[comstock]

And here’s my take on how this will play out...

Tech investors are almost totally unequiped to do the necessary DD. They either therefore go for plays that are easy to understand, largely computational exercises or in the rare cases they do go for something higher risk, they back something crazy (e.g. Theranos) because they don’t do good DD.

Getting an “expert” to vet the play rarely works. Because tech VCs don’t know how to choose good experts.

So most of (all?) these plays will ultimately fail. It won’t matter much to seed round investors though, because they’ll take 10 years to fail and they will likely have at least partially exited by then...

[lsc]

So, I came of age right in the middle of the first dot-com boom. My observation is that back then, no one with money knew what they hell they were doing.

My observation during this dot-com boom is that a lot of the people who did well last round are now part of the VC infrastructure, like our own Paul Graham. My impression is that this time around, money is a lot more competent because of this.

Because this made such a huge impact on my life, I kinda want to extend it: perhaps the first round of any new technology is going to be littered with bad ideas. Perhaps that is necessary. Then perhaps those with experience can look backwards and do better next time.

I personally still think we are headed towards a second dot-com bust, but I've been saying that so long that at this point, I'm just wrong. Unquestionably, the business and money people did their jobs much more skillfully this time around than they did in the '90s.

[rflrob]

> I personally still think we are headed towards a second dot-com bust, but I’ve been saying that for so long that at this point, I’m just wrong.

As a wise man once said[1], “the market can remain irrational a lot longer than you can remain solvent”. At some point, the tech boom will end, and probably for many of the reasons that you have been telling anyone who will listen. The hard part is forecasting precisely when it will end with any range and precision.

[1]https://quoteinvestigator.com/2011/08/09/remain-solvent/

[comstock]

True, but their competence isn’t is science based startups. In all honesty I think that makes them in general gravitate to Bio tech plays which involve a lot of traditional Tech. The thesis is easier, but much less likely to result in high reward.

[lsc]

my implication was that this is (to my knowledge) the first round of silicon valley biotech startups, and if it's like the first round of webapp startups, there will be a lot of failures, but the seeds will be planted for greater success in the next round.

My main point was "perhaps the first round failure is necessary" - of course, I weakened that with my assertion that this second tech bubble is also a bubble and bound to burst.

[patall]

I totally agree. Lots of people think they are experts (or have understanding) in health care or biology but for this you need to be an expert in health care development which is only partially related. The major difference is that in tech, the question most of the time is whether a product makes sense, not whether the proposed things work. In biology, its pretty much the other way around.

[rdlecler1]

They're not going to diligence the technology. They're going to vet the founders. That's what they've always done.

[comstock]

Nope, that’s not what they do in my experience. When a VC says they “invest in the team” what they generally mean is has the team already had a successful venture. Either that or, we’re they referred by a friend, or did they went to a university they like.

They rarely dig into how the background of the team and their ability to deal with unforeseen problems. That is, in my experience.