Silicon Valley's Soft Landing(bloomberg.com)
bloomberg.com
Silicon Valley's Soft Landing
http://www.bloomberg.com/gadfly/articles/2016-01-08/silicon-valley-comes-to-its-senses-on-silly-startup-money
15 comments
> Hell...there are hundreds (if not thousands) of companies just doing advertising services, alone.
http://idlewords.com/2015/11/the_advertising_bubble.htm
> I often wonder how much of Facebook's revenue (for example) consists of valley startups trying to micro-target indifferent consumers.
During the dot-com boom, a large fraction of Yahoo's revenue was coming from startups, who were using their VC money to pay exorbitant amounts for partnerships with Yahoo. You can guess what happened at Yahoo when the party ended in 2000 and the money men went back to NYC.
http://idlewords.com/2015/11/the_advertising_bubble.htm
> I often wonder how much of Facebook's revenue (for example) consists of valley startups trying to micro-target indifferent consumers.
During the dot-com boom, a large fraction of Yahoo's revenue was coming from startups, who were using their VC money to pay exorbitant amounts for partnerships with Yahoo. You can guess what happened at Yahoo when the party ended in 2000 and the money men went back to NYC.
Yep. I remember it well, but people seem to think that since these "partnerships" aren't (obviously) taking place, it can't happen again (also, that idlewords piece is great. everyone in tech should read it, and feel at least a little fear).
There's this great segment in eDreams where the founder of Kozmo.com flies to Seattle to announce a partnership with Starbucks, wherein Starbucks gave them a small amount of money, and they committed to paying Starbucks $30 million a year over five years to put their boxes in Starbucks' stores. Kozmo pitched this as an investment (personal aside: lol), and Starbucks announced that this would increase earnings by five cents a share for fiscal 2001 [1]. Kozmo was, of course, dead by early 2001.
It's painful to watch this now, but it really seems like the same things are happening again. The flow of money is just happening in real time, and not being projected forward on a five-year basis and booked as current revenue. (That happens at the unicorn stage instead, where we seem to have made up fun new ways of booking future recurring revenue as present-day revenue growth, and traditional accounting rules do not apply.)
[1] http://www.wsj.com/articles/SB950479618236414189
There's this great segment in eDreams where the founder of Kozmo.com flies to Seattle to announce a partnership with Starbucks, wherein Starbucks gave them a small amount of money, and they committed to paying Starbucks $30 million a year over five years to put their boxes in Starbucks' stores. Kozmo pitched this as an investment (personal aside: lol), and Starbucks announced that this would increase earnings by five cents a share for fiscal 2001 [1]. Kozmo was, of course, dead by early 2001.
It's painful to watch this now, but it really seems like the same things are happening again. The flow of money is just happening in real time, and not being projected forward on a five-year basis and booked as current revenue. (That happens at the unicorn stage instead, where we seem to have made up fun new ways of booking future recurring revenue as present-day revenue growth, and traditional accounting rules do not apply.)
[1] http://www.wsj.com/articles/SB950479618236414189
> it really seems like the same things are happening again
Indeed, Starbucks pulled almost the exact same thing in 2012 with Square:
http://money.cnn.com/2015/10/15/technology/square-starbucks/
Indeed, Starbucks pulled almost the exact same thing in 2012 with Square:
http://money.cnn.com/2015/10/15/technology/square-starbucks/
> That appears to be an understatement. Square, which filed to go public Wednesday, said that it has lost a grand total of $71 million from processing Starbucks payments over the past three years.
This partner overall sounds better for sbux.
This partner overall sounds better for sbux.
That's also basically what happened to mighty Sun after it became the Dot in Dot-Com, right?
Sun, Oracle, AOL, EMC, Nortel, Lucent, Cisco - all took huge shots from the ecosystem of dotcoms going under.
Cisco for example, in the 4th quarter of 2000, grew sales by 61% (55% for the year). Famously they had basically accelerated growth every quarter for a couple of years. The projections had gotten almost insane, about how big Cisco was supposed to be in just a few more years.
The money quote from August 2000:
"We see no indications in the marketplace that the radical Internet business transformation in practices like customer service, supply-chain management, employee training, empowerment, and e-commerce that is taking place around the world today is slowing -- in fact, we believe it is accelerating globally," said [then CEO] Chambers.
Cisco for example, in the 4th quarter of 2000, grew sales by 61% (55% for the year). Famously they had basically accelerated growth every quarter for a couple of years. The projections had gotten almost insane, about how big Cisco was supposed to be in just a few more years.
The money quote from August 2000:
"We see no indications in the marketplace that the radical Internet business transformation in practices like customer service, supply-chain management, employee training, empowerment, and e-commerce that is taking place around the world today is slowing -- in fact, we believe it is accelerating globally," said [then CEO] Chambers.
3Com. They basically shut down their networking division because their management and investors figured that they were now a wrapper around Palm.
At JavaOne, I remember seeing Bill Joy predicting that $1T of wealth creation was going to grow to $10T. I think this was in 1999. A few years later, he warned that nanotech may turn us into grey goo. [I may be exaggerating a bit] Birth of a pessimist?
What are examples of these companies that are public/recently IPO'd?
If you're referring to adtech, Rocket Fuel IPO'd in 2013, and has steadily declined since then[0]. They raised $77M in VC funding, and their current market cap is $138M. The post-IPO peak valuation was ~$3B.
0: http://finance.yahoo.com/echarts?s=FUEL+Interactive#%7B"rang...
0: http://finance.yahoo.com/echarts?s=FUEL+Interactive#%7B"rang...
Exactly.
WeWork is in my mind, a good example of a company that will suffer once their customer base burns through all of their VC money.
http://www.businessinsider.com/weworks-financial-projections...
WeWork is in my mind, a good example of a company that will suffer once their customer base burns through all of their VC money.
http://www.businessinsider.com/weworks-financial-projections...
Heard an interesting take on the unicorn state of play this weekend on Barry Ritholz's Masters in Business podcast. William Janeway (Warburg Pincus) thinks there is definitely a unicorn bubble going on, but just like the railroad bubble in the 1800's and the automobile bubble in the early 1900's and the PC bubble in the late '70s and early '80s and the Internet bubble in the '90s it will end with a lot of people losing money, quite a few making money, and a lot of companies going out of business, but with a lot of survivors and a lot of infrastructure that will fuel ongoing progress, and that this is a good thing on balance. His belief is that equity bubbles are a lot less dangerous than credit-fueled bubbles like the housing bubbles of the '00s.
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What would be the infrastructure this time? Instacart drivers at the ready...? The whole ecosystem that's been pushed seems to be being pushed precisely because there's no infrastructure involved, leading to the asymmetric cost structures so championed by PG/YC.
The whole devops toolchain really came of age in this bubble. The same stuff you used to build yet another instagram clone can be used for a medical analytics startup. It's how things have always been in tech. Yesterday's toys become tomorrow's tools.
I suppose cloud computing infrastructure investment would be one.=
I'd say it's even better than that. At my last company we used our own hardware, but we still benefited from Docker, Consul, Chef, graphana, etc. There's a lot there that is cloud-agnostic.
For example, service discovery is still service discovery. You still have, say, a hundred machines running the listeners API. Are you going to keep a manual tally of that? Or better to just start consul client from the ansible/chef provisioner, and let "dns" handle the load balancing. You can implement "connection draining" by downing the health check url before going offline on a node. Just one example, but yea, there's a lot of ease and maturity in the new services way of doing things now.
For example, service discovery is still service discovery. You still have, say, a hundred machines running the listeners API. Are you going to keep a manual tally of that? Or better to just start consul client from the ansible/chef provisioner, and let "dns" handle the load balancing. You can implement "connection draining" by downing the health check url before going offline on a node. Just one example, but yea, there's a lot of ease and maturity in the new services way of doing things now.
I think you are overestimating how much they spend compared to Kellogs, Home Depot, Verizon, Walmart, Car companies, etc.
Those big players spend so much money. If the funding river dried up then sure, sooner if there smaller ad-tech might be at risk, but the big dollars will stay put.
Those big players spend so much money. If the funding river dried up then sure, sooner if there smaller ad-tech might be at risk, but the big dollars will stay put.
"the regional effects of those redwoods are tiny in comparison to the "robust ecosystem" of mushrooms that grows in their shadow."
If "regional effects" follow a power law this isn't true. We know valuation does, so why not these effects?
If "regional effects" follow a power law this isn't true. We know valuation does, so why not these effects?
"regional effects" meaning # of employees or gross $ of payroll.
who employees more people: FB or the countless "on the come" app cos /free-to-play game cos that are paying FB $10 per app install?
VC money is sucked up from around the US (via LP's as foundations, etc) and deposited in SF for use in Payroll for companies that are loosing money, and transfering VC money to FB, that inflates FB valuation, a valuation that VC's feed back into their models of expected returns on investment, there by increasing investment. In this way the positive feed back loop is completed.... and $3,500 per mo 1-Bedrooms are created as a side effect ;)
the payroll base of a profitable company is constrained by its real revenue.... the payroll base of an unprofitable company is not restrained by its revenue.
who employees more people: FB or the countless "on the come" app cos /free-to-play game cos that are paying FB $10 per app install?
VC money is sucked up from around the US (via LP's as foundations, etc) and deposited in SF for use in Payroll for companies that are loosing money, and transfering VC money to FB, that inflates FB valuation, a valuation that VC's feed back into their models of expected returns on investment, there by increasing investment. In this way the positive feed back loop is completed.... and $3,500 per mo 1-Bedrooms are created as a side effect ;)
the payroll base of a profitable company is constrained by its real revenue.... the payroll base of an unprofitable company is not restrained by its revenue.
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There are currently 144 unicorns valued at $525 billion
https://www.cbinsights.com/research-unicorn-companies
https://www.cbinsights.com/research-unicorn-companies
Aren't these young infrastructure companies just early adopters of advertising tech that mainstream non-SV companies will adopt once they "cross-the-chasm"?
>>Meanwhile, the theoretical market cap of all current private-market unicorns ($300-$500Bn, depending on the source)
I am sure there are many unicorns that are overhyped and are going to fail. The 300Bn is same as market cap of Facebook. If one invested in every one of Unicorns at current market, I think its most likely they will make profit on the investment.
Don't forget everyone thought FB was Way over valued when MSFT invest at 15Bn valuation.
I am sure there are many unicorns that are overhyped and are going to fail. The 300Bn is same as market cap of Facebook. If one invested in every one of Unicorns at current market, I think its most likely they will make profit on the investment.
Don't forget everyone thought FB was Way over valued when MSFT invest at 15Bn valuation.
Well put, this is looking exactly like a post .com bubble.
A rising tide lifts all boats.
So when the tide goes out....
So when the tide goes out....
I don't think we will see a .com bubble style 'crash' but it seems increasingly certain that the screws are going to get turned on startups that can't sustain themselves without constant injections of cash from investors.
There is a knock on effect too in where the risks aren't entirely understood. For example think about mobile/web analytics companies. Tons of their revenue comes from other unprofitable companies that are propped up by VC cash. Even if the web analytics company is doing well in their own right there is a huge hidden risk with the business model of such companies since a big chunk of their revenue comes startups propped up elsewhere with VC cash and that cash is about about to start drying up really quickly. In other words a lot of companies that think they are doing well are in reality just also propped up with VC cash indirectly.
In short, the tide is going out and we're about to see who's been swimming naked.
There is a knock on effect too in where the risks aren't entirely understood. For example think about mobile/web analytics companies. Tons of their revenue comes from other unprofitable companies that are propped up by VC cash. Even if the web analytics company is doing well in their own right there is a huge hidden risk with the business model of such companies since a big chunk of their revenue comes startups propped up elsewhere with VC cash and that cash is about about to start drying up really quickly. In other words a lot of companies that think they are doing well are in reality just also propped up with VC cash indirectly.
In short, the tide is going out and we're about to see who's been swimming naked.
The whistling past the graveyard is hilarious.
We are going into a 2008-style financial crisis, with the Fed already zero bound and China heading into a deflationary collapse. The banks, at least, have better balance sheets on paper this time around, but the carnage is going to be breathtaking.
How many cycles of "things are amazing -> a new, permanent plateau -> I see no evidence of a bubble -> soft landing for sure -> no one could have seen this coming" do we have to go through, folks?
We are going into a 2008-style financial crisis, with the Fed already zero bound and China heading into a deflationary collapse. The banks, at least, have better balance sheets on paper this time around, but the carnage is going to be breathtaking.
How many cycles of "things are amazing -> a new, permanent plateau -> I see no evidence of a bubble -> soft landing for sure -> no one could have seen this coming" do we have to go through, folks?
What's nice about doomsaying is when you're wrong no one cares and when you're right that one time, you get that useless fleeting feeling of self-satisfaction
Is it really doomsaying when it's occurring at somewhat regular intervals? 1990, 2000, 2007...
Yes. The human tendency to find patterns where none exist makes the whole thing feel more compelling than it is
There is an obvious pattern. The Fed is intentionally inflating asset bubbles to fake economic recoveries. Those asset bubbles inevitably must implode because they're not supported by fundamentals (such as the extremely slow GDP growth the prior six years). They did it in response to the 2001 recession, and they did it again in response to the 2009 recession. They openly admitted they were attempting to inflate assets this time around.
The business cycle is a thing. Everyone knows the business cycle is a thing. Half the people on Hacker News have been calling bubble for the past 2-3 years.
The business cycle remains a thing.
The business cycle remains a thing.
For the sake of argument I will state the efficient market interpretation: What we call the business cycle is actually just good and bad runs in a series of independent random events. I don't really believe it, but would nevertheless enjoy it if you argued against that position.
I don't think the efficient market hypothesis argues that there are no business cycles, only that stock market prices anticipate recessions coming so you can't make a profit by selling when it looks like things are going to tank.
behavioural economics: there are positive feedback loops (things get better => people/companies earn more money => they can borrow more => they spend more => things get better) in both directions (things get worse => people/companies earn less => they can borrow less or go bankrupt => they spend less => thing get worse), so even if the underlying events (the external input into the system) are independent and uniformly distributed, the characteristics of the system produce cyclical effects.
The value of a company is the present value of future dividends. Investors, collectively, will not do better than that. However, it may be possible to find investors who will overpay for an overvalued company and lose money. The "unicorn" business requires a large supply of such suckers.
"It is in the nature of markets to move money from the many to the few."
"It is in the nature of markets to move money from the many to the few."
Googled that quote and can't find a source; who is it?
It's a common statement by stock traders. The original version seems to be from Henry Lloyd, in 1894, writing about "business combinations", at the dawn of antitrust law:
"Property to the extent of uncounted millions has been changed from the possession of the many who owned it to the few who hold it".[1]
The shorter version shows up in the writings of many stock traders. "The markets are designed to take money from the many and distribute it to the few.", is from Bruce Babcock.[2] "There is a persistent overall tendency for equity to flow from the many to the few. In the long run, the majority loses." is from William Eckhardt.[3] "The purpose of the markets is to redistribute wealth from the many to the few" is from Peter Brandt.
[1] http://www.let.rug.nl/usa/documents/1876-1900/excerpt-from-h... [2] http://www.rb-trading.com/article1.html [3] http://www.aaii.com/journal/article/market-wizards-advice-do... [4] http://peterlbrandt.com/the-purpose-of-the-markets-is-to-red...
The shorter version shows up in the writings of many stock traders. "The markets are designed to take money from the many and distribute it to the few.", is from Bruce Babcock.[2] "There is a persistent overall tendency for equity to flow from the many to the few. In the long run, the majority loses." is from William Eckhardt.[3] "The purpose of the markets is to redistribute wealth from the many to the few" is from Peter Brandt.
[1] http://www.let.rug.nl/usa/documents/1876-1900/excerpt-from-h... [2] http://www.rb-trading.com/article1.html [3] http://www.aaii.com/journal/article/market-wizards-advice-do... [4] http://peterlbrandt.com/the-purpose-of-the-markets-is-to-red...
Cool thanks :)
sounds like Karl Marx
Just because his economic theories tend to have historically been executed exceedingly poorly by mendacious totalitarian thugs doesn't mean that he couldn't have actually been correct about a thing or two, here and there.
As a general comment, Marx wrote in a period when 1) productivity was much lower and the big problem was still making enough stuff, and 2) most labor was direct labor, so there was a direct relationship between labor inputs and product outputs. Neither of those apply to the developed world today. Many of the developed world's economic problems come from the fact that we no longer need many people to make the stuff and provide the services. US employment in manufacturing, mining, construction, and agriculture is now about 14% of the US workforce. In Marx's day, 80-90%.
Marx wrote in an era when capital for enterprises was hard to accumulate. Now we have a capital glut, but a demand shortage.
Economic policy-making hasn't caught up to this yet.
Marx wrote in an era when capital for enterprises was hard to accumulate. Now we have a capital glut, but a demand shortage.
Economic policy-making hasn't caught up to this yet.
[deleted]
You are totally right John. Marx is like all the 19th C scientists - things have moved on and most of what he had to say is no longer relevant. He did give the plutocrats a scare for awhile.
Just because someone says that a quote sounds like Karl Marx doesn't mean they're saying he was incorrect about everything.
Defensive, much?
Defensive, much?
It would hard to fill the 50 volumes of Marx/Engels Collected Works with statements that were entirely false but there is a fair amount of bunk in there too. I don't think Marx is entirely innocent of the suffering that tends to follow when people try to implement his ideas.
Good technology is a terrible company to inject into this conversation. They've been around for a decade or more and were always an also ran in their space. They hardly match the desired narrative that the NYTimes, or anyone else wants to use, of a 3 - 5 year rocketship/unicorn who is suddenly engulfed in flames. When I first saw that article a couple of weeks back I was like "What? That company was still even around?"
And why would the author assume, based on one quarter worth of data, that any sort of landing of any kind has occurred? Surely you'd want to let the change of direction play out a little longer before making any type of claims about whether there's a meaningful change and at what speed it's happening.
And why would the author assume, based on one quarter worth of data, that any sort of landing of any kind has occurred? Surely you'd want to let the change of direction play out a little longer before making any type of claims about whether there's a meaningful change and at what speed it's happening.
Now that I think about it, it feels a bit "off" to me that we refer to both behemoth, money printing companies like GOOG and AAPL and smaller, money hemorrhaging, ultra-growth phase Series A and B companies as "Silicon Valley" in the press.
They're really whole different worlds, perhaps best separated as private vs public companies, and it's strange that we haven't clearly made a verbal distinction between the two.
They're really whole different worlds, perhaps best separated as private vs public companies, and it's strange that we haven't clearly made a verbal distinction between the two.
I suspect the VC ecosystem encourages/condones the lumping of mature, money-earners with the money-burners as "Silicone Valley". It serves them (and founders) well/if in people's minds, startups are nascent Googles and Apples
The infographic and analysis are slightly misleading. If you look at the YoY analysis, funding is basically flat. One could argue that Q2/Q3 2015 were outliers and that while investment didn't grow in 2015, it didn't shrink either.
A friend just got laid off at Twitter after a few months there. I thought he was a top tier programmer. I heard they released a fair amount of office space too.
Regardless of your friend's skill, it's possible he simply didn't have enough seniority-capital to dodge the axe. Juniors, as in newer-hires, are sometimes the first ones cut during a lay-off.
[deleted]
Think of the role that an "Advance Man" played for traveling circuses in days gone by...they were on the road keeping a couple of towns ahead of the circus' itinerary and drummed up interest with posters, flyers, and sales puffing, so that the circus would be profitable once it arrived...
Spending VC money on "advertising", or attempting to generate the same "buzz" for free on social media probably amounts to about the same thing...
Is the "circus" (startup) being advertised to investors the "real deal"...ah, the risk of the bet...will it scale, or will it fail...?
It seems that the savvy are becoming a bit wary of relying on the hype of an Advance Man (advertising)...when marketing is required to establish a product as opposed to the product establishing itself, through proven utility, the ground is certainly shaky...
Spending VC money on "advertising", or attempting to generate the same "buzz" for free on social media probably amounts to about the same thing...
Is the "circus" (startup) being advertised to investors the "real deal"...ah, the risk of the bet...will it scale, or will it fail...?
It seems that the savvy are becoming a bit wary of relying on the hype of an Advance Man (advertising)...when marketing is required to establish a product as opposed to the product establishing itself, through proven utility, the ground is certainly shaky...
To give just one example, on-demand ride startup Lyft recently sold a batch of stock that increased the company's implied value to $5.5 billion. The amount is eye-popping for a not quite 4-year-old company that is spending far more money that it generates, and reported a relatively slim $47 million in revenue for the first six months of 2015, my colleagues Eric Newcomer and Alex Barinka have reported. To show how outlandish Lyft’s valuation is, consider that on a roughly similar basis Apple would have a stock market value of more than $12 trillion, about two-thirds of the annual gross domestic product of the U.S.
Can someone ELI5 what a "roughly similar basis" might be? How did they arrive at this number?
Can someone ELI5 what a "roughly similar basis" might be? How did they arrive at this number?
This article basically reads:
"What, me worry?"
It's way too early in the impending downturn to draw conclusions like this.
"What, me worry?"
It's way too early in the impending downturn to draw conclusions like this.
This thread has justified the time wasted on hn. I had recently felt the signal to noise has been dropping consistently here; The smarts catalyzed here justifies keeping HN in my list. The signal is still strong. I feel an awakening.
Cheers!
PS: that idlewords blogpost linked by w1ntermute http://idlewords.com/2015/11/the_advertising_bubble.htm is exactly what I've been thinking for years now, great blog too.
How much did Uber raise in Q3 and Q4? Seems like it would be material to the trend over the past few quarters, and is at this point a different animal.
Equity crowdfunding is now "live," or getting there. This will bring more money in at the seed stage. I wonder how this will affect the larger ecosystem?
Seems like we might see a shift away from a few "unicorns" to an ecosystem with more smaller to medium sized companies trying more things. That's probably good, and is probably more likely to produce more Googles and Facebooks than betting the entire farm on a few dozen over-inflated ventures.
Of course the future is also likely to be more geographically diverse. Silicon Valley might no longer just be in Silicon Valley. That's also a good thing.
Seems like we might see a shift away from a few "unicorns" to an ecosystem with more smaller to medium sized companies trying more things. That's probably good, and is probably more likely to produce more Googles and Facebooks than betting the entire farm on a few dozen over-inflated ventures.
Of course the future is also likely to be more geographically diverse. Silicon Valley might no longer just be in Silicon Valley. That's also a good thing.
" Silicon Valley might no longer just be in Silicon Valley. That's also a good thing."
Maybe we'll no longer have to pay $3000/mo for a 1br.
Maybe we'll no longer have to pay $3000/mo for a 1br.
If only. i think it's actually higher Than that.
A Turkish coworker told me, upon receiving representatives of a tech incubator from Istanbul: "In 2000, everyone wanted to be in Silicon Valley. Today, everyone wants to be Silicon Valley."
That's not true yet, not by a long shot, but I hope we get there soon.
That's not true yet, not by a long shot, but I hope we get there soon.
I do not. People who do not work in tech are being priced out of the area left and right. I'd like to see more startups sprout up in places like Austin, Chicago or better yet Charlotte. Better yet, start a company with remote working being the default from day 1 - makes recruiting the right talent much more straight-forward.
That's what the quote means, though. He saying, that people from many cities are trying to build their own version of Silicon Valley there, with local startup environments.
As much as I'd like it to work, there's really no replacement for working with colleagues face-to-face. And that's not likely to change.
But maybe the hubs can. Perhaps SV can pass the torch to Seattle?
ducks
But maybe the hubs can. Perhaps SV can pass the torch to Seattle?
ducks
Personally think a decent chunk of SV is not worth emulating. Hoping to see a new city blaze their own trail w/o the drawbacks of SV (gentrification, 0 work-life balance, ratio of men/women, same people talking about the same topics (e.g. "oh you work in tech, too?! How unique")
I'm always intrigued when I hear about 0 work-life balance in SV. Maybe I've gotten lucky, but I've worked at a small startup (first 10 hires), a medium sized startup (150 people), and a big tech company (10k people) and at all of them I was able to be home by 6pm every day, even with an hour commute, to spend evenings with my family.
The work life balance thing seems to be a made up justification to not be in the valley by people who live outside of it.
I often wonder how much of Facebook's revenue (for example) consists of valley startups trying to micro-target indifferent consumers. Pretty much any time I look into a VC-funded consumer company, I find that they're spending money on Facebook ads, Google ads, mobile ads...you name it. When that money dries up, the "ecosystem" of ad services takes a huge hit.
I'm sure there are consumer companies that have organic growth, but it's hard to tell when there's so much money sloshing around. One King's Lane, for example...they were buying ads like crazy. At their peak, they had big, unicorn-y revenue. They're probably going to sell for a fraction of their total investment, and have never been profitable [1].
Meanwhile, the theoretical market cap of all current private-market unicorns ($300-$500Bn, depending on the source) is something like 10-20x the market cap of every IPO issued in 2015 (~$30Bn) [2]. It's pretty clear that the economic status of San Francisco is at least correlated to the huge influx of VC money since 2012, and that a lot of the resulting value is creative storytelling. I don't see why people are so confident in a soft landing if that same money goes away.
[1] http://recode.net/2016/01/06/one-kings-lane-once-valued-at-9... [2] http://wolfstreet.com/2015/12/22/ipo-window-suddenly-closes-...