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Answers by Joe Lonsdale, GP at 8VC; Co-Founder of Palantir, Addepar, Opengov, Affinity and Formation 8, on Quora.
A: No, I don't think we are in a technology bubble.
I think that a lot of people are scared about the global macro situation, and I am as well - for the first time ever we have all these zero to flat interest rates around the world and a very correlated global economy where governments are all printing lots of money at once. Assets all inflated then all went down. On top of this we had in the US the 91/92 recession, the 2000 tech crash and recession, the 2008 leverage crisis, and now it is 2016 - and people talk about 8 year debt cycles. This sounds scary! And a lot of people are worried.
However you actually have far less money raised and deployed by VC funds the last few years than in 99 or 2000, and far more revenues and profits and real businesses being built.
The only area where you may have had a bit of a "bubble" is in late stage valuations driven by investments by non-VC funds, particularly from China and hedge funds -- for awhile for example my fund didn't do late stage rounds and stuck more to Series A's, because the valuations were ridiculously high in our opinion. These seem to have peaked in August and are at a lot more reasonable level, but could easily go up too high again and people are rightly cautious.
But the secular reality is that over the next decade a lot of big industries are being "fixed" and adapting to take advantage of big data and the mobile ecosystem, and the companies that are building the data platforms and systems that will drive these industries going forward are going to be worth huge amounts of money - I am bullish technology and especially bullish great early-stage investing.
Sure, investors with large checkbooks should be careful for a few over-valued and under-due diligenced unicorns -- venture investing involves lots of blow-ups and when you have high-growth companies with valuations in the billions and some are yielding 10X returns, others will go to zero. However, I don't think it's healthy that the press is quite so obsessed with this dynamic or of the rise or fall of valuations of these companies // nor do I understand why it is something people seem to discuss and follow with reality-show like obsession, vs the substance and more interesting questions.
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A: YES! Getting to our first prototype this year won't be that expensive all things considered (well under 100 million).
But actually deploying Hyperloop is expensive =). It will require building stuff with billions of dollars of steel - that is the main cost. We will probably have machines that build it out that you feed steel into and that move along the track creating it - this isn't new to us.
Who will invest in it? Well I hope we can let the public do so in some cases - but mostly it will be the same groups that fund other infrastructure investments, infrastructure is a popular area of global finance and it involves some of the biggest checks - they come from pension funds, govt bonds, sovereign wealth funds, large banks that raise capital from groups like insurance companies, and even some large families and others.
I'm really excited about Hyperloop because it's a much more efficient way to move goods and people around the world - it's nearly on par with ships in terms of energy efficiency (and way ahead of trains, which are already I think a significant multiple better than trucks - and of course planes, necessary as they are, are the most wasteful of all). And those big ships we need to power global trade are really nasty, they spew out tons of pollution around our oceans.
It'll take a long time before we get to longer routes that really start to impact any global numbers, but even the shorter routes can make a huge difference, with people zipping between Las Vegas and LA or LA and SF or many other possible routes around the world more quickly and conveniently and without airplanes.
To be honest, even though the environmental angle is very important, I am probably most excited about the Hyperloop for two reasons. First, I spend a lot of time in transit in order to get things done... but with HL you can theoretically get around the world at unprecedented speeds that make it a lot more convenient to travel, which makes the world a more connected and more efficient and fun place to explore. And second because I think it will be a great way to invest in the emerging markets and bring a lot of wealth to less developed areas by making it cheaper and easier for them to trade with and visit and be more connected to the first world. I think this will mean we can more quickly improve their health and education and otherwise. Overall if we do this right it can have a really great global impact, just like the railroad or the airplane.
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