Last Time It Was This Crazy, the Stock Market Crashed

&quot;A parabolic rise in start ups with valuations of $1 Billion or More&quot; or &quot;A linear rise in startup valuations on a logrithmic scale&quot;.<p>Amazing what happens in 10 years when worldwide smartphones go from a tens of millions a year (2004) to over a billion a year (2014). Apple has 130 billion in cash sitting overseas with nothing to spend it on. Microsoft has 90 billion. Google has at least 30 billion. Facebook has over 10 billion cash (domestic + foreign).<p>So yeah. Startups are going to be valued at over a billion. Because there are more than a couple of potential buyers who can spend that in cash.<p>My rule of thumb is that if you can get 100,000,000 users you can sell for $1,000,000,000. You don&#x27;t even need revenue! Crazy, but that is a shit load of users. How many 2000 dotcom companies had a hundred million users? Hell did even Google have a hundred million users back then?

What&#x27;s often missing in these discussions is that a lot of the value of the companies is based on the threat they present to actual profitable companies, like Google and Facebook, and has nothing to do with whatever revenue they currently have.<p>The real reason WhatsApp were worth so much is they started to look like an existential threat to Facebook. Similarly for Instagram and SnapChat. Uber will in the long run to Google.<p>One of the best get rich startup models today is to create something where it looks like you&#x27;ll take away the core raison d&#x27;etre of another entrenched service, and it will radically inflate your value.

I remember the dot-com bubble and how it all went really bad really quick.<p>I still haven&#x27;t heard any convincing reason why &quot;this time it&#x27;s different&quot;.

In 1999 boom, Nasdaq P&#x2F;E reached 200, while general stock market P&#x2F;E was &#x27;only&#x27; 34. 6 times the difference. This time it is around 24 and general market is at about 19. Just 25% the difference. So i think there is really nothing to be worried about. There are few extreme valuations, and when those correct (Zynga, Groupon, ...) it doesn&#x27;t create a domino effect.<p>Even Snapchat doesn&#x27;t sound so stupid - it may never make any revenue, but having such a crowd of loyal users can bring a lot of cash to many companies who have already figured out their monetisation (Apple, Google, etc.) so they will be just buying a huge market. And they have a lot of cash to pay for what they buy, and sometimes they do actually buy. So people investing in Snapchat on these seemingly extreme valuations are likely not that stupid, or subversive.

Just a thought, but before that crash, I wasn&#x27;t actually using ANY of the websites that were valued so high. And I think not a lot of people really were?<p>I read about the big investments back then, but to me, they never became more than a headline. Never a place to visit. More like &quot;a place that I should visit, sometime in the future&quot;. It was full of promise, not of value.<p>Though now, I use and actually pay for many services. I feel like they add a certain value that, back then, nothing did.<p>Now, a billion dollar is a lot. But A billion people is too.

Man, I wish fuckedcompany.com was still around. What&#x27;s Pud doing these days?<p>If he won&#x27;t do it, someone else should. It was a lot of fun back in Crash 1.0 days.

So you&#x27;re saying I&#x27;ll soon be able to pick up a bunch of undervalued stocks?

I&#x27;ve always wondered what pure software startups are doing with millions of dollars.<p>I mean come on you can develop awesome software without having a fancy office, nice furniture and a super high salary.<p>Take me and my friends for example. We love building stuff and work for all our products in university or at home. Also we&#x27;re doing it for, what, like 400$ a month working 20-30h...

I would like to see a map showing where all this money is going by office location, coded for number of employees, as one thing that does seem odd for many of us outside a few very select areas is that we are hearing about this mega-splooge of massive quantities of cash, but very little of it seems to be filtering through to the wider economy. As far as I can tell it is being spent in very concentrated regions on relatively small amounts of people, largely on businesses that are trying to target the pockets of a rapidly shrinking middle class, which doesn&#x27;t particularly bode well.

Or: the startup singularity is near!

I&#x27;ve recently sold all my long term shareholdings on a similar gut feeling.<p>I wonder what will be the trigger that sets off the selling frenzy this time round?

It is all related to quantitative easing, there are not savings, but easy money around. Totally different dynamics compared to last stock bubble.

I&#x27;m reading things like this since 5 years. When do people start to analyse what&#x27;s really happening instead of saying &quot;according to what we experienced 10-15 years ago, it should be way worse than it was back then.&quot; There are reasons why the start-up market is still growing but wasn&#x27;t in 2000.

The market has the capacity to stay irrational. I would not start shorting after a 3-4% pullback..

I&#x27;m very worried about the property bubble collapse in China that will happen in the near future. I&#x27;m seeing the same patterns. People from said country buying up expensive property overseas, people lose fortune when property bubble explodes. It happened with Japan (remember when Japanese yakuza were buying up property in West coast). It surely to happen with China (buying up property in west coast like crazy).

The only ones loosing will be the lower end of the food chain. Everyone on top knows what&#x27;s coming and is storing their assets on single state islands far away from where the water will be going dry. You really think all those SV people preaching &quot;this is not a bubble&quot; are 100% in and haven&#x27;t at least liquidated 99% of their value from the stock market?<p>All what&#x27;s left is digits on screens and papers.