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Tech Economy

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The Tech Industry Is In Denial, But The Bubble Is About To Burst. Euphoric reaction to superstar tech businesses is rampant — so much so that the tech industry is in denial about looming threats. The tech industry is in a bubble, and there are sufficient indicators for those willing to open their eyes. Rearing unicorns, however, is a distracting fascination. The Perfect Storm Raising funding for tech startups has never been so easy. There are many concerns that valuations for businesses are confounding rationale. Meanwhile, the companies themselves are burning through cash like there is no tomorrow. Unicorn Season CB Insights publishes information on unicorns (companies with a valuation above $1 billion), which shows that access to the club has become increasingly less exclusive in the last couple of years.

Different Experts, Same Conclusion In the face of these trends, a small group of well-respected and influential individuals are voicing their concern. A number of high-profile investors have come out and said what their peers all secretly must know. What happened to changing the world? | VentureBeat | Entrepreneur | by Chris Klundt, StudyBlue. “Change the world” used to be the three most-repeated words in Silicon Valley. People flocked to the Bay Area to build the next earth-shattering innovation and to “move fast and break things.” That ethos and the ecosystem it spawned is what compelled me to move my company from Wisconsin to San Francisco. A year, a few $10 billion valuations, and one $19 billion acquisition later, “change the world” has become, “What, no in-house barista?” Or as one recent hire from Yahoo asked us, “Where are the snacks?” We have a $50-per-week snack budget for our entire company. Beyond the perks, many people now have outsized compensation expectations. Let’s Refocus It’s not that excess isn’t the “Midwestern way.”

The more we prioritize scotch, yoga classes, and lots of cash, the easier it is to forget that we came here to make a difference in the world. Entrepreneurship shouldn’t be a get-rich-quick scheme. Passion That’s the level of passion and purpose you want every person at your company to feel. How The Internet Killed Profit. Editor’s note: Tom Goodwin is the founder of Tomorrow Group, a marketing and advertising consultancy for the post-digital age. New eras in technology have always brought a fear of job losses and the devastation of legacy industries, but the Internet has taken us beyond “creative destruction.” It’s destroying the very foundations of business. Software is indeed eating the world, in Marc Andreessen’s words, and we’re presented with an abundance of value being generated for consumers, but what if it’s killing the profit margin?

It was Heraclitus who thought that nothing new ever came into our lives without a hidden curse, and from the steam age to the electrical age to the early Internet, we’ve long heard the cries of Luddites or neo-Luddites angry at the change. They’ve had a point: Whether it was the industrialization of agriculture or the long decline of the postal industry, we’ve seen job losses on a massive scale. The pace of this change is accelerating. Digitization Ad Funding. Was Y Combinator Worth It? Editor’s note: Jarrett Streebin is a Y Combinator alumnus and founder and CEO of EasyPost, a San Francisco-based startup with a simple shipping API.

Follow him on Twitter @jstreebin. Almost any time someone asks about the Y Combinator experience they ask, “Was it worth it?” It’s a difficult question to answer concisely given the complexity of such a program. During Y Combinator we had a chance to make a lot of friends, learn from experienced entrepreneurs, pitch to investors, and even sign up valuable early adopters. While it’s difficult to quantify many of these benefits, one area we can quantify is fundraising. Midway through the fundraising process, we realized that the single most important indicator of success (getting a check in the bank) was whether or not the investor was introduced to us (inbound), or whether we solicited them originally (outbound). This is excluding YC and YCVC ($20K notes from General Catalyst, Maverick, Sequoia, and Start Fund each). Pre Y Combinator. Snapchat and that old no revenues debate.

Like many others in the field I was left scratching my head about Snapchat recently. Not because of the reported $4 billion offer but because of the explosion of age-old arguments about how scandalous it is for a company with no revenues to be valued that highly. I really thought we put that tedious debate to bed a while back, but I guess not. Grown-up warnings about how real businesses have real revenues were yet again littering my twitter feed in recent weeks. It's as if the last ten years of consumer innovation never happened. Here's a selection: "why do investors think a silly app with no clear revenue model is worth so much money? " Be a student of recent history Slamming zero revenue companies seems to happen every time a large, zero revenues company emerges. It was true at the time YouTube started out; Google was ridiculed for the price it paid.

A few years down the road, YouTube is clearly a phenomenal acquisition. Zero revenues as sound business strategy Non linear value creation. Here's Why Box's Aaron Levie Is A Genius. Handbook For A New Era Of Crowdfunding. Editor’s note: Sandeep Sood is founder of Oakland, Calif. -based Monsoon+RainFactory, a product house that conceptualizes, designs, develops and markets mobile and web applications. Ever been to Indiegogo? Kickstarter? Spend any cash? Why Does Crowdfunding Work? There’s no amount of economic acrobatics or consumer rationalization that can explain it. Instead of going to the bank and putting up collateral to fund their crazy idea, entrepreneurs tap into a world that is seeking out connections and ideas everyday. People back these entrepreneurs knowing this. I’ve taken a long hard look at crowdfunding behaviors.

First comes love. Next, backing a crowdfunding campaign is essentially a chance to shape the way things are. Build your campaign around love of the product and a chance to make a dent in the universe, and you’re a step ahead of the game. Ingredients for a Successful Campaign 1. Platforms like Indiegogo and Kickstarter were designed for storytelling. 2. Video Producers. PR Campaign. Software Is Eating The Job Market. According to the Labor Department, the U.S. economy is in its strongest stretch in corporate hiring since 1997. Given the rapidly escalating competition for talent, it is important for employers, job seekers, and policy leaders to understand the dynamics behind some of the fastest growing professional roles in the job market.

For adults with a bachelor’s degree or above, the unemployment rate stood at just 2.7 percent in May 2015. The national narrative about “skills gaps” often focuses on middle-skill jobs that rely on shorter-term or vocational training – but the more interesting pressure point is arguably at the professional level, which has accounted for much of the wage and hiring growth in the U.S. economy in recent years. Here, the reach and impact of technology into a range of professional occupations and industry sectors is impressive. Software is eating the world The shortage of software developers is well-documented and increasingly discussed. A Farewell To Jobs. Few subjects elicit more skepticism than the so-called “sharing economy.” Kevin Roose argues: “The Sharing Economy Isn’t About Trust, It’s About Desperation.” Catherine Rampell warns: “there’s a dark side to these work arrangements … the shifting of risk off corporate balance sheets and onto the shoulders of individual Americans.”

US courts are wrestling with whether Uber and Lyft drivers are contractors or should be considered employees. (It’s a hard case: I can see both sides. It seems to me like an issue the Supreme Court ought to ultimately decide.) And they’re just the tip of the proverbial iceberg. Major corporations are increasingly using subcontracting structures, like outsourcing jobs, hiring workers through staffing agencies, and franchising … Hundreds of thousands of people work days-long or hours-long “gigs” … PriceWaterhouseCoopers estimated last summer that the sharing economy as a whole, valued at $15 billion in 2013, could reach $335 billion globally by 2025.

…Or is it? SF’s Housing Crisis Explained. The Santa Clara Valley was some of the most valuable agricultural land in the entire world, but it was paved over to create today’s Silicon Valley. This was simply the result of bad planning and layers of leadership failure — nobody thinks farms literally needed to be destroyed to create the technology industry’s success. Today, the tech industry is apparently on track to destroy one of the world’s most valuable cultural treasures, San Francisco, by pushing out the diverse people who have helped create it. At least that’s the story you’ve read in hundreds of articles lately. It doesn’t have to be this way. But everyone who lives in the Bay Area today needs to accept responsibility for making changes where they live so that everyone who wants to be here, can.

The alternative — inaction and self-absorption — very well could create the cynical elite paradise and middle-class dystopia that many fear. Here is a very long explainer. It does us all no justice. Oh, and tech? Why? No. Will you? Is Tech Money Good For San Francisco’s Middle Class? An Economist’s Perspective. The liberal wonderland of the San Francisco Bay Area has one of the highest concentrations of wealth in the country. Twitter’s IPO, alone, created an estimated 1,600 millionaires. But, are the local residents catching any of the dollar bills being shaken from the post-IPO money trees? It’s been hard to decipher the broader impacts of technology on the average San Franciscan because heart string-tugging anecdotes have clouded the narrative. Critics of tech companies make headlines by protesting Google’s private buses and indirectly linking their existence with the surge in housing evictions.

“There’s a war brewing in the streets of San Francisco,” wrote former San Francisco Mayor Willie Brown. On the other hand, tech champions like to trot out small business owners who have benefited from re-locating tech HQ’s to blighted areas of the city’s historic Market district. One thing is clear: they believe that the money flowing into SF is a good thing and is bolstering the local economy.

Airbnb and Uber Face Some Harsh Realities. Airbnb and Uber are maturing startups both facing some hard realities as they grow. While they have found a loyal and happy user base, they are facing tough resistance from not just the taxi and hotel industries they are disrupting, but also political and social resistance from quarters they probably never imagined when they started their businesses. In Europe and the US we are beginning to see a backlash against the sharing economy idea.

For Uber, this means fighting the existing taxi industry and its government backers. The prevailing argument is that Uber drivers aren’t regulated like taxis and it creates an unfair advantage. Meanwhile Airbnb has been accused of undermining laws related to hotels and rental agreements. It has reached the point where the two companies can’t simply pretend they are casual startups trying to launch a new kind of business.

Both of these companies have to face the harsh political and social realities of disruptive change. Lessons From The Sharing Economy. Editor’s note: Raj Kapoor is the co-founder and CEO of fitmob, previous managing director at Mayfield Fund and former co-founder and CEO of Snapfish. Companies everywhere are jumping on the sharing economy trend. From sharing skills to houses to cars, the sharing economy is transforming many industries. Technology has lowered the barriers so that anyone can provide services blurring the line between “personal” and “professional.” The consumer peer-to-peer rental market alone is worth $26 billion.

Private investors are noticing as Airbnb recently received a $10 billion valuation, and startups like Lyft, Poshmark, fitmob and Uber, which received a $17 billion valuation in its last round, are gaining traction while consumers benefit from lower prices, higher quality, and unprecedented convenience. But this model doesn’t work for every industry. No Pain … Sharing economy models work great when there is a high degree of consumer pain. Curation Is King You Can’t Ignore the Government.