[spaceman_2020]

It’s clear to me that the smartest thing China ever did was to limit speculation in the markets. So many human capital in America is wasted pumping up valuations instead of actually building stuff

Every Jane Street hire could be building robots, but instead, they’re trading options and crypto and heck, even market making for prediction markets now

[tw1984]

> the smartest thing China ever did was to limit speculation in the markets. So many human capital in America is wasted pumping up valuations instead of actually building stuff

there was this Chinese company named Baofeng that built a stupid media player by "re-using" open source FFmpeg code, it managed to get itself publicly listed, then had its valuation went up like 50x for doing nothing other being accused for stealing FFmpeg code.

there were lots of discussions at that time how that happened and why the same level of speculation didn't happen on other public tech companies listed on Chinese market, the consensus was pretty sad - tech companies suitable for speculation are listed in the US by default, those listed on Chinese markets are 2nd tier or 3rd tier to start with, they don't offer any meaningful room for speculation.

[Saline9515]

The positive aspect is that there is plenty if venture capital for innovators; the negative one is that those innovations are stifled by various extraction techniques that allow VCs and other investors to get a return on investment.

Crypto is a good example of how the equilibria is hard to maintain, and if the last cycle saw many interesting new products come to life, they all got crushed by ruthless profit-taking from early investors and team members.

[spaceman_2020]

Agreed about the venture capital for innovators part, but that has a danger of eventually the tail wagging the dog. Speculative investments enable VCs to fund other speculative investments until the entire chain is only focused on funding speculative products because that's where you get the meatiest exits

Again, see crypto as a prime example - because, at one point, you could command a valuation that was simply not tethered (heh) to reality, you had all these now-dead L1 chains raising $200M+ at $3-5B valuations.

This also leads to a situation where you only end up funding digital plays because the metrics there can be anything. You had these crypto companies raise based on "growth" when that growth was simply coins produced out of thin air and wallets created by the millions with a script.

You can't do that if you're building actual physical products