> Debt is going to finally come to the tech industry
Bear in mind that the tech industry exists in all countries with a population greater than 10. Also consider that this:
> When people in tech want to sound smart, one name you can drop is Carlota Perez.
... is probably nonsense or at best pointing out another point of view.
Not all companies work the way you think they do. Not all companies want to be yoked with the burden of continuous economic growth, always beholden to the irksome shareholder. My little company is about 20 years old now. We have never been in debt apart from a mortgage that we could pay off tomorrow (probably, cough ... ish) We will never set the world on light and you will never hear of us. We have 20 odd employees now and in five years time probably 20-40.
A few years back the UK decided to cede the union with Europe (c'est la vie.) The pound slid south about 30% rather quickly and IT stuff became 30% more expensive nearly overnight. We import nearly everything IT here in the UK. I can't say that my company noticed any downturn in trade, actually we have just hit £1M t/o two months early this year.
I hate this sort of article. Maybe in the US all companies are multi billion t/o setups. Here in the UK we are all simply "shop keepers" (Emperor Napolean said so) and fucking proud of it.
Thank you. I read this article twice, thought I was completely missing something. No, it's a pretty obvious statement wrapped around pseudo-intellectual ideas of Carlota Perez and presented in an Emperor's New Clothes style where if you disagree with it you're an idiot ("Maybe not all investors get this, but the smart ones do").
Alex was previously at Social Capital, a fund with amazing PR and huge egos combined with very mediocre financial results and awful morals. It would not surprise me at all to see him get back into the game by starting a fund using drivel like this post to sucker LPs into writing him checks.
The article seemed pretty straightforward. Perhaps a bit too excited. But the fundamental thesis that the predominance of equity financing in tech is an aberration and will likely come to an end, seems rather plausible.
And the elephant in the room is differing tax treatments for returns on equity vs returns on fixed income. Most jurisdiction allow you to pay interest with pre-tax income but profits are taxed and then used to pay dividends or buy back stock.
(Which is pretty silly and self-contradicting, if you combine it with regulation _against_ leverage. Government, please make up your mind which capital structure if any you want to prefer.)
> Not all companies want to be yoked with the burden of continuous economic growth, always beholden to the irksome shareholder.
Then I don't think this whole thing is about you (that is the SM enterprise). Although, you can make a point that the commoditization of IT (like Amazon or more standard ERP systems) can make lots of these small companies obsolete and unable to compete. (you practically can't start a mobile phone company that makes its phone hardware and software today and expect to make enough to keep the lights on)
At this pace, the world will be a few very big conglomerates and many very specialized shops.
> you practically can't start a mobile phone company that makes its phone hardware and software today and expect to make enough to keep the lights on
That's fascinating. I agree with you, but I'm wondering - how would the world have to change to make that possible? Or maybe, what's possible in today's world?
Starting an MVNO (aka pay T-mobile/others to use their towers) is capital intensive, but still far cheaper than trying to setup a nation-wide network for towers, or launch your own satelite constellation.
The two failures of Windows Mobile and Research In Motion (Blackberry) seem less relevant here given the mass-market appeal they're going for. If the goal were, instead, to operate a semi-private vertically integrated stack, say for a "private spy agency" company (I've been watching too much Archer lately), with semi-custom hardware on an existing network, with custom software, what would the economics be?
Could this be done for a few million? Tens of millions?
The major issue is that these days modern R&D and manufacturing tooling now requires a ridiculous amount of money. Away makes luggage and had to raise $50M in a series C. Look at the multitude of failed product Kickstarters.
It’s why across industry sectors, you are seeing consolidation of companies to reduce costs. In air transport, Embraer sold out to Boeing and Bombardier sold out to Airbus (and due to its fiascoes may cause the death of the business).
Bear in mind that the tech industry exists in all countries with a population greater than 10. Also consider that this:
> When people in tech want to sound smart, one name you can drop is Carlota Perez.
... is probably nonsense or at best pointing out another point of view.
Not all companies work the way you think they do. Not all companies want to be yoked with the burden of continuous economic growth, always beholden to the irksome shareholder. My little company is about 20 years old now. We have never been in debt apart from a mortgage that we could pay off tomorrow (probably, cough ... ish) We will never set the world on light and you will never hear of us. We have 20 odd employees now and in five years time probably 20-40.
A few years back the UK decided to cede the union with Europe (c'est la vie.) The pound slid south about 30% rather quickly and IT stuff became 30% more expensive nearly overnight. We import nearly everything IT here in the UK. I can't say that my company noticed any downturn in trade, actually we have just hit £1M t/o two months early this year.
I hate this sort of article. Maybe in the US all companies are multi billion t/o setups. Here in the UK we are all simply "shop keepers" (Emperor Napolean said so) and fucking proud of it.