Chapter Two of Peter Thiel's New Book
16 comments
I highly recommend the whole book.
The biggest danger with this line of thinking is picking a straw man version of what everyone else believes. Or of underestimating the difference between belief and execution.
In this case, few sophisticated investors truly believed that page views were the ultimate metric. But those were one of the few publicly available metrics you could compare between websites. Their problem was in execution (getting better engagement and monetization metrics) rather than mistaken beliefs.
Straw men are common in startup pitches: "Our software will be powerful and easy to use", as if their competitors had a different goal.
So before proceeding on the assumption that everyone else believes something silly, think hard about reasons why it might only appear that way.
The biggest danger with this line of thinking is picking a straw man version of what everyone else believes. Or of underestimating the difference between belief and execution.
In this case, few sophisticated investors truly believed that page views were the ultimate metric. But those were one of the few publicly available metrics you could compare between websites. Their problem was in execution (getting better engagement and monetization metrics) rather than mistaken beliefs.
Straw men are common in startup pitches: "Our software will be powerful and easy to use", as if their competitors had a different goal.
So before proceeding on the assumption that everyone else believes something silly, think hard about reasons why it might only appear that way.
> Consider an elementary proposition: companies exist to make money, not to lose it.
I'm not sure I agree with that proposition, at least in the general form in which it's stated.
Yes, the objective of any particular company is to make money. But is that why companies exist? We support the concept of a company, build laws and systems that allow one to be created. And clearly the reason we have those laws and system isn't so that the company can make money.
So the instrumental goal of a company is to make money, but the terminal value of companies existing is something different. Perhaps it's that they help us collaborate on issues that outscale any particular mind (though in that we have to be mindful of the Moloch [1] and keep in mind that corporations think in alien ways [2])...
If so, corporations exist to solve human issues primarily; and making money is only a measure of how successful they are at that.
1: http://slatestarcodex.com/2014/07/30/meditations-on-moloch/
2: http://www.antipope.org/charlie/blog-static/2010/12/invaders...
I'm not sure I agree with that proposition, at least in the general form in which it's stated.
Yes, the objective of any particular company is to make money. But is that why companies exist? We support the concept of a company, build laws and systems that allow one to be created. And clearly the reason we have those laws and system isn't so that the company can make money.
So the instrumental goal of a company is to make money, but the terminal value of companies existing is something different. Perhaps it's that they help us collaborate on issues that outscale any particular mind (though in that we have to be mindful of the Moloch [1] and keep in mind that corporations think in alien ways [2])...
If so, corporations exist to solve human issues primarily; and making money is only a measure of how successful they are at that.
1: http://slatestarcodex.com/2014/07/30/meditations-on-moloch/
2: http://www.antipope.org/charlie/blog-static/2010/12/invaders...
You might like to look up work on the Theory of the Firm, as to why companies exist. I'm not suggesting it's the answer but I did find it interesting.
http://en.wikipedia.org/wiki/Theory_of_the_firm
http://en.wikipedia.org/wiki/Theory_of_the_firm
I model people's motivations (and systems made out of their motivations, to a lesser extent) as tangly, illegible, time-varying weighted directed graphs of weighted goals, where none of the nodes seems to actually persistently have indegree == 0 or outdegree == 0. The use of "terminal" and "instrumental" here isn't very clear to me. [http://lesswrong.com/lw/l3/thou_art_godshatter/]
But, to me, "company" usually means something like "an organization with higher-level goals that include selling things to customers and making money for its other stakeholders". When that's not the case, I think of words like "charity", "non-profit", and "club".
But, to me, "company" usually means something like "an organization with higher-level goals that include selling things to customers and making money for its other stakeholders". When that's not the case, I think of words like "charity", "non-profit", and "club".
Well, "non-profit" is just shorthand for "non-profit company", right? At least that's what I'm used to, though googling now seems to bring up "non-profit organisation" as the more popular term...
Regarding 'terminal' and 'instrumental', perhaps the better descriptors would be 'direct' and... uh, not sure, let's take indirect by symmetry.
The direct goals of a company is to make money. The reason we want to have organisations that focus on making money is because .. (we believe that organisations with larger positive impact are better posed to make more money, we want to harness the self-interest to improve efficiency, etc etc). The point is just having a company that makes a lot of money but doesn't improve the world is counterproductive.
Regarding 'terminal' and 'instrumental', perhaps the better descriptors would be 'direct' and... uh, not sure, let's take indirect by symmetry.
The direct goals of a company is to make money. The reason we want to have organisations that focus on making money is because .. (we believe that organisations with larger positive impact are better posed to make more money, we want to harness the self-interest to improve efficiency, etc etc). The point is just having a company that makes a lot of money but doesn't improve the world is counterproductive.
In one line of reasoning, money is a proxy for happiness (I'd rather change this to value... but this doesn't matter because this example is so distilled). So, companies exist to make people happy. This works by providing a good or service that makes a customer happy in exchange for money, which the company can then use to give to employees and shareholders so they can be happy too. Since the company creates a profit, happiness generation can be sustained for multiple parties well into the future.
That's an organization or club, not a company.
Well, a company is a type of an organisation, isn't it.
A club is usually focused on providing value to their members, rather than the world at large; I'm not sure how it's similar.
A club is usually focused on providing value to their members, rather than the world at large; I'm not sure how it's similar.
The members of a company are generally its owners or shareholders, and the company exists to carry out its objects - if the objects of the company are commercial, that usually means providing a return to shareholders.
But the point made by Thiel was not meant to be some existential musing on the purpose of companies generally. The proposition that "companies exist to make money, not lose it" is "elementary" because he is there referring only to companies with commercial objects. In other words, 'for profit' companies exist to make money, and at least for those companies it is a mistake to focus on other metrics to the exclusion of profit.
As for the historical relationship between the development of company law and commerce, a good place to start would be the history of limited liability companies and corporations (in the UK, US and elsewhere) and the effect of limiting liability on entrepreneurship.
But the point made by Thiel was not meant to be some existential musing on the purpose of companies generally. The proposition that "companies exist to make money, not lose it" is "elementary" because he is there referring only to companies with commercial objects. In other words, 'for profit' companies exist to make money, and at least for those companies it is a mistake to focus on other metrics to the exclusion of profit.
As for the historical relationship between the development of company law and commerce, a good place to start would be the history of limited liability companies and corporations (in the UK, US and elsewhere) and the effect of limiting liability on entrepreneurship.
It seems to me that Peter describes a lot of mistakes and then proposes mostly some new ones.
After the initial dust settles, what we want is a valuable, defensible, first good or a much better, must have and not just nice to have solution to a problem where such a solution can be the crucial, nearly sufficient means of a valuable new company.
Okay, now for the lesson: However we come up with such a solution, we have to evaluate it. Well, we can look around just a little and see that some parts of our society are very good at technical evaluations of such solutions. With everything else being assumed, a successful technical evaluation is supposed to be able to remove about all doubt about the business success. E.g., the ideal solution would be a one pill, safe, effective, cheap cure for any cancer. Big company? Sure. Done. And we should expect such solutions in other areas.
In particular, we are able to plan, propose, and have evaluated just on paper solutions for major problems. Examples: Hoover Dam. The new World Trade Center. The Erie Canal. Powered, controlled flight as the Wright brothers were on the way to Kitty Hawk. The SR-71. GPS. Many more. Evaluated just on paper, and then executed as planned. Sand Hill Road needs to be able to do much the same, and that is much of what Peter is missing.
Instead of such solid history of project evaluation, Peter goes off on various emotional reactions to various irrational flights of triviality in various headlines, etc.
Peter, friendly advice: Learn how to evaluate research results and their applications to valuable, practical projects. E.g., borrow from evaluations of GPS, the SR-71, Hoover Dam, etc.
After the initial dust settles, what we want is a valuable, defensible, first good or a much better, must have and not just nice to have solution to a problem where such a solution can be the crucial, nearly sufficient means of a valuable new company.
Okay, now for the lesson: However we come up with such a solution, we have to evaluate it. Well, we can look around just a little and see that some parts of our society are very good at technical evaluations of such solutions. With everything else being assumed, a successful technical evaluation is supposed to be able to remove about all doubt about the business success. E.g., the ideal solution would be a one pill, safe, effective, cheap cure for any cancer. Big company? Sure. Done. And we should expect such solutions in other areas.
In particular, we are able to plan, propose, and have evaluated just on paper solutions for major problems. Examples: Hoover Dam. The new World Trade Center. The Erie Canal. Powered, controlled flight as the Wright brothers were on the way to Kitty Hawk. The SR-71. GPS. Many more. Evaluated just on paper, and then executed as planned. Sand Hill Road needs to be able to do much the same, and that is much of what Peter is missing.
Instead of such solid history of project evaluation, Peter goes off on various emotional reactions to various irrational flights of triviality in various headlines, etc.
Peter, friendly advice: Learn how to evaluate research results and their applications to valuable, practical projects. E.g., borrow from evaluations of GPS, the SR-71, Hoover Dam, etc.
the yc app has a form of this as one of it's questions: "what do you understand about your business that other companies in it just don't get?"
one of thiel's general business examples is "capitalism and competition are opposites". although his point is sound (business schools explicitly teach you to look for ways to avoid/eliminate competition), his definition of capitalism is a bit distorted to make this phrase work. capitalism is a decentralized economic system for deploying capital efficiently based on supply and demand, not simply for accumulating/concentrating capital (which is how thiel sees it).
one of thiel's general business examples is "capitalism and competition are opposites". although his point is sound (business schools explicitly teach you to look for ways to avoid/eliminate competition), his definition of capitalism is a bit distorted to make this phrase work. capitalism is a decentralized economic system for deploying capital efficiently based on supply and demand, not simply for accumulating/concentrating capital (which is how thiel sees it).
"Efficiently", in this case, means deploying capital where it will accumulate the most profit. Not where it does the most good, or solves the most pressing or important problems.
at a game theoretic level of you vs. the competition, that's true. you're trying to maximize profit because profit is used as a proxy for solving the most pressing problems (or desires) of a set of people (i don't believe profit is a perfect proxy, but that's another discussion).
but if you want a stable and efficient economic (and political) system, you want capital to continuously flow through the system, not accumulate.
but if you want a stable and efficient economic (and political) system, you want capital to continuously flow through the system, not accumulate.
"Conventional beliefs only ever come to appear arbitrary and wrong in retrospect; whenever one collapses, we call the old belief a bubble."
I couldn't help but feel that, in 10 years, Silicon Valley's current bubble (which Peter Thiel buys into) will seem this way.
I couldn't help but feel that, in 10 years, Silicon Valley's current bubble (which Peter Thiel buys into) will seem this way.
Thiel goes so far as to reference Twitter in a recent article as an example of how the eyeballs / users / etc. type metrics aren't always wrong (he also used Facebook).
Which falls flat when you consider that Twitter has proven itself to be anything but a successful business the past seven years or so. It's currently bleeding money at an epic rate, and if you assume a $30 to $35 billion market cap, there is almost no scenario in which it can ever justify that by earning a profit (even if revenue were profit today, they'd still be fairly valued; best case scenario possible is in ten years they're worth about what they are now, assuming non-stop growth and that they eventually have a $5b sales / $1.xb profit business)).
On the downside of this stock market bubble, when cash is harder to come by, Twitter is still bleeding out, and their growth trails off, the company is worth maybe 15% of what it's currently trading for. Thiel will of course no longer be discussing Twitter as a good example at that point (he'll then stick to only Facebook as the example).
Which falls flat when you consider that Twitter has proven itself to be anything but a successful business the past seven years or so. It's currently bleeding money at an epic rate, and if you assume a $30 to $35 billion market cap, there is almost no scenario in which it can ever justify that by earning a profit (even if revenue were profit today, they'd still be fairly valued; best case scenario possible is in ten years they're worth about what they are now, assuming non-stop growth and that they eventually have a $5b sales / $1.xb profit business)).
On the downside of this stock market bubble, when cash is harder to come by, Twitter is still bleeding out, and their growth trails off, the company is worth maybe 15% of what it's currently trading for. Thiel will of course no longer be discussing Twitter as a good example at that point (he'll then stick to only Facebook as the example).
I haven't read the book but I'm interested in other people's opinions on how much predictive power is in his ideas. It's clear he, like many other entrepreneur writers, has presented something with good descriptive power. He can describe why something was a good investment or why something else failed, but does he provide any kind of framework for predicting success?
I wish I remember who said this: If you could predict business success correctly 51% of the time, and acted on your findings, you'd soon be the richest person ever.
"Our contrarian question—What important truth do very few people agree with you on?—is difficult to answer directly."
Didn't this question originate from Peter himself? I recall he claimed so in an interview from Pando but I can't find the link.
Didn't this question originate from Peter himself? I recall he claimed so in an interview from Pando but I can't find the link.
Did you actually try or that some kind of weird figure of speech?
It's the very first result on Youtube for "Pando Thiel", 6 minutes in.
http://youtu.be/p6taTMa4nls?t=5m44s
It's the very first result on Youtube for "Pando Thiel", 6 minutes in.
http://youtu.be/p6taTMa4nls?t=5m44s
I didn't try... was on my mobile phone and crappy 2g connection. Thanks for linking :) I'm a big fan of Peter Thiel, hope my comment didn't come across as negative.
It sounds very much like an Edge question but it's not. http://edge.org/annual-questions
Thanks for the excerpt. It's not long, but I enjoyed the writing, it's crisp, fast-paced, and covers a lot of ground. (I imagine Peter's lectures to be similar!)
This gave me the confidence to order the book.
The course (CS183) which this book is based on was outstanding and the authors claim that they extended and improved on the course. I'm looking forward to the book.
Can someone explain to the people that don't understand who "Peter Thiel" is and what this new book is about? I hope, I don't offend anyone by not knowing, I usually just use Hacker News to get some News articles and am not too much involved with YC and the whole community behind HN...
Also, he tends to be contrarian in his posture towards investments. For example, he's backed anti-ageing research[1], which is obviously viable, but seen by many as oddball.
He was the first outside investor in Facebook[2]...
And perhaps most well known for co-founding PayPal with Elon Musk and Max Levchin.
There's a ton of vids with him being interviewed on YouTube, if you want the gist of the guy.
I've bookmarked this one for later. A Conversation with Peter Thiel and Niall Ferguson[3]. (Niall Ferguson has done some fine work, as well)
[1] http://en.wikipedia.org/wiki/Peter_Thiel#Anti-aging_research [2] In the intro section: http://en.wikipedia.org/wiki/Peter_Thiel [3] https://www.youtube.com/watch?v=exfbmY7mg8s
He was the first outside investor in Facebook[2]...
And perhaps most well known for co-founding PayPal with Elon Musk and Max Levchin.
There's a ton of vids with him being interviewed on YouTube, if you want the gist of the guy.
I've bookmarked this one for later. A Conversation with Peter Thiel and Niall Ferguson[3]. (Niall Ferguson has done some fine work, as well)
[1] http://en.wikipedia.org/wiki/Peter_Thiel#Anti-aging_research [2] In the intro section: http://en.wikipedia.org/wiki/Peter_Thiel [3] https://www.youtube.com/watch?v=exfbmY7mg8s
Peter Thiel co-founded PayPal. The book is based on a class about startups he taught at Stanford.
Not offensive, just lame. Google or Wikipedia would answer your question in 30 seconds.
Private link: https://en.wikipedia.org/wiki/Peter_Thiel
Here's the IAmA he did recently: http://www.reddit.com/r/IAmA/comments/2g4g95/peter_thiel_tec...
Facebook made him really rich http://money.cnn.com/2012/08/20/technology/facebook-peter-th...
Damn he sold all those shares at the bottom of the dip. $19 - $20... facebook is now at $74. His shares would be worth more than $3.5 billion now if he held on to them. Of course the market could behave differently if he holds, but still fun to imagine.
He also managed a $8 billion dollar hedge fund that failed spectacularly.
http://en.wikipedia.org/wiki/Clarium_Capital
http://en.wikipedia.org/wiki/Clarium_Capital
So what? It's a few big ones that matter. Why all this negativity?
He claimed to know things about the economy and raised $8 billion to capitalize on his ideas. Turns out he was full of shit. He had no idea what he was doing and lost huge amounts of money over years. He wasn't just bad he was arrogantly clueless.
Now he's claiming to know things about the economy again.
Now he's claiming to know things about the economy again.
Ok, so usually I really like your posts, and I understand how you can believe this because it is written across the internet in some difficult to assess ways, but I believe you are very mistaken about this.
During and after the liquidity crunch of 2008 and the recession, Clarium reduced in capital dramatically primarily because people were withdrawing their capital, not due to losses. He did not lose $8 billion, instead, most of the capital under management was drawn down, as it was with many hedge funds.
The annual returns of Clarium were volatile, but overall, impressive. Here is a list for the returns pre 2011 (after which reporting was kept to the remaining investors -- rumor is that it has done well but this is not public).
2002: 29.4%
2003: 65.6%
2004: 5.6%
2005: 57.1%
2006: -7.8%
2007: 40.3%
2008: -4.5%
2009: -25%
2010: -23%
From:
http://3.bp.blogspot.com/_-M95ijQ3Mq0/Sw0Tax_AoTI/AAAAAAAAAC...
http://www.hedgefundinsight.org/the-limits-to-fundamental-co...
and from:
http://www.bloomberg.com/news/2011-01-12/clarium-hedge-fund-...
Here is a good chart, for pre-2010 data.
http://www.marketfolly.com/2009/02/peter-thiels-clarium-capi...
Even despite the tough losses sustained through 2008, 2009 and 2010, the fund returned, net, from October 2002 (fund start date) to the end of 2010, 2.53x.
That's an 8.25 year, aggregated annual return of 11.9%.
http://www.wolframalpha.com/input/?i=%281.294+*+1.656+*+1.05...
For comparison, the S&P 500 over the same time period rose from a deep dip of about 800 to about 1260, a rise of 57%, for an aggregate annual return of about 5.6%.
It was volatile too, without the strong gains to buffer the losses. If you had your money in Clarium the entire time, you'd be well ahead, even net of fees -- you would have more than doubled your money (2.14x return net). Comparing the two cases, if you held Clarium vs S&P 500, you'd have 36% more capital.
Hardly a fund that's full of it, and has no idea what it's doing.
The tragedy of Clarium is that money flooded in in 2007 and early 2008, and then largely exited during 2009 and 2010, forcing a major unwind at the worst time. Macro-economically, Clarium was correct about the recovery being slow and drawn out. But the financial world, in particular their bets against the dollar, were not born out in that timeframe.
During and after the liquidity crunch of 2008 and the recession, Clarium reduced in capital dramatically primarily because people were withdrawing their capital, not due to losses. He did not lose $8 billion, instead, most of the capital under management was drawn down, as it was with many hedge funds.
The annual returns of Clarium were volatile, but overall, impressive. Here is a list for the returns pre 2011 (after which reporting was kept to the remaining investors -- rumor is that it has done well but this is not public).
2002: 29.4%
2003: 65.6%
2004: 5.6%
2005: 57.1%
2006: -7.8%
2007: 40.3%
2008: -4.5%
2009: -25%
2010: -23%
From:
http://3.bp.blogspot.com/_-M95ijQ3Mq0/Sw0Tax_AoTI/AAAAAAAAAC...
http://www.hedgefundinsight.org/the-limits-to-fundamental-co...
and from:
http://www.bloomberg.com/news/2011-01-12/clarium-hedge-fund-...
Here is a good chart, for pre-2010 data.
http://www.marketfolly.com/2009/02/peter-thiels-clarium-capi...
Even despite the tough losses sustained through 2008, 2009 and 2010, the fund returned, net, from October 2002 (fund start date) to the end of 2010, 2.53x.
That's an 8.25 year, aggregated annual return of 11.9%.
http://www.wolframalpha.com/input/?i=%281.294+*+1.656+*+1.05...
For comparison, the S&P 500 over the same time period rose from a deep dip of about 800 to about 1260, a rise of 57%, for an aggregate annual return of about 5.6%.
It was volatile too, without the strong gains to buffer the losses. If you had your money in Clarium the entire time, you'd be well ahead, even net of fees -- you would have more than doubled your money (2.14x return net). Comparing the two cases, if you held Clarium vs S&P 500, you'd have 36% more capital.
Hardly a fund that's full of it, and has no idea what it's doing.
The tragedy of Clarium is that money flooded in in 2007 and early 2008, and then largely exited during 2009 and 2010, forcing a major unwind at the worst time. Macro-economically, Clarium was correct about the recovery being slow and drawn out. But the financial world, in particular their bets against the dollar, were not born out in that timeframe.
Financial results are the objective test of an investment firm but I'm not sure you're factoring in the risk involved in what Clarium was doing. Or how wrong their bets were.
And I do know that Clarium is probably one of the better hedge funds by any measure. Peter Theil seems like an ethical and good person. That's so rare in that world it's probably the reason he was able to raise money without any expertise in trading.
And I do know that Clarium is probably one of the better hedge funds by any measure. Peter Theil seems like an ethical and good person. That's so rare in that world it's probably the reason he was able to raise money without any expertise in trading.
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Now a quora answer, lightly edited.
http://qr.ae/iKZQV
http://qr.ae/iKZQV
He was already really rich (see: PayPal).
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Plus, he is in the Billderberg Group...just sayin' don't hate
clickable: http://pastebin.com/NuxLFmW4
What is the benefit of not allowing links in a post? Is it a purposeful decision or or is it just that no one has bothered to implement it.
When allowed, some then stop submitting primary links, and instead wrap even more commentary around the (now in-text) link than is possible in an editorialized headline. This also effectively reserves for the submitter a permanent "top comment".
> Don't abuse the text field in the submission form to add commentary to links. The text field is for starting discussions. If you're submitting a link, put it in the url field. If you want to add initial commentary on the link, write a blog post about it and submit that instead.
https://news.ycombinator.com/newsguidelines.html
You aren't supposed to use the text field for submissions that are really links. I assume links in the text field aren't clickable to discourage this behavior.
https://news.ycombinator.com/newsguidelines.html
You aren't supposed to use the text field for submissions that are really links. I assume links in the text field aren't clickable to discourage this behavior.
Another excerpt was posted on Business Insider: http://www.businessinsider.com/peter-thiel-how-to-create-inn...
Awesome I really want to read this book but it is sadly over 30$ up here in Canada.
My god man, this guy just put everything he knows about startups into a book. Years of hard-earned experience wrapped up in a neat little package just for you. And all for only $30. If you get just one insight out of this book it will pay for itself a thousand times over. Stop complaining about the price and just buy it.
There is nothing wrong in finding better deals or for that matter asking on HN. Online versions and ebooks are generally cheaper.
>>My god man, this guy just put everything he knows about startups into a book.
Well, I doubt it's everything he knows, but yeah, I found it to be well worth the money. :)
Well, I doubt it's everything he knows, but yeah, I found it to be well worth the money. :)
I have some Kool-Aid for sale, do you want to buy it too?
If you can show me how your kool-aid will help me or why your kool-aid matters to anybody, then yes, I'd be happy to buy your kool-aid. Welcome to capitalism.
CDN $16.99 Kindle Edition. Note that there are free Kindle readers for pretty much all platforms, even the in browser Web one if you don't have anything else. Also... should appear shortly in public/university libraries.
2106 yen in a bookstore in Tokyo, not including tax. A little less than 20 USD.
[deleted]
It was also hard to find for my case (in Canada)
Audible man, free trial
Thank you for talking to Peter and sharing this.
For those interested in more, Blake (the co-author from the book) took Peter Thiel's CS183 class in Stanford, and has class notes freely available on his blog (the notes generated the idea for the book, from my understanding):
http://blakemasters.com/peter-thiels-cs183-startup
I highly recommend the book.
For those interested in more, Blake (the co-author from the book) took Peter Thiel's CS183 class in Stanford, and has class notes freely available on his blog (the notes generated the idea for the book, from my understanding):
http://blakemasters.com/peter-thiels-cs183-startup
I highly recommend the book.
I wait with bated breath that this will be more than just a recapitulation of Blake's existing notes.
Time to exhale. Thiel has publicly stated that this is largely a recapitulation of Blake's existing notes. Just better-organized and refined. If you want free, his notes will be fine. Personally, having followed along with the notes, I'm planning to get the book as well.
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VCs in the dot com bubble were not confused about whether companies should make money or not. VCs knew exactly what they were doing: making money for themselves. They were raking in millions by pumping up companies and dumping them on the public market. A classic ponzi scheme. Eventually the public market realized what was going on and the party stopped.
a pump-and-dump scheme is not a ponzi scheme
Fair enough. I knew it was wrong when I said it but I said it anyway!
Party Like It’s 1999
Our contrarian question—What important truth do very few people agree with you on?—is difficult to answer directly. It may be easier to start with a preliminary: what does everybody agree on? “Madness is rare in individuals—but in groups, parties, nations, and ages it is the rule,” Nietzsche wrote (before he went mad). If you can identify a delusional popular belief, you can find what lies hidden behind it: the contrarian truth.
Consider an elementary proposition: companies exist to make money, not to lose it. This should be obvious to any thinking person. But it wasn’t so obvious to many in the late1990s, when no loss was too big to be described as an investment in an even bigger, brighter future. The conventional wisdom of the “New Economy” accepted page views as a more authoritative, forward‐looking financial metric than something as pedestrian as profit.
Conventional beliefs only ever come to appear arbitrary and wrong in retrospect; whenever one collapses, we call the old belief a bubble. But the distortions caused by bubbles don’t disappear when they pop. The internet bubble of the ’90s was the biggest of the last eight decades, and the lessons learned afterward define and distort almost all thinking about technology today. The first step to thinking clearly is to question what we think we know about the past.
A Quick History of the ’90s
The 1990s have a good image. We tend to remember them as a prosperous, optimistic decade that happened to end with the internet boom and bust. But many of those years were not as cheerful as our nostalgia holds. We’ve long since forgotten the global context for the 18 months of dot‐com mania at decade’s end.
CONTINUE HERE: http://pastebin.com/NuxLFmW4