[maehwasu]

Wait, the government gives investors essentially infinite cheap credit, resources get allocated in an incredibly perverse manner, and it's Friedrich fucking Hayek who has it wrong????

I certainly don't think Hayek is above criticism, but this author definitely is not making the point he thinks he is.

This isn't some kind of "no true Scotsman" thing either. The current market is exactly what someone like Hayek would expect given the monetary manipulations of the past 10+ years.

[jcfrei]

Exactly. I'm not a libertarian or Hayek fanboy by any means but these types of companies are what you would expect in a world of shrinking investment opportunities and lots of excess capital (as evidenced by the falling interest rates). Add to that a few oil rich countries which desperately try to diversify their economies and therefore put lots of their petro dollars into various VC funds.

[thu2111]

Are investment opportunities really shrinking or is this a result of central banks never having really unwound their whole QE programmes, in fact many of them buy up as many 'safe' assets as possible.

I'm pretty sure Hayek would identify the issue as government intervention. It's not only central banks with their massive buy-ups of high quality corp/gov debt that's the matter here (forcing investors into ever riskier asset classes like VC funds). Given current world events I'm pretty sure a part of it is academia is broken too.

One thing that puzzled me for a long time is why there aren't more biotech startups, or why there aren't any (it seems) unicorn biotech firms. The potential of biotech seems unlimited. One day I found out a possible reason - VCs are afraid of biotech firms because they virtually all start by taking some academic paper that sounds promising, and building a lab to try and replicate it. But the papers don't replicate, so the company tanks and the VC loses everything. The figure I heard is around 50% of the papers don't replicate, which seemed shockingly high at the time.

Well, later I encountered an even worse figure: AmGen Oncology claimed only 11% of cancer papers replicated.

The cost of trying to find the next big idea in biotech seems astronomical with those kinds of odds. In effect the biotech world is flooded with ideas that sound good but fall at the first hurdle. No wonder investors prefer the software world, it's way less dependent on universities. Not many startups get started by saying, "we're going to commercialise this amazing sounding paper put out by the U of X". Even AI startups which I suppose come the closest are mostly being driven by corporate research labs, and even then, a16z dunked cold water on AI as a startup category.