Comment by F_J_H | Hacker News Reader

Comment by F_J_H | Hacker News Reader

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hmmm....

Here's an exaggeration to make a point:

“The housing bubble didn’t really hurt anyone who already owned their home, or those who never owned a home in the first place.”

Yes, a tech/start up bubble burst would not have near as much impact as the housing bubble for the reasons you point out, but when you suggest that it won’t hurt “anyone here” (i.e. people who frequent HN), I’m not sure I agree.

Let’s say Angel and VC money dries up, and Series A funding also dries up. You then have a bunch of start ups that don’t get funded at all, or who burn through their first Angel/VC raise, and then can’t get any further funding. They then can’t afford to hire or keep talent (hackers, system admins, designers, etc. – i.e. the people here) and there are only so many positions at companies like Apple, Google, Facebook, etc.

So, depending on the percentage of people who depend on work from start up, or early stage companies who are not yet profitable and need to rely on further funding to grow, a “bubble burst” could impact people on HN.

> Let’s say Angel and VC money dries up, and Series A funding also dries up. You then have a bunch of start ups that don’t get funded at all, or who burn through their first Angel/VC raise, and then can’t get any further funding. They then can’t afford to hire or keep talent (hackers, system admins, designers, etc. – i.e. the people here) and there are only so many positions at companies like Apple, Google, Facebook, etc.

This is precisely what the view looks like for those inside the bubble. Outside the bubble, that would be called a return to normalcy. A world in which solid businesses that have a prayer of actually returning investor money are rewarded and those that don't, die on the vine. The reality is that if you can't raise money for your startup and you aren't making enough to pay your employees, your business sucks and it's time to do something other than create slide decks and beg people for money.

hmmm...not sure I agree that "you can't raise money for your startup and you aren't making enough to pay your employees, your business sucks".

When funding dries up, even good businesses have a very difficult time raising capital, and it's not uncommon for a "good" business to be unprofitable for a couple of years (or more) as it ramps up. (See Amazon, Twitter, etc.)

When has Amazon or Twitter ever had any trouble raising cash?

I should have been more clear. What I meant by those example is that the companies were not profitable in their early years, and paying employees may have been difficult without the capital they had raised.

Well my point was that if you can't raise money and you aren't making profits, then your business sucks. That was poorly worded, but Amazon and Twitter never had a problem raising capital when they needed it because there was a huge amount of competition to get into them.

The companies that aren't profitable in their early years and simultaneously can't raise cash are screwed and probably shouldn't be funded in the first place.

The difference is that this time there's only a few hot .com IPO's that could "pop" (ZNGA, GRPN, LNKD) and most of Wall Street is really skeptical of those already...just look at their charts.

If it is a bubble and it doest pop, it's really only going to affect the tech jobs market and the ridiculous valuations at which tech companies can be acquired or raise money. So it will be like 2-4 years ago when we all thought Mint.com was an enormous exit, and 12 million for Reddit was more than fair.

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