this post was submitted on 02 Jul 2023
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No Stupid Questions

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YouTube disallowing adblockers, Reddit charging for API usage, Twitter blocking non-registered users. These events happen almost at the same time. Is this one of the effects of the tech bubble burst?

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[–] zos_kia@lemmy.fmhy.ml 41 points 1 year ago (12 children)

No. I don't mean to be rude but most of that message is wrong.

VC Money is very much not drying up. 2023 has seen record rounds in most markets. What is drying up is "VC Money for early stage startups with no revenue, no traction, and barely a functional idea", but even that is not new it has been going on since at least 2018. Remember that guy who raised 1.5M$ with an app that just let you say "Yo" to your contacts ? That was 10 years ago. Those times are dead and buried.

Then the link between VC markets health and interest rates is... contentious to say the least. VCs don't borrow money - they raise funds from family offices and individual investors, every 2 or 3 years. So every change to the financial landscape will have a progressive effect over 3 years, not a brutal one after a few months. Also you have to bear in mind that the people who bankroll VCs are looking for performance of at least 2X over 10 years. Interests would have to go up to 7% to even be in competition with VC investment. Of course there's a psychological aspect to investment so the effet is not ZERO but it's not as automatic as saying "interest go up => vc dry up".

Finally, the companies we are talking about are in vastly different situations and not necessarily looking for VC money. There is no explaining their behaviour with a single cause, what we're seeing is probably a cluster effect, because executives are like fish they always follow the movement of the other fish in their field.

  • Youtube has been profitable for years and is part of Google which is massively profitable. VC Money has no bearing on their decisions - they are in a quasi-monopoly with no credible competition and want to squeeze their users out of greed
  • Reddit has a long and complicated cap table including some very powerful institutional investors so they are aiming at an IPO rather than more VC money. They're in a pretty good place actually with 1.5 billion MAU, and in the process of shaking off the 10% of hardcore users who are super hostile to monetization. Their monetization is so low (<2$/month/user, when the competition is 10 to 20 times higher) that they could bear to lose 50% of their userbase and still make bank with the remaining ones. They don't need VC money right now.
  • Twitter is... uh... well there's no telling what Elon is up to but he is absolutely not raising any VC money especially after the shit he's pulled off since the buy-off. I think it's just a bunch of bad moves because he's inept at the social media game.
[–] suspecm@lemmy.world 3 points 1 year ago (3 children)

I'm not so sure about Google nowadays. What started out as an everyday product killing, ended up as the first of many. They killed Stadia from one day to the other, and then started to basically sell and kill everything that is not massively profitable to the point they sold their domain distribution as well to Squarespace. That does not seem like something a massive monopoly with no regards to investor opinion does.

[–] zos_kia@lemmy.fmhy.ml 2 points 1 year ago (2 children)

Well i don't know about that. They still generate 15B$ in profit every quarter. Sure they're losing some growth, but even amid a historic advertising budget bust they are still beating expectations.

When i mentioned their monopolistic position i was talking more specifically about Youtube, but anyway buying and killing off products is standard operating procedure for a company this size on a market this mature. There's nothing alarming about Google's health.

[–] BelEnd@lemmy.world 2 points 1 year ago (1 children)

99% of their profit comes from their search engine ad revenue though. Google has only ever had one truly profitable product and the advent of chatgpt, driven by their only true rival in Microsoft, has them scared shitless. They are way behind in the AI department and it's the only thing out their that fundamentally threatens Googles goose with the golden eggs: their search engine.

[–] zos_kia@lemmy.fmhy.ml 1 points 1 year ago

I mean when you're at that level of profit you're not "scared shitless" of much. Sure they have some risk around AI but i think a global ad market collapse is higher in their list of stuff to be worried about.

Coming back around to the original subject, they are publicly traded anyway so the VC market is not their problem.

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