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Comment by karlerss | Hacker News Reader

Some companies are willing to sell dollar bills for 75 cents[0]. It's fine if you take on a business risk and it materializes (or pays off), but I wonder if there are companies/founders/executives who maliciously spend investor money with no expectation of positive return for the company.

[0] https://www.nytimes.com/2018/05/16/technology/moviepass-econ...

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Absolutely. Everyone does it though, including the VCs. Greater fool theory is dominant investment theme at the moment. It’s terrible.

Why is it terrible if it works? What would you recommend? How could we change it to something better?

It depends how you define terrible. My background is actually in trading, and so from an ROI perspective it is what it is. In markets there are winners and there are losers. I’m fine with that.

But from a broader social consideration of allocation of capital, I think it’s terrible because (as another comment says) it’s not sustainable. Eventually the market will find the way forward, this is the exuberance period of free markets. We don’t know of a better system imho. But it doesn’t make it any less terrible.

It doesn't work because it is unsustainable. This will never hold. There is no such thing as free money.

We should try to get (back) to the point where companies actually need to make a profit in order to survive.

It is sustainable and there is such a thing as free money. Ultimately all this useless activity traces back to governments and their obsession with GDP. Asana has never made money but it spends money so it counts as economic growth. The money itself comes from QE and government manipulations of the markets via printing. There is in fact no reason why governments cannot keep forcibly reallocating money from savings to startups forever, and given that sound money has vanished from the political conversation for many years now, it likely will.

It's a depressing thought, really. There is no use in attempting to play by the rules and building something useful for an effort that can justify the results. Governments don't care about that. What they care about is that you're doing something. Exactly what you're doing, doesn't matter.

The cost of money changes. If your company is only sustainable with free money it will inevitably fail when money costs something to borrow.

Like most pyramid schemes it works until it suddenly stops working.

because eventually someone gets left holding the parcel when the music stops, and that someone is usually you, me, and the rest of the taxpayers

definition of a bubble: people buy to sell

Power and revenue aren't the same thing.

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