hire in the south.
Yeah, that. Are the pitches public and is there anyone who can openly explain why these have been accepted? I guess the answer is ‘we invest in people, not ideas’ but the quality of these has been dramatically bad (I think my 5% useful is pretty optimistic) so I feel I am missing something.
Who are they raising money from? I have plenty of ideas and if I can bank roll them with an fat investment on an open ai wrapper that I pivot away from all the better. Lol.
That article claims way too much from too little data.
Tesla does have a serious problem with pricing. Electric vehicles have become cheaper, and nobody can mark up electrics the way they did a year or two ago. Tesla had to cut prices.
But not enough. BYD now sells more electric cars than Tesla. BYD now has a good US$20,000 electric car, and they're selling it in Europe, Mexico, South America, and of course China.
Not in the US only because of import restrictions.
Tesla's factory in Shanghai is way behind schedule and work seems to have stopped before much was built.[1] The Hertz/Tesla debacle has been embarrassing.
Tesla is an auto company, and has the operating problems of an auto company - competition, parts and service, and reliability. Tesla is way overvalued for an auto company.
And no, the "autonomy" thing won't save Tesla. Everybody has Level 2 now, and the driving assist systems from Mercedes and Ford (Level 3) are considered better than Tesla's. Waymo, of course, has level 4 and taxicabs running around.
now that the borrow rate has gone up and dollar has strengthed. they arent competing against 0% inflation so less need to go into risky plays. in some ways this helps the economy because it allows people to focus on what really matters but in other ways a bunch of people who were employed because of low interest rates about about to lose their jobs.
Plus makes month to month operations more expensive with the higher cost of borrowing for companies (which most do now)
>a bunch of people who were employed because of low interest rates about about to lose their jobs
You're making it sound like the alternative would have been for all those people to have been unemployed if those zero interest rates would not have happened.
No, the alternative was, as the market is being corrected right now, is these people working in older, more established businesses and economic sectors with steady growth, that are based in reality instead of gaming meme hypergrowth "to the moon" businesses, which are laying them off right now.
There's tones of jobs open in the "un-cool" sectors.
To profit, you need to have a working business plan.
You can't have an Underpants Gnomes plan:
Step 1: Steal underpants
Step 2: ?
Step 3: Profit!
Here Step 1 is building an app or website for most startups. What is step 2? You skipped it. Step 1 is the Moonshot, Step 2 is how you profit from the Moonshot.
1) convince gnomes having no underwear is shameful, if caught by pixies.
2) steal underpants
3) offer replacement underpants at a low price, based on washing and dying the stolen underpants
4) profit.
This is also not dissimilar to the "replacement light bulb" scam where you go around the street with a box of one houses lightbulbs, replacing the neighbours with your boxes contents, and then rinse and repeat for every house for one low low fee..
True, but only partially. We really don't know (or at least investors don't understand) what LLMs are really good for. Some of the use cases put out there now will wither away.
Moonshot is when those trajectories are not yet known and won’t be known for quite some time. A good example is nuclear fusion. This is something else: risky but clearly tractable innovation.
The market indeed seems to put rather little value on growth these days.
Example: Google. Their p/e ratio of 30 seems low if you assume that they will keep growing like they did for the last ten years. Which was about 19% annually.
At a p/e of 30, to outperform a ten-year bond at current rates, they would have to only grow at about 3% or so from now on.
Exactly. The "risk free rate" does not exist when it comes to the purchasing power of an asset. And the purchasing power is what matters to an investor.
The 4% bonds pay you might be somewhat "risk-free" when it comes to "getting your investment back and 4% on top of it". But it is likely to have been devalued. And often to a large extend.
This is not what equity risk premium means. (You also seem to be misunderstanding the role of a risk-free rate, which is commonly understood to not mean with absolutely zero risk whatsoever.) A good introductory finance text is Fabozzi’s Fixed Income.
I mean “investors” in the WSJ sense always want either profit now, even if it tanks the company in the long term, or BS hype wagon to drive the stock up, again regardless of the long term impact.
The WSJ acts as though the only portion of the economy that matters is the profit produced by rent seeking investment firms and hedge funds.
https://archive.md/w6qAR
Not in my world and I live in the EU! People raise millions and 10s of millions here for stuff that is nonsense and cannot be done. As someone said already here: openai wrappers that do something intended in <5% of cases but the millions will solve that by insert-some-shite-fine-tuning-rag-bla.
And when at meet-ups people actually tell me that investors will pay whatever for an ai wrapper demo (I saw a few last month that were not even that; just faked) and a few $ charts.
I am not even sure if I find that good or bad. There are other things people invest into that have more problematic consequences.
For example I'd like to have someone explain me how housing can be both a good investment for rich people and a commodity people can afford — the way I see it these are fundamentally incompatible goals. One is about making housing prices go up, so your one investment gives you more profit, the other is about building enough to keep the prices stable (or even going down).
Funny you'd say that, that's exactly the conclusion (the housing market, i.e. investment opportunities, being the cause of the housing crisis, i.e. lack of affordability) in this video essay from Philosophy Tube 5 years ago: https://www.youtube.com/watch?v=qihG6AGjkRk
The problem is that currently (at least until the interest rates went up to a reasonable level) housing was a (too) good investment for the rich. Prices just went up and up without any added value.
This made houses expensive for the ones who wanted to buy a house to live in.
The main profit should instead only come from the actual building of the house, by a construction company, and selling it the first time to someone who wants to live there. This is where value add comes from.
Higher interest rates fixes this.
> Higher interest rates fixes this
Yet prices keep going up and up and up and up.
Just slap a massive fine (I mean tax of course but that is just semantics) on any profits from a second or higher house. And dont start with the "you can't change the rules of the game in play"; sure you can, you just dont like it.
I always wondered why law didn't rely more in mathematics to regulate such dynamics. It is trivially easy to describe a formula which gives you a tax that doesn't impact the many have-nots while preventing perverse accumulation and still leaving enough slack in the middle to incentivise people to take part in a market. And anyone who disagrees: you can tweak the formula to any cutoff point, you can make it grow linear, logarithmic or exponential etc.
That being said, things like your solutions should always come with thorough check by a red team. E.g. what about the rich guy just forming a new company per property to evade that tax? So maybe it is smarter to bind that to an actual owner person. How will the shape of houses change if their count gets important (that could be how we get these cyberpunk-megabuildings)? Maybe it should be about rental units instead (or some other clever definition)?
Sometimes I wonder if the best solution wouldn't be to prevent companies from owning housing alltogether..
> Yet prices keep going up and up and up and up.
The thing is that the interest rates need to stay higher for a long time (many years). Many home owners and speculators have fixed interests on their loans. It is not until they have to be renewed that they feel the effect of the higher interest rates. So unfortunately it will take time.
Higher interest rates doesn’t fix this at all. The supply shortage is in available land (with the right permission/zoning/etc)
Higher rates will reduce the profit the land owner can take, but they also increase the costs to the builder who has to pay the bank more to borrow to build (before repaying after selling).
It doesn’t affect the affordability for the purchaser which is set as a given percentage of their monthly income.
> I live in the EU! People raise millions and 10s of millions here for stuff that is nonsense
Is it purely private money? I've noticed a lot of nonsense European start-ups are basically consulting gigs with a public grant writer.
Getting a grant isn't raising money from investors though. People assessing grant applications are looking for interesting, innovative (or not) ideas. They don't care about making a return. I would expect to see a wildly different set of projects getting grants than get VC money.
I am talking private money. Grants is a lot easier but are usually just tax breaks (you need to spend money first) so get vc money and then grants on top for the tax breaks.
How far does millions or 10’s of millions get you in the EU? In Silicon Valley… that’s not a lot.
10 years ago the entry level SWE salary for FANG was about 160k USD.
Today, about 100K GBP or EUR are still "senior" SWE salaries at a lot of non-FANG tech companies around UK and Europe.
In that time, the currencies have also cratered against the USD.
The question is, which is it? Do engineers generate so much value that they should earn hundreds of thousands or are US engineers overpaid.
Given that most the FANGs generate over 1.5M per employee I'm inclined towards the former. Europe/UK is just poor. Our markets are smaller, our dreams are smaller and we settle for lower salaries while around us everything else gets more expensive, land healthcare education and energy.
Companies here might not be making fang money but they are underpaying. You have to push harder and people here tend not to do that here. Most I know value their free time above everything and so they want easy ok paying work, not millions while working their asses off. If they don’t appear in the office or take an ad hoc vacation they don’t want to be yelled at. Personally I have almost always made fang+ money as developer (since the early 90s) in Europe. I am good at what I do but I also have a big mouth and I mesh well with c levels; we become friends usually. Unfair for my colleagues but it’s not like don’t tell them to speak up and bluff; they don’t want to mostly because they think it encroaches on their freedom (not sure if it does; in my company it doesn’t; just less shares).
It depends on the startup I guess, but for software/saas a few million seed gets you off and away: wages, bonuses etc are all a lot lower than what I see for sv. Especially if you hire in the south.
See how much more money you can raise from private investors in USA once you tell them you have a contract with the USA government.
I’m actually shocked at the number of ChatGPT wrappers ycombinator has accepted recently
Yeah, that. Are the pitches public and is there anyone who can openly explain why these have been accepted? I guess the answer is ‘we invest in people, not ideas’ but the quality of these has been dramatically bad (I think my 5% useful is pretty optimistic) so I feel I am missing something.
Who are they raising money from? I have plenty of ideas and if I can bank roll them with an fat investment on an open ai wrapper that I pivot away from all the better. Lol.
That article claims way too much from too little data.
Tesla does have a serious problem with pricing. Electric vehicles have become cheaper, and nobody can mark up electrics the way they did a year or two ago. Tesla had to cut prices. But not enough. BYD now sells more electric cars than Tesla. BYD now has a good US$20,000 electric car, and they're selling it in Europe, Mexico, South America, and of course China. Not in the US only because of import restrictions. Tesla's factory in Shanghai is way behind schedule and work seems to have stopped before much was built.[1] The Hertz/Tesla debacle has been embarrassing.
Tesla is an auto company, and has the operating problems of an auto company - competition, parts and service, and reliability. Tesla is way overvalued for an auto company. And no, the "autonomy" thing won't save Tesla. Everybody has Level 2 now, and the driving assist systems from Mercedes and Ford (Level 3) are considered better than Tesla's. Waymo, of course, has level 4 and taxicabs running around.
[1] https://www.youtube.com/watch?v=IqQ0uuazqbk
Instead of replacing "moonshots" with "show me the money", I think we should try "roofshots".
https://web.archive.org/web/20160715152958/https://rework.wi...
now that the borrow rate has gone up and dollar has strengthed. they arent competing against 0% inflation so less need to go into risky plays. in some ways this helps the economy because it allows people to focus on what really matters but in other ways a bunch of people who were employed because of low interest rates about about to lose their jobs. Plus makes month to month operations more expensive with the higher cost of borrowing for companies (which most do now)
>a bunch of people who were employed because of low interest rates about about to lose their jobs
You're making it sound like the alternative would have been for all those people to have been unemployed if those zero interest rates would not have happened.
No, the alternative was, as the market is being corrected right now, is these people working in older, more established businesses and economic sectors with steady growth, that are based in reality instead of gaming meme hypergrowth "to the moon" businesses, which are laying them off right now.
There's tones of jobs open in the "un-cool" sectors.
> allows people to focus on what really matters
What really matters is the hardest philosophical question ever posed.
But if you mean „quality work“ or „useful products“ I have yet to see evidence.
If you mean „shady grift“ or „lying till my ass falls off“ then sure
In this sense I guess "what really matters" is businesses and business models which can survive without free money.
Zero interest and money thrown at you by VC's is basically no different than the bad parts of socialism. It just sounds better.
A better title would be "Forget Moonshots. Investors Want Profits That Will Actually Exist"
To profit, you need to have a working business plan.
You can't have an Underpants Gnomes plan:
Step 1: Steal underpants
Step 2: ?
Step 3: Profit!
Here Step 1 is building an app or website for most startups. What is step 2? You skipped it. Step 1 is the Moonshot, Step 2 is how you profit from the Moonshot.
This is also not dissimilar to the "replacement light bulb" scam where you go around the street with a box of one houses lightbulbs, replacing the neighbours with your boxes contents, and then rinse and repeat for every house for one low low fee..
At least in the other scheme they wash and dry the underpants.
As proven by all the AI wrapper startups raising enormous seed rounds
> all the AI wrapper startups raising enormous seed rounds
Aside from Cohere, don't they mostly have massive and rapidly-growing revenues?
A massive revenue that is dwarfed by massive expenses isn't "profit"
Depending on the trajectory of both P&L it could still be worthwhile
So moonshots it is then. I think we just demonstrated the typical investor though process here quite well!
> moonshots it is then
Moonshots involve fundamental technology risk. LLMs are no longer unproven technology--the problems are in scaling and product-market fit.
True, but only partially. We really don't know (or at least investors don't understand) what LLMs are really good for. Some of the use cases put out there now will wither away.
Moonshot is when those trajectories are not yet known and won’t be known for quite some time. A good example is nuclear fusion. This is something else: risky but clearly tractable innovation.
Rapidly-growing revenue that will all get spent on OpenAI API requests once OpenAI shifts its focus from growth to profit.
> once OpenAI shifts its focus from growth to profit.
In the meantime there will be a zillion competitors to OpenAI using open engines for basic tasks, and it will become a commodity product.
The market indeed seems to put rather little value on growth these days.
Example: Google. Their p/e ratio of 30 seems low if you assume that they will keep growing like they did for the last ten years. Which was about 19% annually.
At a p/e of 30, to outperform a ten-year bond at current rates, they would have to only grow at about 3% or so from now on.
> At a p/e of 30, to outperform a ten-year bond at current rates, they would have to only grow at about 3% or so from now on
This implies zero equity risk premium, to say nothing of single-stock risk.
There is no asset without risk. If you hold bonds, you are long fiat. Which can be devalued on a whim.
Avoiding single-stock risk is simple. You buy another stock.
> no asset without risk
That doesn't follow in any way from the concept of a risk premium [1].
[1] https://en.wikipedia.org/wiki/Risk_premium
Exactly. The "risk free rate" does not exist when it comes to the purchasing power of an asset. And the purchasing power is what matters to an investor.
The 4% bonds pay you might be somewhat "risk-free" when it comes to "getting your investment back and 4% on top of it". But it is likely to have been devalued. And often to a large extend.
This is not what equity risk premium means. (You also seem to be misunderstanding the role of a risk-free rate, which is commonly understood to not mean with absolutely zero risk whatsoever.) A good introductory finance text is Fabozzi’s Fixed Income.
If you have a point, state it.
Just claiming "You are wrong, educated yourself" won't get us anywhere.
I think that you are wrong just like you think I am wrong.
But I am willing to discuss it.
> Their p/e ratio of 30 seems low if you assume that they will keep growing like they did for the last ten years.
Yes. So the P/E ratio is a bit high?
I mean “investors” in the WSJ sense always want either profit now, even if it tanks the company in the long term, or BS hype wagon to drive the stock up, again regardless of the long term impact.
The WSJ acts as though the only portion of the economy that matters is the profit produced by rent seeking investment firms and hedge funds.