Tuesday, September 8, 2015

Tech Bubble Popping

Remember fall of 2008? That nasty financial house-loan crisis that sent the World into recession.  Did the startup Bubble pop like all the nay-sayers said? NO.

The tech bubble is not on the financial side as with only allowing high-monied people to invest and high control of when one can IPO a startup the financial side is somewhat controlled from bursting.

But what is the one thing if taken away does in fact burst that tech bubble? The idea and co-founders labor source. What do I mean?

Start-ups, 99% of the time, get started by those without major debt. But, unlike previous decades we have a higher percentage of people in major debt. What happens when we run out of that source of co-founders? Exactly, the bubble bursts in terms of  the group of VCs and Angels now decides that the new ideas are not good enough and pulls back to invest only in established startups.

Remember, the last big hit in economic impact as far as consumer spending up-swing was when China in moved a whole bunch of labor from its less urban areas to its urban areas and that was close to 1 billion people.  The next economic increase like that will be India if it can get its act together in building out electric, sewage, and water systems nation-wide.

Once those consumers are on-line we have no other big economic increases in people turned into consumers. That coupled with increasing debt and a technological progress march that reduces
human jobs wil present a new set of challenges.

At that time we may see a startup bubble deflate due to no new ideas as the amount of people debt free to pursue startup ideas will be significantly less.

The only counter to this deflation seems to be the reliance upon the immaturity of our technological systems to form an efficient AI and the human desire of new services that make use of all the digital information we as humans and as firms produce in the actual form of small businesses making applications and new services in the pursuit of a small-piece of the American Dream.