End of Cycle? | Hacker News Reader

End of Cycle?

blog.eladgil.com

163 pointsakharris99 comments

On the cycle front, we've hit the end of ad-supported startups. Google and Facebook now get most ad revenue. I mentioned previously that only two of YC's current crop are ad-supported.

Incidentally, we passed "peak Twitter" some time ago. Look at TWTR stock. We may have passed "peak social".

We've hit the end of "apps". There's an app for everything, and most of them are losing money now.

We ought to be hitting the end of "online retail is 'tech' and deserving of high multiples".

So what's next?

There's a lot of stuff in the pipeline that's promising, but hard to do. AI. Robots. Automatic driving. Automatic driving is close, unless someone screws up big-time. AI is going to chew up a lot of desk jobs over the next decade.

Robots are still hard, but we're now hearing about larger robot deployments than ever before. Amazon has 30,000 robots. Foxconn is installing 60,000. We've never seen single customer numbers like that before in robotics.

Vision processing will be big. Lots of semi-intelligent systems will be looking at video and making decisions. From store inventory to crime detection, there's a role for intelligent video processing.

VR? Probably not. VR looks to be the next 3D TV. It's just too much of a hassle to go mainstream.

> VR? Probably not. VR looks to be the next 3D TV. It's just too much of a hassle to go mainstream.

I disagree, I think VR is going to be the next big thing but it will take a few generations of HW and SW to get there. VR mixed with real time video of your surrounding (augmented reality) is a new environment for brand new applications but it needs to reach the state where it is hidden in your average looking glasses to be really mainstream.

"I disagree, I think VR is going to be the next big thing but it will take a few generations of HW and SW to get there".

I would say, based solely on this statement, that VR is not the next big thing according to your own narrative (as the next big thing will likely be within one to two hardware generations).

I share his skepticism of VR as a major business. At this point we have a 150-year history of people being wowed by 3D and mistaking novelty for utility. That includes the Brewster stereoscope in the 1850s; the early 1940s wave that gave us the ViewMaster; the anaglyph 3D movies from the 50s to the 80s; the first VR wave of the 90s; and the 3D movie and TV boom/bust of the last decade.

These all had significant excitement and commercial success. The Brewster stereoscope was introduced to great fanfare at the Victorian Exhibition of 1850. It eventually sold 250,000 units. The ViewMaster has sold millions of viewers and 1.5 billion reels. (In WWII, the US military even bought 100k viewers for training.) All of these products are now marginal or extinct. Novelty aside, none of them is much better than the 2D alternative.

I'm not saying VR will never work. But I am saying that anybody inclined to make a big financial bet on VR should think very hard about this history. Generations of smart entrepreneurs and their customers have mistaken 3D's cool factor for lasting utility. In the end, everybody has gotten bored, shrugged, and gone back to 2D. This is true even when, as with 3D movies, the hassle is as small as putting on a pair of glasses, something millions of people otherwise do daily.

Its easier to embed digital into the world than to embed the world into digital.

Wait for the first e-ink cheap as paper. That and solar cells cheap as paper. Then things will get interesting.

"Wait for the first e-ink cheap as paper. That and solar cells cheap as paper. Then things will get interesting."

Why? Display cost isn't a big deal any more. Display size is getting insane. I was in Costco yesterday. 70-inch TVs for $1500. TV sets are now outgrowing standard houses.

Solar cells already cost less than their installation cost as a retrofit on houses.

LCDs aren’t cheap as paper by a wide margin. Wallpaper is, say, $20 a square meter, and is free once glued to a wall.

Also, imagine putting high-dpi full-colour displays on all your walls and ceilings, so that one can change wallpaper at the flick of a button, or place ‘paintings’ wherever one wants.

Backlit LCDs would lead to uncomfortable living; rooms would be warm, there would barely be any shade in the room, and power costs (even if solar cells are cheap as paper) would probably be high.

e-ink wins on the power usage front, and is reflective, rather than backlit.

>> Also, imagine putting high-dpi full-colour displays on all your walls and ceilings, so that one can change wallpaper at the flick of a button, or place ‘paintings’ wherever one wants.

No. Not going to happen. The wall, the plain white-ish surface, has been a thing for thousands of years. I own a nearly infinite number of nails, glues and other fasteners to affix thing to my white walls yet change the appearance of my walls ... well basically never. It would be moderately cool to see a wall capable of HD television, but the physics of ever doing, in comparison to a dedicated device, will never be practical. There will always be a place for paint.

“The human mind treats a new idea the same way the body treats a strange protein; it rejects it.”

I for one would love having every inch of my interior walls e-ink, changeable on a whim, and would likely pay $1 to download a new wallpaper/design on a regular basis.

Such products would be online-only, DRM-bound, with gaping security holes for any two-bit hacker on the other side of the planet who wants to change all your wallpapers to goatse. I'll pass.

Yeah, it's a shame that we only have the Internet of Shit right now. But it's not baked in the technology. You can have secure IoT devices with custom builds, so I'm sure that there will be secure e-ink wallpapers (although maybe not on the mass market).

Someone is on the right track, but to emphasize its ubiquitous nature when its too cheap to meter.

Not, "there's my workstation and the giant LCD monitor is no longer a status symbol" but more like "well of course the wall next to my bed is a star trek style all-walls-are-misterhouse interface to everything"

Not, "there's my solar panels which cost more than the roof they're sitting on although they are quite profitable" but more like "well of course every surface exposed to the sun charges a battery or sells electricity to the local power co-op".

Think of the weird stuff that'll happen culturally. Campaigns to save the topsoil because people who want $$$ more than they want grass lawns will kill their lawn by shading it with cells. Endless arguments on HN about if you're better off selling solar power to buy hot pockets or using the sunlight directly to grow lettuce. All battery powered rechargeable devices will charge when sitting in the sun, so you'll have interesting social patterns about not stepping on or running over people's devices. When sunlight equals money you'll have people chopping down their neighbors trees illegally on a regular basis. They'll be a short term "vegas" effect where every surface of the world will have to be covered with gaudy advertisements. People will wear clothes that are computer display fabric and download new patterns more often than they wash, probably. And they'll be viruses that eat your electricity until you pay them off, throw spam on your epaper, and upload nude texture packs to your ecloth clothing (although, who knows, maybe people will intentionally like that?)

I'm old enough to have lived thru long distance voice communication going from "too expensive for regular folks per minute" to too cheap to meter. I can see something coming for at least low power electricity and computer display tech.

Long distance telephony is a poor analogy-- the high cost in the U.S. was due to regulated market structure (govt policy enforced a monopoly), not the underlying tech. Once the courts opened the door to competition by breaking up Ma Bell and MCI v. ATT , costs collapsed.

I too enjoy science fiction, but I don't think that has a lot to do with the sort of near-term investment decisions that are being discussed here.

Mediatronic chopsticks.

People will pay extra for wallpaper that doesn't move.

There's way more to VR than the fact that presentation is stereoscopic. Writing off VR on the basis that 3D has been over-hyped before is like writing off the Macintosh for not being the first device capable of raster presentation.

You might want to check out this thread to get some idea: https://news.ycombinator.com/item?id=12046398

I am saying that 3D products have a history of creating a "wow, this is so amazing" effect that creates a lot of excitement but no lasting value. My concern isn't really with 3D, but mistaking novelty for utility.

People also thought stereoscopic photos were the "new medium going forward", so linking to somebody amazed about a novel experience doesn't change my mind. It's another example of exactly how I think people shouldn't make this decision.

What will make the difference for me is not yet another person being amazed, but people using VR gear on a daily basis for something after the novelty wears off. At this point I have asked an awful lot of VR partisans for examples of that sort of usage, but so far nobody has offered anything substantial.

I hope one day it will get there, but until it does, I personally wouldn't bet much on it.

the utility/superiority of 3D/VR over 2D is a lot like the utility/superiority of GUI over CLI/text. at first, the former appears superior. certainly to newbs and casuals. but the vast majority of real work, true work by smart folks, occurs by folks focused on the latter. It's not that there are no niches and no use cases where the former is better, it's that the vast majority of truly necessary cases are best handled by the latter. the latter has an additional benefit/advantage that you can build the former atop the latter, if/when needed.

That's a very interesting comparison.

ah yes bulky VR headset connected to tower computers via cable is going to single handedly revitalize the enthusiast PC market and prompt mom and pop to buy SLI'd graphic cards to tether themselves in an open world environment

not to have a lack of vision, but nobody is promoting a better solution right now

View-Master aren't dead. In fact, they have a VR offering (based on Google Cardboard): http://www.view-master.com/en-us

(Whether or not you think that counts as 'relevant' is another thing.)

Edit: The problem with 3D movies/TV is that there's always that one person who gets headaches or eye strain from them, and so you can't use the 3D function. Then by the time you're finally watching something on your own, you just watch the 2D version by habit.

I think that the ViewMaster is a very successful novelty-based toy. But as far as a serious display device, I'm comfortable calling it marginal. That nobody can name their nearest competitor is a sign that it's not a big market.

If the desire for a 3D TV experience can be overcome by casual viewing habits, then that's a sign to me that the value delivered is quite low.

That certainly matches my experience. I found 3D movies a pleasant novelty, but after a couple times it wasn't something I would pay extra for. That's in sharp contrast with, say, color. Or theater-quality sound, which I went out of the way to get for my home setup and make sure is properly working whenever I watch something I care about.

> I found 3D movies a pleasant novelty, but after a couple times it wasn't something I would pay extra for.

I think this sums it up nicely. I'll sometimes pay the couple of dollars extra if I'm already seeing an action film at the cinema, because I think it does add some value, but it's in no way indispensable.

> VR? Probably not.

You are correct. AR (augmented reality) is the future, and it's going to be huge. Look at microsoft's hololens, and use your imagination as to what magic leap is cooking up. Once the hardware is there, it'll be like the second coming of the iphone.

I was thinking about this yesterday; I had air-conditioning installed and the guys spent an hour measuring and marking the walls before deciding where to mount the unit and drill holes. I kept thinking "get a HoloLens, take a picture of the back of the unit, look at the wall and pin the picture where you want, start drilling".

I think interior design will change a lot in the next ten years.

Based on your assumptions, it looks like we are going up the tech ladder. You won't get by without specialist knowledge in the future and probably will need big money as well. No more "low hanging fruit", though I hate the phrase.

There's still lots of deployment of existing technology to be done. But most of the "get rich quick using off the shelf technology" has been done for this round. There are just too many people trying to do that.

Where booms really come from is when someone invents a taller ladder. Then a whole bunch of fruit suddenly becomes "low hanging" that wasn't before. (Yes, that became a horribly butchered metaphor. I still think it makes a valid point about how booms occur. They come from newer and better tools that make things easy that used to be hard.)

I believe we are largely moving from a situation where any single technology or idea can have big impact to where the ones who can organize, standardize and connect things will be the winners. A lot of the problems startups have been trying to avoid by essentially ignoring are now becoming worth solving.

Of course things like automatic subways, industrial robots and vision processing already exists and are probably more of an evolving hing than the next big thing.

Curious -- have you used an Oculus Rift or similar?

It seems to have a magical ability to turn doubters into enthusiasts.

Really? I've used an Oculus Rift; it pretty immediately turned me from curious to extreme doubter.

Can I ask why? Do you not feel like the medium of VR gives you presence and adds something that no other medium does? To me I'm more concerned about the content and if that can be 'solved'. Also if there's no way to fix motion sickness with standard "non-neural stimulation" technology then it will always be limited I think.

>Do you not feel like the medium of VR gives you presence and adds something that no other medium does?

Absolutely not. I feel like I have a pair of very low resolution monitors strapped to my face. The whole rig needs to be an order of magnitude lighter and and order of magnitude higher resolution before it actually approaches "virtual reality". It's pretty impossible with the current generation of devices to forget that the device is there, which I see as a key requirement of credible virtual reality.

I was a doubter until I got a free samsung gear vr with my phone. Some of the apps are just amazing, and turned this doubter into a believer. Everyone I've let use it, thinks it's amazing especially The avengers demo.

The few people who liked it but had to stop, had issues with nausea.

I think we are maybe a generation or two away from a vr explosion.

> We may have passed "peak social".

Every time a social startup becomes too successful, it creates the need for more social startups. E.g. there would have been no reason for snapchat to exist if not as a reaction against the success of Facebook. It seems unlikely that social will ever reach a steady state, and so I doubt we'll have have a ten year period without a new 100B+ social startup.

Social is an evergreen human need, but the exact flavor that resonates with the zeitgeist at any given time will likely change faster than any given company can adapt.

Social media platforms contain within themselves the seeds of their own destruction, but that's pretty much been the case for the past 30 years, going to BBSs and Usenet.

There are a number of dynamics at play.

One is the Yogi Berra / Evaporative Cooling effect. "Nobody goes there any more, it's too crowded", or the more precise construction given at Bumblebee Labs. High-value members leave, the network is dominated by lower-value providers. As the Tilly-Odlyzko refutation of Metcalf's Law notes, not all contributors are equal. Network value doesn't rise with n^2, but n * log(n). I'd add on top of that a network cost function which is effectively constant per member, so we end up with V = n * log(n) - kn, where k is some constant cost. At the point where k > log(n), additional members lose* you value. This happens through spammers, griefers, trolls, scammers, idiots, and other forms of annoyance.

(A corollary: to grow your network, you've got to minimise that per-user cost -- it matters more than value ultimately.)

http://blog.bumblebeelabs.com/social-software-sundays-2-the-...

There's accumulated technical debt. Existing systems have an ever-growing component of klugey old software that's got to be maintained. Possibly even and Amdahl's Law (or Baumaul's Law) component where that comes to dominate constraints -- it's so baked in you cannot easily extricate it, and all the easily extricated stuff's been eliminated.

There's the falling costs of information technology. About an order of magnitude every ten years. Facebook cost about 1/10 what Google did for equivalent hardware functionality, Facebook's competition will cost about 1/10 what it did, and 1/100th what Google did. Much of that is eaten up through the Jevons Paradox -- making a thing cheaper creates an induced demand for more use. But there still seems to be a tendency for computing hardware to be ever-more democratised. The current challenges aren't in system capabilities, but in interfaces, and the compromises those present. It's the keyboard and screen size I need now, and the device I'm using now (a tablet and highly defective Logitech Bluetooth keyboard) is almost _all_ keyboard and screen. The latest generation of Apple laptops are essentially an iPhone slipped inside a keyboard/display case, with all the empty space filled with flat, form-filling batteries.

The larger challenges are relevance, the social graph, the interest graph, truth, and quality content. Filling a datastream with crap 24/7/365 is easy. Filling it with genuinely relevant information, and avoiding abuse, harder.

And Secret was the reaction against the mandatory real name policy of Facebook. And Ello was the reaction against the overloaded UI of Facebook. And Pair was the reaction against perceived lack of privacy for person-to-person communications.

Snapchat benefits from survivor bias, and until its financials are out in the open, we won't know whether it's a legitimate cash-flowing operation or yet another project sustained by large liquidity injections until the music stops.

>We may have passed "peak social".

The latest megainvestment cycle was largely inspired by facebook (and enabled by zero interest rates).

It's interesting what happens to Facebook. The founders all cashed out. But the main product is dead. Will Instagram/WhatsApp maintain its market cap, or will it implode? Will it buy Snapchat and continue to buying anything new that is fashionable? I am actually curious about the opinions here.

What's dead about its main product? From a monetization and innovation point of view, it seems about as dead as, say, Google's search product.

Right. I worked at a company that did advertising data brokering and there were really three categories: Google, Facebook, and the best of the Internet. (This was a year or so ago and the company was focused on the US market.)

Money is a very lagging metric. Young users left (13-17yo often do not even have facebook, and certainly do not post), and more and more of older people are dropping out. It used to be cool to post on FB, now it's cool not to post there.

This is a false meme which needs to die.

Facebook has more users than ever before. It continues to add users at a health pace.

Moreover, the people who quit Facebook actually tend to be older, not younger.

Adding users in India and Philippines, losing users in the US and UK. It will burn through those new users too in time.

Facebook continues to grow domestically. [0]

If you want to continue to asset the eminent collapse of Facebook, please bring data.

[0] http://www.statista.com/statistics/408971/number-of-us-faceb...

Only FB knows the real data, everything else are just guesses. They have to present some data on their quarterly reports, but the definitions that they use are fairly flexible. So it's my hearsay/belief versus yours, unless you work at FB and have direct access to this information (your profile seems to say otherwise?)

Here are some other hearsay links:

http://venturebeat.com/2015/02/27/facebooks-active-users-are...

"Facebook’s definition of an active user is now so broad that you can do very little on the site and still be counted within its figures. Secondly, and just as importantly, GlobalWebIndex’s data shows that, while Facebook’s active user numbers are undergoing consistent declines, its member and visitor numbers are either holding steady or increasing. Clearly, we have a large group of Facebookers who are checking the site but not actually contributing to it"

Or even:

https://www.google.com/trends/explore#q=facebook&cmpt=q&tz=E...

(note the countries below the chart). Contrast this with

https://www.google.com/trends/explore#q=%2Fm%2F0nbtf_n

When you have to turn to Google Trends to try to support your point, it's a pretty flimsy point. If we believed your data, then 2012 would be the high water mark for Facebook usage (globally), which is obviously false when you look at actual user numbers released by Facebook. A much better explanation for the decline in searches is the shift to mobile, where people actually have the app installed and hence don't search to find the website.

The VentureBeat article is obviously anecdotal and relying on poor data.

Doom and gloom all you want, but the only real numbers we have (from Facebook) directly contradict your view. If you're trying to force the data to fit your hypothesis, it's usually a sign that your hypothesis is wrong.

I linked Snapchat Google trends data specifically to preempt your navigational search argument: Snapchat does not even have a meaningful website.

How does that prove anything?

Snapchat is starting from a base of 0. So of course it has increased as people have even found out about it. They didn't have any desktop users to transition to mobile.

You're being totally irrational.

http://www.paulgraham.com/microsoft.html

> we've hit the end of ad-supported startups.

How about ad-supported, one-or-two-person operations with good traffic? Is advertising still a viable revenue model for something like that?

I think blockchains and so-called "smart contracts" should be added to the list of exciting areas to watch.

Companies like Paypal are begging to be disrupted, we've all seen the problems of Too Big to Fail banks and the havoc they've unleashed. Globally remittances charge a fortune in fees, just to name another area that seems ripe for disruption by cryptocurrencies. Even big banks are expermenting with private blockchains for asset transfer and verification.

Smart contracts are in a phase somewhat similar to the dotcom 1999-2000 boom/bust, some great ideas and some awful missteps like the DAO disaster recently. Even Bitcoin had it's Mt Gox moment, which didn't kill Bitcoin. Eventually the diamonds in the rough will become apparent.

Disclosure: ethereum investor/miner

The section under "People move from bits to atoms without realizing the change in underlying fundamentals" is important. He writes (condensed):

"Many tech investors are shifting from investing in bits-driven business (software) into atoms driven businesses (anything you need to manufacture). ... investors are applying tech multiples expectations to these radically different types of businesses. This is unlikely to end well. ...

"If you are merely using software but the business fundamentals have not shifted - than the startup ... will not merit tech multiples. A software-enabled, network connected, crowd funded, smart toaster is, when all is said and done, still just a toaster."*

Birchbox. Soylent. Maybe Uber. You can think of others.

(Uber may be a bubble. They've raised and spent a huge amount of money underselling competitors. It's rumored that only in SF is Uber profitable.)

(Amazon succeeded because they figured out how to do online retail really well. Remember "one click ordering"? (The key to that is not the one-click ordering. It's that the user can easily cancel for a short period after ordering. That makes one-click ordering safe for the user. Most retailers still don't get this.) Then they developed new distribution technology. Amazon has 30,000 Kiva robots and their order pick time is down to 15 minutes at some distribution centers. They're now in the same business Webvan had 15 years ago, but their costs are low enough that it works.)

>They're now in the same business Webvan had 15 years ago, but their costs are low enough that it works.

People frequently mistake Amazon's business. They're not a store or a delivery service, Amazon is a logistics company.

What they do at the frontend is important, but their value as a business is everything in between... warehouses, picking systems, delivery logistics, AWS... doing as much of that stack themselves as possible and doing it very efficiently is their core.

Just try to buy AAA batteries to convince yourself that being a store isn't Amazon's core competence. (the review system, the recommendation engine, the product organization, it's all mediocre at best)

The future of massively computation intensive personal level logistics is the amazon drone delivers your daily packet of stuff which contains four AAA batteries because amazon has figured out your remote control battery which is currently working, should be dead by this evening. Also it'll have two rolls of TP and one of your favorite breath mints and one squeeze packet of ketchup because it knows you're having french fries with dinner tonight.

Personal logistics is going to look a lot more like the star trek replicator (although enormously higher latency... for now) than like a web page store.

The blind faith that "... on the internet" will make you a millionaire, will be replaced by a blind faith in the infallibility of personal logistics. Why if Amazon is sending my wife baby clothes, no need to even bother taking a pregnancy test because how could Amazon ever be wrong, etc.

I disagree on the "daily packet of stuff" bit from the standpoint that I don't think Amazon is really great at the "we'll pick which specific product/brand you should get" part yet.

Part of that is the rise of 3rd party sellers and fake reviews has really impacted my (and many others I've spoken with) trust in Amazon. To continue the battery example, I could totally see some knockoff brand arriving that blows my remote up down the line because they were cheap, poorly made no-name batteries (possibly expired) that happened to have great margins for Amazon.

I just don't have that trust there. But maybe that's been my experiences and personal preference to research things to death.

> Amazon is a logistics company

We hear this said of Amazon, and that's also Uber's ambition.

But isn't Walmart also a logistics company?

Isn't every big company that makes or moves around physical items?

Yes. Some are more successful than others.

Not as much.

Amazon sells it's fulfillment services directly. AWS should be obvious, but they also sell fulfillment services. Not just whitelabel spam products from /r/Entrepreneur either.

Amazon can do the entire logistics chain from accepting products shipped from your manufacturer to processing the payment in your own web store. [1]

[1] https://services.amazon.com/fulfillment-by-amazon/benefits.h...

Trying to understand: WalMart is logistics, but their logistics customer is WalMart, and the only way in is to sell in a WalMart store.

Amazon effectively thinks outside the Big Box, and will let anyone sell anything within the Amazon marketplace. I'm not sure if third-party websites w/ Amazon back-end and fulfillment are a thing, but that's a possibility.

In which case, Amazon effectively sells a marketplace, ordering, and delivery logistics system to its merchandise suppliers.

Maybe. I'm not entirely sure I'm a fan of the "Company X isn't in Market Y, they're actually in Market Z" meme, but it's got utility.

The problems I'm seeing with Amazon now are on two fronts. One is that the actual product review/selection process stinks -- too little control over quality and relevance of what's presented. If I go to a third party, one specialising only in the products of interest to me, I can get a far more appropriate selection of items, and I value that.

The other is morality. Bezos is an asshole and screws people over -- techies, noncompetes, warehouse workers, competitors, and more. I've got a problem with that. I may be in the minority, but that is something which ultimately matters. Perhaps it's the only thing which ultimately matters.

Buying AAA batteries is a great experience. You can even order by voice via Alexa. What experience are you actually looking for? Who does it best?

This result is perfect after a few key presses of the a key: https://www.amazon.com/gp/aw/s/ref=is_s_ss_i_0_3?k=aaa+batte...

I'll reframe what I said a little.

I want to buy the least expensive (per unit) CR123A batteries from a brand/seller that meets my own standard of trust.

Search for CR123A batteries ... 14,000 results, 27 departments, about 100 sub-departments. On the first page 2 of the 17 results include per-unit pricing. There's no way to sort by unit price. Package size varies from 1 to 12, there's no way to sort or select by package size. Cost ranges from $1.44/unit to $5.02/unit

---

CR123A batteries are expensive enough to care how much they cost. They can also burn your house down if the proper protection circuits aren't in place (cheap Chinese manufacturers don't always include it)

They are also very frequently overpriced. A healthy market where you could do easy price comparisons would be good for the consumer but it doesn't exist.

To find the least expensive, I'd have to manually sift through 14000 entries and divide the price by the number of batteries manually. It's a big frustration, and I've legitimately tried and given up on buying them on amazon because of the bad experience.

> Birchbox. Soylent. Maybe Uber. You can think of others.

Go ahead, I'm listening. And what is this Birchbox which is a great success again?

> Amazon succeeded because they figured out how to do online retail really well.

Actually, Amazon succeeded because they had everything you could want in their stock, especially the rare things (books?) that literally nobody else had (and you would pay for such a thing a special premium on top of its normal price, but the alternative was to not have the thing, so it was a win-win).

Seriously. Having almost any book that has been printed in the past 100 years available from somewhere beats the stuffing out of scouring yard sales, used-book stores, library divestments, etc, etc

uber being not profitable doesn't really tell us anything. They are not profitable by design.. if they cut their growth budget today, I am sure they are insanely profitable, they just prefer to spend all the money in growth.. Even in SF they try to launch new products all the time, Pool, UberEats, delivery API.. it costs money to grow these businesses. Hopefully they did the math so when the time comes, they can turn the switch and basically print money (and they probably spend a ton of money on driverless car R&D)

I believe the issue is that saying there are "bits" companies, and there are "atom" companies is a misnomer. I believe there are "product" companies, and there are "platform" companies. Product companies have to earn "each dollar" they make, platform companies get a share of each dollar thats earned on them. Amazon makes money from all amazon merchants. Google makes money from every ad sold. They're private "governments". That's why they get high multiple valuations. They just scale better.... they probably became the dominate platform because they're the ones who figured out HOW to scale, and they only scaled after they actually needed to.

It seems like whenever I hear of cycles, no example past "the last" (~2000) is given. What evidence is there that these are regularly recurring cycles?

If you are a student of history, you start seeing these things. I was in tech in 1995, and at the start of the Internet boom it was not obvious to everyone what was happening. You should read Bill Gate's "The road ahead". He (and many others) predicted things like Netflix and the information super highway but they got the delivery mechanism dead wrong - people were convinced it was going to be over cable TV networks.

I've heard similar things about the boom/bust days of Commodore in the mid-80s.

I agree with the general thesis that (a) people are searching for the next big thing, and (b) we'll likely get it wrong a few times.

The challenge is when people start to try and predict the next cycle and what it will look like. Yes, you can get the broad brush-strokes right, but details are usually very wrong and timing is way off.

Glad that painting is here to stay.

Have you any good resources for recommendation?

In Kevin Kellys new book, The Inevitable [1], he talks about the trends and long-term forces that push and pull the actual implementations and delivery mechanisms of new technology.

I'd suggest that understanding the themes narrow down the search area for the Next Big Thing.

[1] https://www.goodreads.com/book/show/27209431-the-inevitable

> He (and many others) predicted things like Netflix and the information super highway but they got the delivery mechanism dead wrong - people were convinced it was going to be over cable TV networks.

Oh yes, I remember how around 1994 people were predicting the rise of "interactive TV" that would take over the world in 1997. The descriptions of what "interactive TV" would do were very similar to the web.

The immediate predecessor of that was the multimedia CDROM. Its all the same idea and same skills of course. The course curricula for a BSCS with a specialization in multimedia in 1993 is identical to webdev in 2016 except for obvious language syntax differences. Graphic arts/design classes from the art school, marketing classes from the biz school, a couple programming classes, etc.

Ha .. almost forgot that one. Do you remember Encarta? Wikipedia of the old days :)

Um...for the most part it IS delivered over cable tv networks.

It's all based on the idea of The Business Cycle https://en.wikipedia.org/wiki/Business_cycle

People apply that idea to how tech works. You're right to question the evidence for it. The business cycle itself is just a bunch of ideas and theories people use to try and make sense of a chaotic, unpredictable system that is never the same twice. Sometimes it's useful, sometimes it's not.

And "theory" in this case refers to the layman's idea of theory. Not the scientific meaning like the "theory of gravitation".

You could argue that 2008-2009 was actually the beginning of the last cycle. Aside from including an economic crash (which usually, but not always, accompanies a shift in the tech cycle), it also included a shift in delivery mechanisms from web to mobile, and a shift in predominant business types from social, content-driven businesses (Web 2.0) to marketplaces and on-demand services.

Before 2001-2003 was 1991-1993, which (aside from the recession) featured intense investor interest in VR, tablet/pen computing, WebTV, etc. That period of uncertainty ended with Netscape's introduction and the rise of the WWW.

There was a mini-shift around 1985-86, with the introduction of Windows and Steve Jobs's ouster from Apple. That changed the paradigm of desktop apps from 8-bit PC apps hand-coded in assembly to more slick GUI apps written in C or Pascal that used OS frameworks. Like the other cycles, it was also accompanied by a lot of hype and malinvestment, but largely in the B2B world: the big buzzwords in 85/86 were AI, 4GLs, and 3D computer graphics.

Finally, the PC revolution started in the mid 70s. This also had a similar period of uncertainty, coupled with a recession - take a look at old magazines from the late 60s and early 70s. But instead of computing, the hot technology areas then were flying cars, supersonic transports, and home appliances. Makes me wonder if the next big thing might be something not computer related at all, perhaps aviation (again), rocketry, or material science.

Also going deeper into this, one of the common trends is huge liquidity events which allow there to be a huge emergence of venture capital funds. The growth of tech stocks in the late 90's gave people tons of money to blow, and since they had trust in the tech economy since had made them tons of money, they further invested into tech.

Notice how massive growth of companies such as Google, Apple, Microsoft, and Amazon over the past 5 years. Additionally notice how many of the big VC's of today were early investors in companies such as FB. This gave them the capital and trust they needed to invest in all these random startups.

I bet that an Uber IPO will give VCs the money they need in order to continue to invest in more and more companies. The success of silicon valley is that every 8-10 years, there is a new company that reaches unprecedented valuations, and in turn people reinvest that money into the next generation of companies who will reach those same levels.

It's occurred to me that there's been a new $100B company founded roughly every 6 years. 2010 = Uber, 2004 = Facebook, 1998 = Google, 1994 (a couple years late) = Amazon, 1984 (a couple years early) = Cisco, and then there were none in 1980 but 3 between 1975-1977 (Microsoft, Apple, and Oracle). Makes me wonder if the next tech giant is being founded right now in some garage.

https://www.youtube.com/watch?v=Njj6HZvixK8&t=16m31s

> Makes me wonder if the next tech giant is being founded right now in some garage.

There probably is. And now what? Don't go scouting all the garages in Da Valley just-yet, as basements/coffee shops/coworking spaces/campus dorms are The New Garage 2.0.

Although they didn't come from the romantic depths of a basement,based on today, if I had to guess, Niantic seems poised to make that leap.

Sun Microsystems in 1982. Silicon Graphics in 1981.

Back in college, a professor of mine talked about cycles and used the NASA boom of the '60s as an example. When it ended, engineers just abandoned their houses in Cape Canaveral and moved back to their hometowns.

I wish I could remember more of that lecture; all I remember is him describing a 7-year boom/7-year bust cycle with the NASA example as an example of how suddenly a boom can end.

Not proof that this happens every time, but some evidence from the 1980s: http://reactionwheel.net/2015/01/80s-vc.html

I would recommend the book Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages [0] by scholar Carlotta Perez. She studies longer cycles though (~50 years) but the mechanism she describes seems pretty sound for the matter at hand.

It goes more or less like this:

- capital in search for long term returns goes to early moves of a big technological shift

- as successes from the new technology get more and more apparent, it attracts a much larger slice of capital available, and eventually gets over-funded (the real opportunity of this technology is limited)

- a bubble forms, most capital is in for a quick speculative return

- back to square one with a new technology (and former bubble bursts)

[0] https://www.amazon.com/Technological-Revolutions-Financial-C...

An excellent if obscure book. Interesting to find another fan.

I'm not convinced she's right, I think she's more right than most, and she's definitely interesting and well-researched.

It's very easy to confuse an autoregressive time series with a wave.

Cyclical behavior in business and economics has been noted for a long time, certainly since the Industrial Revolution, and arguably before.

I think it's very dangerous to speak of cycles of predefined lengths, which recur regularly. I think it is useful to look at dynamics, how they occur, how they differ, the specific technological mechanisms driving these, and what the future implications are.

The questions are deep, vast, perplexing, and far from settled. Carlotta Perez's book is mentioned here, I second that. Paul Mason's Postcapitalism argues based on Kondratiev cycles, and has a lot of strong anecdotal data though I question Mason's economic instincts. Robert Gordon's The Rise and Fall of American Growth is an excellent look backward at the period 1870-1970, and onward to the present, though I think his view forward is somewhat clouded. It's not that I disagree with his headwinds and projections of harder times ahead, it's that he's missed some far more fundamental drivers and dynamics.

Alvin Toffler's Future Shock also deals in technology cycles and their dynamics. I've only skimmed bits but suspect that would be insightful.

There's a bunch of crud written on the topic as well, but if you're interested in the question, you're not going to be short of content.

With vision processing, augmented reality and the internet of things I think we are primed to live in a world where devices will be personified in AR. Personified devices will then be able to tell me what they are capable of and I will be able to query them to learn about them. I will also be able to find out what's wrong with them. I think chatbots will be the ideal interface to talk to IoT devices for most things however AR will be needed for a richer experience/in depth device instruction.

Envision a world where a google glass like device take see what you are seeing, identify what it you are looking at, figure out if it is an IoT device, notify you in AR if it is (via icon hovering over device or something), allow you to "activate" the device's personified self and talk to it, question it, assign a task to it or a variety of other interactions supported by the IoT device.

And what problems will it solve?

Well, a number of years ago, my wife asked me when a building had been built. I thought, "Just click on Help/About and look at the copyright date... Oh, wait. I can't do that on a physical object." But with VR, I could.

Now, I'm not saying that I think that VR is the next big thing. I would pay approximately $0 for the ability to know when a building was built, and I've only ever wanted to know (even mildly) once.

Zillow and done.

On a commercial building?

First World.

Too many to list. Let your imagination loose. :)

> The period of 2004 to the 20-teens will be viewed as the era of... the lean startup.

Does this mean that the success of lean approaches will not extend to next cycle? I.e. that they're only applicable to the current "bits-based" businesses?

I know a few people who run IoT startups. When creating a new version of your piece of hardware involves shipping the designs off to China, getting the hardware back, checking that it's correct (repeat until actually correct), and then pulling "Yes, mass produce" ... before you even have anything consumer facing.

Basically, each "iterate" takes a few months and many thousands of dollars. Lean kind of stops being all that lean.

Lean is easy in software. Thinking before doing is important in hardware.

Cryptocurrencies are the next cycle.

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