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You’re using a configuration for webpack 1.x, but your webpack version is 2.x.
In webpack 1.x you could have custom options on the config. Vue made use of this by using a vue property on the config. Now, in webpack 2.x you can not do this.
Hackernews now supports webpack 2.x, so if you download a fresh version it will compile correctly.
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Source:stackexchange.com