This article describes the classic failure modes of a centrally planned economy, but for some reason calls it "overcapitalization" instead. Whatever you call it, the tech part is a distraction. This is what happens in any society, at any time when money is assigned by capricehttps://twitter.com/ahcastor/status/1194340426511273984 …
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It's not like Softbank came along and ruined everything, either. We've had this pathology for a decade now. Remember Color, with 41M in funding for nothing? Yo, a joke company that raised $1.5M? Secret, whose founder looted a fair chunk of $35M?
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The whole tech economy since 2008 has been trickle-down economics disguised in a robot costume
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Remember Path, who raised $66 million, mined everyone's address book, and then went up in a cloud of nothing? Path was a lifestyle business par excellence—its founder now enjoys a comfortable tech retirement in Helena, where he of course dabbles in angel investment.
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I'm mentioning these companies not because they failed—that's how the game is supposed to work—but because at no point did any of them (except a reluctant Quora) try to make any money.
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similar things could have been said in 2002, but look where we are now
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Similar things were said in 2002, and look where we are now.
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Are you saying the tech startup economy is being centrally planned? By whom? VC groupthink/collusion?
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Yes, it's a planned economy. A large pool of resources is allocated by a couple of hundred planners (called VC) based on compelling stories they hear from startup founders.
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But in the meantime it's only gotten easier (with cheap cloud hosting and improved tools/libraries) to build software without any VC money. So what stops the people with ideas other than investor-storytelling from going ahead and innovating anyway?
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Dumping.
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