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Comment by vidyesh

12 years ago

Very weird and imo, wrong comparison.

WhatsApp is a consumer product. It lives as it breathes. As long as people/consumer keeps pumping in money & time to it, its value will stay or rise from its current value. Once that stops and people/consumer stop using it, its value will eventually fall.

SpaceX on the other hand is not a consumer product yet, but is aiming to become one. Consider it just like Boeing or AirBus, nobody would have valued them as a multi-billionaire company ( back in 1900s when they were founded). Their technological advancements and the development phase would have been same as SpaceX right now.

But eventually it became a very integral part of human life. They have become a consumer product, their value is now because of people using it daily. And unlike WhatsApp people won't stop using air-travel.

Everyday people do not invest directly into it like they do(?) for WhatsApp, but indirectly by using airline services they are paying for it. Similarly for SpaceX everyday people aren't investing in it right now but eventually ( as per SpaceX's ambition ) people would just like they are doing for air-travel.

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vidyesh

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TeMPOraL  12 years ago

> Very weird and imo, wrong comparison.

I think comparison is ok, but people are missing an important distinction - yes, the system works exactly as one would expect it to. There are good reasons for the system to value WhatsApp higher than SpaceX. The algorithm's implementation is correct. The problem is, we're using a wrong algorithm - a system that begins to increasingly value wrong things.

  • john_b  12 years ago

    Capitalism as a system has many impersonal qualities, but capitalism per se does not value anything. It just provides mechanism (market prices, investment dollars, and so on) by which the value that people attribute to things can be known.

    If "capitalism" values the "wrong" things it's because people at large have the "wrong" values. If that is a problem, it's probably not an economic one, but something deeper.

    • TeMPOraL  12 years ago

      Nope, capitalism as a system very much values particular outcomes. It's not a machine that perfecly translates human values into economic output; it's a system that actively prefers one type of values over other. The powerful feedback loops of markets that - I very much acknowledge this fact - led us to prosperity we enjoy today have a side effect that is increasingly becoming apparent: they slowly throw away any human value that stands in a way of being more competetive.

      Anyway, that's a long topic. The TL;DR of my point is: it's not our values that control the system, it's the system that controls our values.

      EDIT:

      Case in point, from other HN thread: https://news.ycombinator.com/item?id=8916146.

      > And a serious question: How do these people have money and especially free time for this [clever hack involving suspending a jaccuzzi under a bridge]?

      That this is actually a serious question shows that there is a strong mismatch between our values and the system we live in.

    • dragonwriter  12 years ago

      > Capitalism as a system has many impersonal qualities, but capitalism per se does not value anything.

      It values capital and the capitalist class, which is why it was named "capitalism" by its critics (specifically, its socialist critics.)

      The free market justifications in terms of Econ 101 simplifications that, in addition to applying to a simplified version of reality in operational terms, also apply to a system different than capitalism as ever actually implemented, came later.

  • simonh  12 years ago

    In this case I think the valuations are justifiable.

    Imagine that all the people that sent a Whatsapp message in the last year were charged SMS rates for the messages they had sent. How much would that cost them? Well, that's a reasonable rough measure of the value they have derived from Whatsapp. It's an important service that has real immediate benefits for the people using it right now.

    SpaceX is a fantsastic venture, I'm very excited by it, but right now it's providing limited economic benefit. The Space Station is an expensive waste of money. A few comms satelites is great, but there haven't been all that many of them. Now, if SpaceX does manage to recover and re-utilise it's boosters that willbe a game changer. Their value will skyrocket (appropriately) and Google will make a killing on their investment. But that hasn't happened yet.

visakanv  12 years ago

Yeah, imagine investing in things like... the first electricity service provider, or the first telephone, or the first TV. All of those things are multi-billion dollar industries. I'm sure this entire exchange has been played out before for other emergent industries!

  • crdb  12 years ago

    The issue is picking a winner. As Warren Buffett points out, there are thousands of bankrupt airlines and car companies. If you pick a loser, you wipe out no matter how well the industry does, as consolidation is inevitable particularly in high barrier to entry industries. This keeps early valuations low.