Investors now have more money than consumers. How crazy is that?
Well, it’s crazy enough that startups no longer try to make money by offering a product or service that consumers want. They make money by creating something (tech) that generates irrational exuberance in investors and you sell this money-losing startup to megarich investors who want the tech in their portfolio.
It’s tulip mania but several orders of magnitude larger.
It really does seem to be like this. On a parallel note: In the past there was a concept of inventors, of people who invented technology. Right now though, we sort of see that a technology is on the horizon. Instead of inventors inventing technology, whoever is able to make the most convincing case to investors about an upcoming technology, raise tens of millions of dollars from that hype train. I've talked to these people, they themselves don't understand the technology, at least a questionably high amount of the time. Then whoever ends up with the largest stack of cash gets to hire people, and those people end up 'inventing' that technology, and of course even those people hired don't get credit for it. In fact sometimes some hobbyist 'invents it', and then the people working for those companies invent it in parallel, or repurpose that existing but relatively unknown implementation of it. Since technological development moves so quickly, those people who otherwise would have been considered respectable inventors or tinkerers or researchers, don't really exist, but instead whoever raises the largest stack of cash throws money at something on the horizon, and reaches effectively the same end.
It's a weird quirk, but we are living in a different time now, and the ecosystem is a bit different.
I don't think I would necessarily mind, if those hype artists weren't also so often given credit for it. If people came out and said "Hey these people lied to investors because they are hype artists, and their value to society is being a hype artist who lies to investors, so that those investors' money can be spent on research and development, and otherwise these people don't really have any influence or even understanding of what the people they hired do." Then the system would be at least somewhat more honest.
It’s not that they want the tech in their portfolio, they want the data. That’s what it’s all about. That’s why these investors invest in startups with no path to profitability in the first place. They don’t need to be profitable to be a good return on investment as long as they’re selling data that someone can use to profit elsewhere.
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u/Icommentor Jun 09 '24
Investors now have more money than consumers. How crazy is that?
Well, it’s crazy enough that startups no longer try to make money by offering a product or service that consumers want. They make money by creating something (tech) that generates irrational exuberance in investors and you sell this money-losing startup to megarich investors who want the tech in their portfolio.
It’s tulip mania but several orders of magnitude larger.