Why the Smart VCs Are Boarding their Jets(techcrunch.com)
techcrunch.com
Why the Smart VCs Are Boarding their Jets
http://www.techcrunch.com/2009/02/20/why-the-smart-vcs-are-boarding-their-jets/
41 comments
Very nice to hear: "good thing for the world overall", how cute. However, quality of life basically translates into resources/population ratio within a country and that's a zero-sum game. The planet at the current level of technology couldn't even provide for all existing Chinese to suddenly start living like people in US/EU do, yet their populations, especially if measured in number of households, much more relevant than just counting heads, keeps growing.
And no amount of Internet innovation will solve the problem of diminishing clean water, oil, ocean fish, disappearing forests, soil erosion and increasingly bad air quality. Right now 1st world countries are basically "exporting" these problems to developing nations, eventually these issues will be averaged out: eventually China won't be so poor to accept our non-recyclable electronic garbage anymore, what then?
And no amount of Internet innovation will solve the problem of diminishing clean water, oil, ocean fish, disappearing forests, soil erosion and increasingly bad air quality. Right now 1st world countries are basically "exporting" these problems to developing nations, eventually these issues will be averaged out: eventually China won't be so poor to accept our non-recyclable electronic garbage anymore, what then?
Any increase in someone's quality of life comes at someone else's expense.
Historically that has not been the case. Historically quality of life improvements have come from technological discoveries (e.g. penicillin) and social evolution (e.g. of the middle class). Who loses if penicillin is discovered? Who loses if some former serfs decide to become artisans instead?
The single biggest improvement in quality of life for most humans over most of history has probably come from improved hygienic practices. How does that come at someone's else's expense?
I also disagree with your specific claim that "Internet innovation" can't improve physical world problems. Would you claim books don't help solve the problem of clean water? Not literally, obviously; you can't use books to make clean water, except by ripping out pages and using them as water filters. But think how much harder it would be to solve the problem if books didn't exist. And the Internet is an innovation on the scale of printing.
Historically that has not been the case. Historically quality of life improvements have come from technological discoveries (e.g. penicillin) and social evolution (e.g. of the middle class). Who loses if penicillin is discovered? Who loses if some former serfs decide to become artisans instead?
The single biggest improvement in quality of life for most humans over most of history has probably come from improved hygienic practices. How does that come at someone's else's expense?
I also disagree with your specific claim that "Internet innovation" can't improve physical world problems. Would you claim books don't help solve the problem of clean water? Not literally, obviously; you can't use books to make clean water, except by ripping out pages and using them as water filters. But think how much harder it would be to solve the problem if books didn't exist. And the Internet is an innovation on the scale of printing.
I just finished the 2nd book by Jared Diamond (Collapse) and he claims that population growth diminishes the advantages of technological progress. Without penicillin, Internet, improved hygienic practices we wouldn't have nearly 7 billion people living on this planet right now.
At the current rate of population growth we'll have a density of 10 people per square foot (!) before year 3000, and the population growth is what usually follows a country's increased economic output.
At the current rate of population growth we'll have a density of 10 people per square foot (!) before year 3000, and the population growth is what usually follows a country's increased economic output.
You can't extrapolate historical population trends and expect them to be remotely accurate. Most current data shows population plateauing at around 10 Billion.
Most of the westernized world's population (US, Japan, Western Europe, Australia, etc) is either stagnant or decreasing - and almost every other country (China, India, Latin America) is moving towards that.
And the technology has more than made up for our population growth. Almost everyone would agree that the 7 Billion people we have today are far better off (on average) than the 1 Billion people we had 200 years ago.
Most of the westernized world's population (US, Japan, Western Europe, Australia, etc) is either stagnant or decreasing - and almost every other country (China, India, Latin America) is moving towards that.
And the technology has more than made up for our population growth. Almost everyone would agree that the 7 Billion people we have today are far better off (on average) than the 1 Billion people we had 200 years ago.
I hope population does indeed plateau. But one twist is that the population subgroups that reproduce the most will over time become a larger portion of the population. As these subgroups grow, fertility trends may start to reverse.
population growth is what usually follows a country's increased economic output.
Epic fail.
Some graphs:
http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=mx... http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=in... http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=ch...
Epic fail.
Some graphs:
http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=mx... http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=in... http://www.indexmundi.com/g/g.aspx?v=24&v=67&c=ch...
These graphs are showing you the results of population management. I never said we'll be growing in numbers like roaches, I was pointing out that advances in technology allow much higher population densities that would have been possible otherwise.
Look at nearly all European nations: they're much more populous now and have surplus of food, whereas they've been starving throughout mid-ages living off exact same lands.
Look at nearly all European nations: they're much more populous now and have surplus of food, whereas they've been starving throughout mid-ages living off exact same lands.
One buck per fuck is more or less the price of not having children. If you live on $1/day, that's 4/7 of your living expenses!
Economic growth tends to reduce birthrates. European birthrates have dropped below replacement levels. The US is hovering around replacement, as is Japan and South Korea. Other developing countries are following this trend.
Technology does increase agricultural output, but within the 20'th century, rich people have fewer children.
Economic growth tends to reduce birthrates. European birthrates have dropped below replacement levels. The US is hovering around replacement, as is Japan and South Korea. Other developing countries are following this trend.
Technology does increase agricultural output, but within the 20'th century, rich people have fewer children.
Your problem is that you're focusing on the last ~200 years and only on countries that have successfully managed to avoid their populations outgrowing technological progress.
There have been many societies on this planet, and some of them have collapsed after peaking precisely because of population explosion due to "good times". Isolated collapses of ancient polynesian peoples have been studied particularly well.
There have been many societies on this planet, and some of them have collapsed after peaking precisely because of population explosion due to "good times". Isolated collapses of ancient polynesian peoples have been studied particularly well.
In his recent letter Bill Gates has this graph that shows the correlatin between better health and less children for a family. http://www.gatesfoundation.org/annual-letter/Pages/2009-prev... (chart 3)
Bill G. explained that in the begining his foundation was focused on population control. But when they discovered that the single most important factor in population was health is when they started to focus in the most crucial sickness. His explanation is that parents simply try to optimize to have two children that can take care of them when they are old.
Bill G. explained that in the begining his foundation was focused on population control. But when they discovered that the single most important factor in population was health is when they started to focus in the most crucial sickness. His explanation is that parents simply try to optimize to have two children that can take care of them when they are old.
Interesting on the topic as well is Huxley's Brave New World Revisited. As I recall he postured that democratic systems would come under significant strain if the world population reached 2 billion. :-)
FYI, Diamond wrote many books before Collapse: http://en.wikipedia.org/wiki/Jared_Diamond#Books
Let me express my surprise: being downmodded for offering UCLA professor's anti-globalist claims for open discussion on HN isn't terribly encouraging.
You don't have to agree with me but why shut the conversation down? Am I offending anyone or posting fart jokes?
Meanwhile a lot of folks are debating either "technology and globalization" approach will work, and some of them aren't stupid. At least you downmodders could try to use some curiosity and open up a little to what they have to say.
That's a pity: while reading the book I was actually thinking about bringing this topic up for discussion on HN.
You don't have to agree with me but why shut the conversation down? Am I offending anyone or posting fart jokes?
Meanwhile a lot of folks are debating either "technology and globalization" approach will work, and some of them aren't stupid. At least you downmodders could try to use some curiosity and open up a little to what they have to say.
That's a pity: while reading the book I was actually thinking about bringing this topic up for discussion on HN.
No one's shutting down the conversation. If you wanted to continue the conversation, there was already a reply waiting for you:
http://news.ycombinator.com/item?id=489006
http://news.ycombinator.com/item?id=489006
Jared Diamond isn't "anti-globalist". Collapse is a good book, but IIRC, he isn't attacking free trade, but the overuse of resources. They're two different things.
www.storyofstuff.com
We have finite resources. By using resources we are either doing it at someone in the present times expense, or someone in the future. By keeping more people alive now, we are possibly reducing the longevity of the human race.
Just to play devils advocate :)
We have finite resources. By using resources we are either doing it at someone in the present times expense, or someone in the future. By keeping more people alive now, we are possibly reducing the longevity of the human race.
Just to play devils advocate :)
www.nonzero.org
We have infinite creativity. By finding more productive and innovative uses for resources we can make the world a better place for everyone. By keeping more people alive now we have more creative minds working on the problems that we face.
We have infinite creativity. By finding more productive and innovative uses for resources we can make the world a better place for everyone. By keeping more people alive now we have more creative minds working on the problems that we face.
you can't use books to make clean water, except by ripping out pages and using them as water filters
I think you would do better by using books as kindling to boil water, killing any latent bacteria.
I think you would do better by using books as kindling to boil water, killing any latent bacteria.
The basic tenet of capitalism is that trade is not zero-sum: it actually creates wealth.
If I have I pay you $10 for a service that costs you $5 to provide, you've actually created $5 of wealth out of thin air. I end up with a service that I value more than $10 so I come out ahead, and you end up with money that you value more than the marginal cost of providing me that service so you come out ahead.
As a simple check, the average person (in the world) today is better off than the average person 50, 100, or 1,000 years ago. Even though are population has increased significantly, our wealth has increased even more.
If I have I pay you $10 for a service that costs you $5 to provide, you've actually created $5 of wealth out of thin air. I end up with a service that I value more than $10 so I come out ahead, and you end up with money that you value more than the marginal cost of providing me that service so you come out ahead.
As a simple check, the average person (in the world) today is better off than the average person 50, 100, or 1,000 years ago. Even though are population has increased significantly, our wealth has increased even more.
Wealth is not created when I pay you $10 for something that you made for $5 -- wealth is created when you use labor to add value to natural resources.
To this end, capitalism is very much a zero-sum game. There are only so many resources to exploit, and once they're gone (or otherwise locked up), that's it for growth.
To this end, capitalism is very much a zero-sum game. There are only so many resources to exploit, and once they're gone (or otherwise locked up), that's it for growth.
You can add value to natural resources by using labor. But that isn't what I was talking about. I was talking about the wealth added by trade.
As a simple example, let's say I have a large bag of peanuts - but I'm allergic to peanuts. And you have a copy of Smith's 'The Wealth of Nations' (which you clearly have no interest in reading ;-)). By trading my peanuts for your book, we both come out ahead and no one is worse off - the trade itself creates value.
Every time any trade/purchase takes place, value is created. Both parties are better off than they were before the trade - otherwise they wouldn't have chosen to be involved in the transaction.
As a simple example, let's say I have a large bag of peanuts - but I'm allergic to peanuts. And you have a copy of Smith's 'The Wealth of Nations' (which you clearly have no interest in reading ;-)). By trading my peanuts for your book, we both come out ahead and no one is worse off - the trade itself creates value.
Every time any trade/purchase takes place, value is created. Both parties are better off than they were before the trade - otherwise they wouldn't have chosen to be involved in the transaction.
I must have missed the part of Wealth of Nations that you're citing. Because when I read it, Smith defined "wealth" only in aggregate, as the "net revenues" of the labor of a society. So ignoring, for the moment, the fact that Adam Smith's definition of "wealth" isn't the only one (and the fact that you're using the terms "wealth" and "value" interchangeably), I think you've misinterpreted what he wrote.
In other words, you're really stretching to use his notion of "wealth" as an argument that trade creates more wealth. Wealth generation does not occur when an item is traded -- it occurs when an item is created, using labor. Smith goes out of his way to say this:
"The value of any commodity, ... to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities" (Wealth of Nations, Book 1, chapter V)
The peanuts in your example didn't gain or lose value when they were traded for a paperback. Nor did the paperback gain or lose value. We merely created a market that defined their values as equivalent. Confusing this process for wealth creation is a big reason why we're in the economic mess that we're in today.
In other words, you're really stretching to use his notion of "wealth" as an argument that trade creates more wealth. Wealth generation does not occur when an item is traded -- it occurs when an item is created, using labor. Smith goes out of his way to say this:
"The value of any commodity, ... to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities" (Wealth of Nations, Book 1, chapter V)
The peanuts in your example didn't gain or lose value when they were traded for a paperback. Nor did the paperback gain or lose value. We merely created a market that defined their values as equivalent. Confusing this process for wealth creation is a big reason why we're in the economic mess that we're in today.
You're misinterpreting reality with that quote, because labor that produces inherently more valuable goods is inherently more valuable labor than labor which does not. Part of the wealth that goes into the peanuts and book is the extremely valuable labor of finding out who needs what resources.
"wealth is created when you use labor to add value to natural resources"
That (the labor theory of value) is exactly what all the classical economists (Adam Smith, David Ricardo, Karl Marx) got wrong.
That (the labor theory of value) is exactly what all the classical economists (Adam Smith, David Ricardo, Karl Marx) got wrong.
No offense, but it's fairly amusing that you're so confident about this statement, when other people in the same thread are equally confidently arguing that Adam Smith isn't saying that at all.
I've got to defer to the guy who said that internet geeks don't know what they're talking about when it comes to economics.
I've got to defer to the guy who said that internet geeks don't know what they're talking about when it comes to economics.
No offense taken. My statement is so non-controversial that I have no problem saying that anyone who disagrees with it truly has no idea what they're talking about.
The "marginal revolution" is one of the major events in the history of economics.
EDIT - here's some useful wikipedia links:
http://en.wikipedia.org/wiki/Labor_theory_of_value
http://en.wikipedia.org/wiki/Marginal_utility
EDIT #2 - paragraph 3 from wikipedia:
Different labor theories of value prevailed amongst classical economists through to the mid-19th century. It is especially associated with Adam Smith and David Ricardo. Since that time, it is most often associated with Marxian economics; while modern mainstream economics replaces it by the marginal utility approach.
The "marginal revolution" is one of the major events in the history of economics.
EDIT - here's some useful wikipedia links:
http://en.wikipedia.org/wiki/Labor_theory_of_value
http://en.wikipedia.org/wiki/Marginal_utility
EDIT #2 - paragraph 3 from wikipedia:
Different labor theories of value prevailed amongst classical economists through to the mid-19th century. It is especially associated with Adam Smith and David Ricardo. Since that time, it is most often associated with Marxian economics; while modern mainstream economics replaces it by the marginal utility approach.
How does intellectual property and knowledge fit into this framework? How much of the value of software is in the natural resources used to package it? If the Industrial revolution was about using steam engines to build steam engines and we use software to write software, is labor really the only differentiating component?
As a simple check, the average person (in the world) today is better off than the average person 50, 100, or 1,000 years ago. Even though are population has increased significantly, our wealth has increased even more.
I will have to do a research on this. It's a very interesting claim and you didn't provide any sources. I'm not convinced. I think we've been heavily "borrowing from the future" i.e. even current rates of consumption/household growth are not sustainable, again - I got these conclusions and trends from Diamond.
Also forget for a second about words like "wealth" and "dollars" and look at basic resources instead: fish, meat, oil, wood and minerals. Currently we're consuming them at the rate faster than they can regenerate, I hope we can agree here. To me, that's an indication that technology isn't keeping up. Look up the rising numbers of meat and fish consumption in China and compare them to agricultural output of the world (all these facts are googlable).
I will have to do a research on this. It's a very interesting claim and you didn't provide any sources. I'm not convinced. I think we've been heavily "borrowing from the future" i.e. even current rates of consumption/household growth are not sustainable, again - I got these conclusions and trends from Diamond.
Also forget for a second about words like "wealth" and "dollars" and look at basic resources instead: fish, meat, oil, wood and minerals. Currently we're consuming them at the rate faster than they can regenerate, I hope we can agree here. To me, that's an indication that technology isn't keeping up. Look up the rising numbers of meat and fish consumption in China and compare them to agricultural output of the world (all these facts are googlable).
I'm simply using dollars as a universally understood metric for wealth (where wealth is the 'value' of actual goods and services).
Obvious data that supports my claim (that life is better for the average person today than it was 100 years ago) is that the average worldwide life expectancy has increased from 31 years in 1900 to over 65 years in 2006 (http://www.who.int/global_health_histories/seminars/presenta...). If memory serves, child mortality rates, homicide rates, and per capita energy production all paint a similar picture.
Even though there are some limited basic resources (land, water, etc), we are always learning to use them more efficiently. Our yield for most crops, per acre, has increased over ten fold in the last 100 years. Look into Norman Borlaug's Dwarf Wheat and the Green Revolution for proof.
Obvious data that supports my claim (that life is better for the average person today than it was 100 years ago) is that the average worldwide life expectancy has increased from 31 years in 1900 to over 65 years in 2006 (http://www.who.int/global_health_histories/seminars/presenta...). If memory serves, child mortality rates, homicide rates, and per capita energy production all paint a similar picture.
Even though there are some limited basic resources (land, water, etc), we are always learning to use them more efficiently. Our yield for most crops, per acre, has increased over ten fold in the last 100 years. Look into Norman Borlaug's Dwarf Wheat and the Green Revolution for proof.
Ok, you're supporting the claim that technology is winning the race. May I ask a hypothetical question: if all countries had social/economic systems identical to US, with full access to US technology, democracy, political stability, etc (kinda imagine them all being US states), do you honestly believe the whole world would enjoy the same standard of living we do?
The whole world would probably enjoy much higher standard of living than we do now. Do a thought experiment, and remove any 1st-world nation from the world, and see whether it would help or hurt everyone else. In my mind, it would hurt every time, so adding more 1st-world nations would therefore help every time. There's no reason to suppose that our current proportion of rich societies to poor ones has any special significance.
Yes, it would help some large groups of people if the US were gone, but this is not because US profits from them. If anything, US loses wealth roughly in proportion to its brutality. Besides the obvious example of Iraq, there is also the "war on drugs" and its effect on the Latin American nations. Actually if everyone was 1st-world, I suspect there would be less of this pointless aggression, because US citizens aren't as able to dehumanize people who aren't poor.
Yes, it would help some large groups of people if the US were gone, but this is not because US profits from them. If anything, US loses wealth roughly in proportion to its brutality. Besides the obvious example of Iraq, there is also the "war on drugs" and its effect on the Latin American nations. Actually if everyone was 1st-world, I suspect there would be less of this pointless aggression, because US citizens aren't as able to dehumanize people who aren't poor.
> Also forget for a second about words like "wealth" and "dollars" and look at basic resources instead: fish, meat, oil, wood and minerals.
The US has more forested land, more wood, than it did 100 years ago. Yes, it has fewer 1000 year-old trees than it did 100 years ago but it's unclear which direction that trend is going.
The US also has more meat than it did 100 years ago.
That's because meat and wood, unlike fish, are both farmed. However, farmed fish will take care of that.
As far as minerals go, there's a pretty obvious place to look for large amounts of them when the current natural caches become expensive. And, in many cases, we don't actually care about the "minerals", we care about what we can get from the mineral, such as iron. We're pretty good and getting better at reclaiming such materials when it makes economic sense (and we shouldn't try when it doesn't, even if we're pretty sure that it will later).
The US has more forested land, more wood, than it did 100 years ago. Yes, it has fewer 1000 year-old trees than it did 100 years ago but it's unclear which direction that trend is going.
The US also has more meat than it did 100 years ago.
That's because meat and wood, unlike fish, are both farmed. However, farmed fish will take care of that.
As far as minerals go, there's a pretty obvious place to look for large amounts of them when the current natural caches become expensive. And, in many cases, we don't actually care about the "minerals", we care about what we can get from the mineral, such as iron. We're pretty good and getting better at reclaiming such materials when it makes economic sense (and we shouldn't try when it doesn't, even if we're pretty sure that it will later).
"I will have to do a research on this."
Angus Maddison is the man with the data.
http://books.google.com/books?id=UNgbMMwlgmcC&printsec=f...
Angus Maddison is the man with the data.
http://books.google.com/books?id=UNgbMMwlgmcC&printsec=f...
because there is more opportunity oveseas now. India and China will each have more internet users than USA within a few years
This does not necessarily imply innovation happens there.
thats the point, those countries are just starting out. You can just copy paste proven ideas from the states and make millions.
Like Mint? Angry that you missed the boat? Good news! Invest overseas in the same type of company, and watch it grow to become a market leader by having a monopoly. And you have a guaranteed exit lined up, when Mint enters your market and decides to buy you out.
Sure the core innovation will still come from the states, but the first innovator is rarely the guy who profits from the idea.
Like Mint? Angry that you missed the boat? Good news! Invest overseas in the same type of company, and watch it grow to become a market leader by having a monopoly. And you have a guaranteed exit lined up, when Mint enters your market and decides to buy you out.
Sure the core innovation will still come from the states, but the first innovator is rarely the guy who profits from the idea.
I agree with part of that. Look at the German LinkedIn competitor, which is a publicly traded company. It is the local leader, but that did not stop LinkedIn from moving in there. In the long run, the only strong brand is a global one. I do not see an opportunity for every region to have a successful me-too competitor.
I do not see an opportunity for every region to have a successful me-too competitor.
Don't forget though, that the cultural gap between the US and Asia is much bigger than between the US and europe. It's quite likely that a successful US product can be made successful in europe by the same people. It's a different story when you move from US/Europe to India, Japan or even China.
The japanese Facebook (mixi.jp) looks quite different to the US and european variants. Not only in terms of aesthetics but also in many subtile usability and feature aspects.
Don't forget though, that the cultural gap between the US and Asia is much bigger than between the US and europe. It's quite likely that a successful US product can be made successful in europe by the same people. It's a different story when you move from US/Europe to India, Japan or even China.
The japanese Facebook (mixi.jp) looks quite different to the US and european variants. Not only in terms of aesthetics but also in many subtile usability and feature aspects.
The Chinese facebook (xiaonei.com) is another good example of this - it started as a complete facebook ripoff, but has now gained more momentum than facebook has in that country, and is evolving its own feature set.
This goes to support the point that, for the next while at least, "me too" business models WILL work in developing nations.
This goes to support the point that, for the next while at least, "me too" business models WILL work in developing nations.
[deleted]
I think this is a good thing for the world overall, the more people that come up to the middle class, the more people that will have disposable income to spend on products. I just think that there are plenty of promising ideas here to invest in as well if they start looking past Web 2.0 in favor of more concrete businesses.