Insomnia

By Torsten Brose | Business Development Director | Magenta Technology

Those of us who suffer from insomnia consider it a vile and frustrating ailment causing us to be simultaneously utterly fatigued and almost manic in our inability to shut off our brains. This is one such unfortunate occasion, and you, oh lucky reader, find yourself at the sharp end of my need to expunge some thoughts on the current ever more ludicrous dotcom technology marketplace.

For those of you who remember the dotcom meltdown in the 90s, there are some frightening similarities between delusional investors and companies selling … not what they are actually doing or might really achieve, but a theoretical idea of what new business could look like in the future.

Well, you say, this is how speculation works, and all investment is based on a promise of future wealth. Yes, of course you’re right; however, so many of the current “super valuations” look more like the emperor’s new clothes than a solid plan.

Let me describe some current investment darlings in slightly different terms and see if you get a feel for where I am coming from:

A food delivery company that a banker dreamed up in his lunch break so he could get his sushi delivered more quickly. It borrowed fortunes on the basis that all it needs to do is keep growing and it will eventually make some money. Yes, really!! Although he has never had any experience in delivering anything, if he recruits enough smart 25-year-olds with ironic beards and data analysis skills, gives them Apple Macs and a grungy sofa to sit on, they will eventually spend enough of other people’s money to come up with some sensible business strategies.

A sharing app that has, somehow, despite barely making any money, achieved a valuation of more than most large established manufacturing companies – and in a market that has already proved that monetising this type of business is very challenging. Now, I like “megafilts” adding silly dog ears to my selfies as much as the next man, but honestly, this is the biggest successful swindle I have ever seen.

Lastly, a taxi company run by a guy so hateable that you just know he must have been the boy that was bullied at school. He has somehow convinced the world that he reinvented the wheel, while actually operating the most despicable business practices and using his bottomless investment fund to destroy legitimate businesses, swerve legislation and avoid tax. Most miraculously, he has managed the parlour trick of conning drivers that they he will pay them less and less money on the basis that this will allow him to provide more work for them. Surely, evil genius on a breath-taking scale. The real kicker is that he managed to do this all while continuing to lose money faster than a third world dictatorship.

Maybe because it the middle of the night and I am extra cynical, but as someone who works in technology, it’s hard to see that bubble is not going to catastrophically burst soon, and that will be bad for everyone.

Torsten Brose | torsten.brose@magenta-technology.com | tel: 07557 272600