I sympathize with this view, but the very example given contradicts the thesis that this bubble will leave no technology in its wake.
Hadoop was developed at Yahoo, an advertising supported company. Some of the most interesting contributions (HDFS sync, RaidNode, AvatarNode) have come from Facebook, an ad supported company. Hadoop's architecture itself is inspired by the MapReduce and GFS papers from Google, another ad supported company. This shows that the premise is false: there is indeed technology transfer from the "hot businesses" to other companies and academia. Hadoop is the prominent example, but not the only one: many contributions to the Linux kernel come from Google, both Google and Facebook have also contributed extensively to MySQL.
The ad ranking and recommendation algorithms themselves are also by no means trivial, much of the work that goes on in that field (machine learning, information retrieval, natural language processing, large scale graph processing) is applicable elsewhere. The "math wiz" college graduates working on these fields, are going to be able to apply the skills they build elsewhere. Not to mention, the stock options, even if we assume modest outcomes, could pay for many a Ph.D. for engineers who wouldn't otherwise afford to take the time off from industry.
There are also products like GroupOn that don't seem to be technology driven at all, but that can change rather radically (e.g., Amazon's move from a technology consumer, to a producer of their own technology, to a company selling technology to others).
In other words, one doesn't have to sell technology to businesses in order to build technology that benefits others. There's nothing wrong with selling technology to businesses (and if I were to start my own company, I'd start one that does that, because I understand e.g., distributed databases and market for them better than I understand, e.g., machine learning and consumer marketing), but there's nothing wrong with providing an ad supported service to consumers, as long as interesting and universally applicable technology gets built in the process.
A nice thing about Google is that its interests have been aligned with the public good: more internet access, more websites, more blogs, more webapps. (Their interests are now diverging a bit, as they try to extract more personal information. Facebook did a nice trick where people actively give them their personal information...)
Not sure if the alignment is as deep for Facebook - more people with internet benefits them, but does more internet content?
I agree with you, though I think we are as yet unable to point to the actual differences the supporting technologies have created in our lives. It's easy to point to the invention of the internet, microchips, battery technology, etc. etc. Telling somebody about Hadoop and how it is changing the world is more difficult for the average person to grasp.
"Hammerbacher looked around Silicon Valley at companies like his own, Google (GOOG), and Twitter, and saw his peers wasting their talents. "The best minds of my generation are thinking about how to make people click ads," he says. 'That sucks.'"
I loved this quote, I also had a similar experience. In past I had an internship in a similar role and pursued few projects on mining communities in large social networks. However luckily I got an amazing opportunity of working at med school/hospital affiliated with my university. I now apply similar algorithms, but now I help radiologists and physicians.
Lets hope that in future the methods that are developed for optimizing ad clicks could probably be useful in some other field.
E.g. how IBM is now planning to use Watson in healthcare. My guess is that a lot of algorithm used in developing Watson, were developed for ranking Ads. Closer home, I use a 55 node Hadoop cluster for processing 19 Million annotated PubMed abstracts.
Just because a lot of time is spent working on "non-interesting" problems, technologically speaking, like Facebook and Zynga, doesn't mean that there aren't plenty of startups who are working in more technologically-impressive fields (). The entire article is completely anecdotal.
To make things worse, it explains how Groupon's only tech innovation is "cute email". But I don't understand why people call Groupon a (technology) startup. It's just a company. A fast growing one, sure, and that relies on some technology (like every other company in the world). But it's not a tech company at all.
I'm not saying that Facebook isn't impressive, technologically. I think Facebook has a lot of things to offer, e.g. scaling, building the world's largest real-time chat system, impressive amounts of work into user interfaces, and, as the article mentions, impressive amounts of work into analyzing user behavior.
You gotta be kidding me. Social media will leave nothing behind? How about a communications infrastructure spanning the whole world and connecting people to both friends and other people of interest in real-time, no matter where they are (in the bus, in the street, at home, at their computer), enabling the most rapid spread of information ever seen, and potentially enabling the world to start functioning as a sort of "human computer", with intelligent sensors and intelligent nodes (people) and lightning fast communications between them?
How can you point at that and say that Twitter and Facebook are wasting their time?
Maybe it's not even a tech legacy. Millions and soon billions of people have a larger internet footprint than before. They communicate with each other in far more intimate and elaborate ways. It's a cultural legacy.
> How about a communications infrastructure spanning ...
tcp/ip? The infrastructure has been here for a long time. The reason why people start to "connect" with everybody now is because computers and mobile IP devices are becoming really cheap. People would be still communicating in realtime without twitter, facebook, co. SMTP, IRC and IM protocols were here before Mr. Zuckerberg knew how to spell PHP.
Those were computer-to-computer, not people-to-people. The only people who could use those were technical.
Facebook, Twitter, et al, built a communication infrastructure between people. That's about much more than just programming or designing computer communication protocols.
It's a common fallacy from programmers to think that the hard part of "build a system for 100 million users" is the programming.
Emails are a very unproductive way to handle communications between hundreds of people in your social network. They provide no ambient awareness of what's going on with the people you know.
They were people-to-people communication infrastructure, sure, in the same way as a dirt road is a road. But there's a big difference between an 8-lane highway and a dirt road, and there's as big a difference between email and twitter. Both are a kind of infrastructure.
This is the really depressing thing about the hype from this bubble. "Web scale" is decentralized open protocols over full unrestricted IP, not shitty NATed HTTP to a rack of servers in the US.
"Hammerbacher looked around Silicon Valley at companies like his own, Google (GOOG), and Twitter, and saw his peers wasting their talents. "The best minds of my generation are thinking about how to make people click ads," he says. 'That sucks.'"
Man, I love that quote. Advertising is a pestilence. The real problem with ads is that they invariably take the form of insincere communication. As such, they are fundamentally at odds with the open and thoughtful (on a good day) nature of the Internet.
The best minds of my generation are thinking
about how to make people click ads
Best minds of any generation have always thought about ways to make money.
That doesn't mean that the world doesn't benefit from side-effects. Information is at your fingertips because of companies like Google and Yahoo. Staying connected is easier then before because of companies like Facebook and Twitter.
And speaking about infrastructure; since 2000 lots of cool things happened, like cheap cloud-computing (EC2, Rackspace) or open-source projects that can kick start your company straight at Google-scale if needed (Hadoop). Not to mention research papers that happened because of these companies.
Not true, "most" of the research gets funded by NSF, NIH, DARPA, ARPA, Naval Research. Of course there are companies such as IBM research, Microsoft research but they are few.
By money and for money generally gives you High Frequency trading bots.
>Best minds of any generation have always thought about ways to make money.
Yeah, but sometimes it comes from developing technology that sends people to the moon. Or technology that reduced a roomful of vacuum tube computer technology to a chip the size of your fingernail. Or finding ways to mass-produce cheap chip-based computers affordable my hundreds of millions of people... You know, stuff that actually kinda matters, and can improve people's lives.
I would. I may even go as far as to say it makes then worse. Deleting my facebook account was probably one of the biggest improvements I've made to my life so far this year.
Best minds of any generation have always thought about ways to make money.
Yes but making money by building things that truely further the good of humanity is very different from doing so while trying to separate more consumers from their cash
Throughout much of history many top scientists have devoted their lives to finding better ways to kill people. Advertising is merely a more humane alternative.
Humanity does seem to have a predilection to devoting its brightest minds to unproductive activities. How much better would the world be today if the hot job of early medieval times was medicine instead of producing manuscripts? Science instead of theology? Science instead of stock market analysis? Just repeating a pattern...
This post is not fair to history. First, many theologians of old were first rate thinkers. Although much of their work was practical (philosophy in this case heh) they made contributions to logic, physics and uhm philosophy. Perhaps you have heard of William of Ockham or Thomas Aquinas? As for manuscripts, this was before the printing press so making manuscripts was vital to knowledge spreading. Note that in this time Fibonacci and Copernicus lived.
Finally, although things were slow in Europe, during this time the arabs, persians and indians layed the foundations of and invented some of the greatest inventions in the history of the universe including: positional decimal numbering, zero, and algebra. As well as furthering calculus, geometry, astronomy and number theory. Arabic medicine also maintained and made some contributions to the state of the art of greek and roman times.
And you know what? There is something really evil about taking thousands
of the world’s smartest young people and using them to sell online text
ads more efficiently. Really. Think of all the really interesting and
important things that this pool of brainpower could be addressing.
The content seems very anecdotal - I see a lot of conclusions being drawn from a few examples in 'hot' startups like Facebook, Zynga & Color which represent only a fraction of SV startups (and are possibly outliers).
yup, and this time it's mostly about unwinding desktop/workstation motifs, as well as single app as moat, apps are now fluid points of integrated services. we're going to learn how to unwind our boxes into all kinds of things. it feels like more of a baroque bubble, emotionally we'll change ... and that leads to opportunities.
"This bubble is always different"...
Right up to the moment when the people involved lose everything and start eying their office windows and wondering if they open...
Bubbles exist because human nature is the same yesterday, today and tomorrow. Not every tech company collapsed in 2000 - but the weak ones surely went to the wall. Those with solid business models, and profitability are still going strong. Not everyone will fail this time around, but it looks like serious money will be lost.
As long as the companies going under are pre-IPO the ones most affected will be VC's. After IPO it'll be Joe Public. Thanks to Sarbannes-Oxley there's far fewer companies going public though, so perhaps that's at least one good thing to come from that ill-advised adventure.
You should generally read the article before commenting. You should really read the article before replying to a comment about how you ought to read the article!
Here's some reality surrounding certain socioeconomic fads, including the "technology bubbles" we'll see intermittently for the next 100+ years since technology is becoming the only economic force that really matters. The visible winners and value-harvesters are usually idiots who got lucky. We look at what they're doing and we say, "When the tide goes out, those lucky, no-talent assclowns will have left us with nothing." The people getting invited to the "hip" parties and the most exclusive events at SxSW are generally what you'd expect in the era of social douchebaggery: people who are too busy partying to get real work done.
Okay, okay; but something else happens, and there's a silver lining here. While all the hipster douchewizards scramble for visibility and credit and the image of "A-player" status, progress still continues. Somewhere under all that smoke are the invisible people who are the real A-players, usually taking home a "B" or "C" outcome. You rarely hear their names (sometimes you do, but there are too many of them for more than 0.1% of them to achieve real notability) but they're the ones doing actual work and building great things. And in 2025, when all the "social media" robber barons are either washed-up billionaires or washed-up and penniless, the work that the real A players are doing right now will still matter. The applications of their work may have died out, but their work will still be around and people will be putting the ideas to better use.
your view is a bit dramatic but probably closer to reality than anything else I have read in this thread. The so called A-players taking B and C outcomes also gradually increase their power and influence in the infrastructure of what the net economy has become because they are able to win in almost every cycle. The hipsters, usually only win once and then fade away from fame ;-)
I've been investing for a long time. I've lived thru two bubbles already- the dotcom bubble and the housing bubble. I lost money in the first and made a killing in the second.
I won't say whether this is a bubble or not, but the number one thing I look for is businessweek (or newsweek) saying that "things have changed!" A mainstream publication putting the bull market on its cover is the prime indicator that it is a bubble and that it will be a painful crash.
It is almost a cliche.
The real bubble right now is in the dollar. We've been able to inflate, an export that inflation, for nearly 100 years, and we got away with it because of military might and manufacturing might (and bretton woods). 2 of those 3 are gone and the last one is losing respect rapidly. It is gonna be a bloodbath when those dollars come home to roost. (and it will kick off a bubble in gold.)
Maybe the bursting of this "tech bubble" (if we're in one) will be the trigger that causes the end of the dollar bubble.
Unfortunately I'm not aware of business week putting the dollar on the cover and saying "This time its different". (But maybe one of their covers for gold will count.)
The interesting thing about the gold market is that there is 40x more "paper" gold ownership then there is actual gold in the world.
They can do this because the rules say if someone calls in their gold, they can just give them the value of it in dollars if there is not enough metal to cover it.
nika, good input! one insight though. I have a friend working high in hierarchy in one of the biggest precious metals trader in the world. He told me what you saying about gold (and other P.M.), but he said that White House is drafting an Executive Order for president (Obama if still?) to actually ban sell and export of P.M. you see, they know when dollar loose its green face, it will be nothing more than paper, and then P.M. will soar. In order to stop or slow it down, the government will be entitle to take ownership over your precious metals (it happened in the past!) and cruel penalties will apply if you do not submit. further to cool of the US market it will be forbidden to import/export not to create a shell in US for cheap/expensive p.m. tradeoff.
The biggest trade houses are advising clients to stash pm. or certificates in foreign countries. he also told me they lobby hard to allow IRS to tax other-than-bullion P.M. Right now, as you know, you dont need to report gold and silver coins to the IRS (bullion only).
I think you are right about the bubble, but this one will be "revert-bubble": it will grow naturally through market need, but will be artificially killed by US government and its sanctions.
I have 80% of wealth in us silver great eagle/canadian coin since $21. I think we will see $100 on it, but I may be wrong.
Hadoop was developed at Yahoo, an advertising supported company. Some of the most interesting contributions (HDFS sync, RaidNode, AvatarNode) have come from Facebook, an ad supported company. Hadoop's architecture itself is inspired by the MapReduce and GFS papers from Google, another ad supported company. This shows that the premise is false: there is indeed technology transfer from the "hot businesses" to other companies and academia. Hadoop is the prominent example, but not the only one: many contributions to the Linux kernel come from Google, both Google and Facebook have also contributed extensively to MySQL.
The ad ranking and recommendation algorithms themselves are also by no means trivial, much of the work that goes on in that field (machine learning, information retrieval, natural language processing, large scale graph processing) is applicable elsewhere. The "math wiz" college graduates working on these fields, are going to be able to apply the skills they build elsewhere. Not to mention, the stock options, even if we assume modest outcomes, could pay for many a Ph.D. for engineers who wouldn't otherwise afford to take the time off from industry.
There are also products like GroupOn that don't seem to be technology driven at all, but that can change rather radically (e.g., Amazon's move from a technology consumer, to a producer of their own technology, to a company selling technology to others).
In other words, one doesn't have to sell technology to businesses in order to build technology that benefits others. There's nothing wrong with selling technology to businesses (and if I were to start my own company, I'd start one that does that, because I understand e.g., distributed databases and market for them better than I understand, e.g., machine learning and consumer marketing), but there's nothing wrong with providing an ad supported service to consumers, as long as interesting and universally applicable technology gets built in the process.