I can't say I agree with this one bit. One bubble/bust cycle does not a trend make.
It's good general advice, though - you have to give it that.
Winter is coming
51–60 of 86 posts
Re: Winter is coming
#52I'm not so sure. I think the broader economic forces may help tech companies rather than hurt. No matter what happens, America (and the world) will still have a lot of very wealthy people and institutions. Those people need to put their money somewhere. The stock market is scary, bonds and banks don't pay anything. If you had $100 million tomorrow to invest what would you do with it? I'd start looking for startups. 1…
I would invest in gold. No hassle. No risk since every country is printing money and putting savers at risk. Doubled in price in dollar in two years thus far.
Absolutely no risk of price falling closer to its intrinsic value either...
Re: Winter is coming
#53The more people say this, the more true it becomes.
Re: Winter is coming
#54Its funny that in 2008 - we see posts like "RIP Good Times" - http://techcrunch.com/2009/10/06/r-i-p-good-times-one-year-l... - and yet nothing - fundamentally - came of it. I'm sure Sequoia's companies left that meeting - scared, sacked a bunch of employee's, cleaned out the closest - and the VC's were happy because the capital lasted longer ensuring no more dilutions for themselves and a "trimmer" business even if…
Its funny that in 2008 - we see posts like "RIP Good Times" - http://techcrunch.com/2009/10/06/r-i-p-good-times-one-year-l.... - and yet nothing - fundamentally - came of it.
I want you to be right, but didn't something come of it? Didn't we have a huge recession whose impact is still being felt by all of us? Don't we have a nearly 10% unemployment rate, nearer to 16% if you include people who've just given up?
Re: Winter is coming
#55Earlier quoted context omitted.
I would invest in gold. No hassle. No risk since every country is printing money and putting savers at risk. Doubled in price in dollar in two years thus far.
Gold is the safe bet, but some people like to diversify with some riskier investments.
That's a peculiar sense of "safe". The value of gold fluctuates substantially over time, even over fairly short periods of time. Sometimes (like the last decade) it goes up; other times (like most of the 1980s and some of the 1990s) it goes down. It's easy to lose half of what you invested; if you time it right, you can lose seven-eighths.
The peculiar sense in which gold is "safe" is that it tends to go down just as much as it goes up; that is, it isn't subject to secular inflation or deflation.
Re: Winter is coming
#56I don't agree with much of this for two reasons... 1. The bubble for already funded companies burst in the 90s but that didn't dry up funding. The truth is a wealthy person's best bet in a down economy is a small startup. Because the potential upside is so much better than any other investment. A company like Y Combinator can literally fund hundreds of startups and as long as at least one has a significant payday at…
> A company like Y Combinator can literally fund hundreds of startups and as long as at least one has a significant payday at the end Y Combinator still comes out on top. I understand that Y Combinator only does token investment in terms of money, and gets a good share of the startup in exchange for its brand and the experience and connections of its founders within the VC world. Since the actual money outlay is low,…
I used to think I would want to be an angel investor at some point, but being an LP at YC (and maybe at a later stage VC, and get shares in great long term companies directly or via BRK.A, would really meet my goals.
Re: Winter is coming
#57Check out my counter-argument: Why are startups hot now? Not because the economy is good or because the startup ideas people are having are particularly good, but because risk seeking investors are trying to shove capital anywhere they can. After the crash of 2008 lots of avenues (created by Wall Street post Financial Modernization Act) to invest this capital were closed, and the growth of the startup scene, particul…
It's because the Fed pumped money into the banks and it made its way to the VCs. If there is no QE3, the well will run dry.
Re: Winter is coming
#58I don't agree with much of this for two reasons... 1. The bubble for already funded companies burst in the 90s but that didn't dry up funding. The truth is a wealthy person's best bet in a down economy is a small startup. Because the potential upside is so much better than any other investment. A company like Y Combinator can literally fund hundreds of startups and as long as at least one has a significant payday at…
> the dollar is falling The dollar doesn't seem to have moved much since 2008. Versus the Euro, it was on a downward trend from ~2004 until mid-2008 or so, but it's been flat since then, albeit with significant volatility: http://www.google.com//finance?chdnp=1&chdd=1&chds=1... Against other currencies, it's down versus the Japanese Yen, but up versus the UK Pound. In terms of domestic prices, inflation has been runn…
The dollar hit a record low in 2008, not just against foreign currencies but also against measures of value such as gold, soybeans, corn, etc. It got stronger in the intervening years (as you note), except against gold, and is now back down to the 2008 level, more or less.
You're certainly right about the bond markets.
Re: Winter is coming
#59Check out my counter-argument: Why are startups hot now? Not because the economy is good or because the startup ideas people are having are particularly good, but because risk seeking investors are trying to shove capital anywhere they can. After the crash of 2008 lots of avenues (created by Wall Street post Financial Modernization Act) to invest this capital were closed, and the growth of the startup scene, particul…
I concur with your counter-argument. I'll add that one of the reasons we've seen such a huge increase in startup activity and entrepreneurship in the last 4-5 years is the fact that getting a startup from an idea to an Internet scale web service costs practically nothing now.
4-5 years ago a startup (like iLike) had to spend millions up front on server and infrastructure costs. Then the ongoing opex costs for serving millions of users were huge.
This has shifted radically. $150k is TOO much money for many ideas and the opex costs have continued to plummet.
The recent announcements by both Amazon & MS on lowering (almost eliminating for many scenarios) ingress and CDN costs (http://www.talkincloud.com/amazon-web-services-cuts-cloud-tr...) are just harbingers of this.
In fact, it could be argued that any sort of economic contraction could increase the rate at which these costs decline, further enabling great ideas to get traction via startups.
Re: Winter is coming
#60Its funny that in 2008 - we see posts like "RIP Good Times" - http://techcrunch.com/2009/10/06/r-i-p-good-times-one-year-l... - and yet nothing - fundamentally - came of it. I'm sure Sequoia's companies left that meeting - scared, sacked a bunch of employee's, cleaned out the closest - and the VC's were happy because the capital lasted longer ensuring no more dilutions for themselves and a "trimmer" business even if…
In this kind of analysis, you can't ignore the role of government stimulus spending in juicing the economy. Yes, 2009/10 were better, but largely as a result of stupendous stimulus packages. The current problems are a predictable consequence of that stimulus money running out. So, that stimulus spending brought the financial world some breathing room. Now, the question you have to ask is, was that breathing room put to good use? Have the fundamental imbalances which triggered the 2008 liquidity crisis been corrected? I think if you look at the financial/legal problems BAC is facing and the economic instability in the European PIIGS countries, the answer is no. So then you have to ask whether there's going to be another liquidity crisis, and how much capacity and political will there will be for further government stimulus, if there is another crisis. I think another liquidity crisis is all but certain. If that's so, and government stimulus is limited, the downturn will be hard and protracted, and you are going to need a hell of a good business plan just to survive. If the stimulus is vigorous, there will be another acceleration to the economy, and that will be the ideal time to be taking money to grow a nascent business.
So I don't think it's as simple as you make it out to be. Starting a business now is basically a bet that either the problems which caused the 2008 crisis have been corrected (doubtful) or there will be another massive stimulus when another crisis arises (highly uncertain, but certainly possible.)