Take A Very Deep Breath

A few weeks ago I noticed my post How Can This Be A Billion Dollar Company? getting a surprising number of new Twitter shares. Since I wrote it in the summer of 2014, it must have been picked up somewhere and hit a new chord. I wish I had titled it what was in my mind when I wrote it, which was “How Can This Be A Billion Dollar Company and other bullshit VCs ask early stage companies” – that would have been more fun to see in my Twitter feed.

I took the weekend off, spent time with friends, had an awesome Valentine’s dinner with Amy, and read Barry Eisler’s newest book The God’s Eye View (excellent – five stars – I love everything Barry Eisler.)

While going through my daily reading this morning, I came across a bunch of posts talking about how the sky was falling, Silicon Valley was in turmoil, financing was drying up everywhere, and all the unicorns were doomed.

Whatever.

In the midst of all the very predictable noise, much of it not really saying anything particularly insightful, were three posts by friends that I thought were extremely useful and very relevant. I encourage you to read each of them slowly and think about both what the writer is saying and what it means for you and your company.

Let’s start with Mark Solon’s Some Gray Haired Insights For New InvestorsBuried deep within in a nice reminder of one of my fundamental beliefs.

“I remember a series of conversations I had with Brad Feld in 2008 about his perspective on investing through various parts of economic cycles. Brad was (and is) resolute in his belief that creating outsized returns in the venture industry demands ignoring the macro environment as it relates to investment pace.”

Mark says plenty of other things, along with walking us through some dynamics in 2008 around the macro, startups, and the global thermonuclear financial freakout that was occurring.

Ok – let’s move on to Mark Suster’s What Most People Don’t Understand About How Startup Companies are ValuedMark also has a nice call out to me that helps explain why he writes posts list this one.

“When I started blogging it was because I was inspired by Brad Feld. When I was an entrepreneur there was no public information about how term sheets worked or how investors thought. Brad was openly writing about this and it felt like he was giving the VC playbook away for free! I always wanted to work with Brad for this reason so I started blogging because I figured if transparency worked for Brad I would try the same approach. Nearly EVERY smart VC I know has been talking privately for the past two years about how ridiculous valuations in private markets have gotten and how a reckoning was coming. Most prefer not to say this publicly for two reasons: 1) they have an entire portfolio of startups, many of whom are raising capital and 2) they prefer not to be attacked publicly or seem “anti entrepreneur.” But I promise you they’ve been saying it privately. So my talking up over the years is more trying to shine transparency on what we’re already saying in private rooms.”

Mark is on a monstrously awesome blogging roll right now. This post, along with the last N that he has written, have been outstanding. While I don’t agree with everything Mark says, it’s super important context for what is going on.

And then Alex Iskold, who runs Techstars New York, reminds us why this is a particularly good time to create a startup.

When you are done reading those three posts (and – if you haven’t – go read them – seriously – it’s worth the time) you should sit quietly for five minutes. Take a very deep breath. Figure out what you can actually impact today, and then go do it. And shut out all the rest of the noise.

  • David Waxman

    Whew. Breathing now, and just downloaded God’s Eye View. Thanks, I was looking for my next read!

    • You’ll be holding your breath through a lot of God’s Eye View!

  • Yeah, just have to add my own thank you for all your blogging over the years. It’s been really informative and led me to a bunch of other people. Also, thanks for the book recommendation, passing it on to my wife who loves that sort of thing.

  • “Figure out what you can actually impact today, and then go do it. And shut out all the rest of the noise.”-yes that. What an awesome piece of advice that is so hard to follow sometimes. If Company X goes worthless, does it affect your company? Probably not.

    As a person who has dealt with MrMrsMs. Market his entire life, this is not the worst beat down I have ever seen. It’s been highlighted and accentuated because social media wasn’t as ubiquitous. I think that it will get worse, but it’s not fatal.

    There are plenty of extenuating circumstances that Mark Suster put in his post which are the cause of high valuations, and come downs. In this day and age, I have never seen the amount of opportunity available. It’s always been hard to build a great company, but at least people today have incredible tools that can give them a better chance at success.

    Don’t sweat the extracurricular stuff. If you want to get depressed, follow and read ZeroHedge. But, it’s a very skewed view of the world.

    I have no hair, and what’s left is gray. October 1987 was a true melt down. There was true fear then. The Nuclear Winter in startups was bad in 2001. But, since I wasn’t in startups then, it was only a footnote to me. I was just pissed I wasn’t short! 1998 LCTM was a short term nightmare, and 2008 was really bad.

    We took CME public in Nov 2002 and were working on it from 1999 until then. When the market melted down in 01 we didn’t care. We knew we had a great product and we didn’t worry about it. It was up to us to execute. Stock opened at $35 and went to $714. Then in 08 it crashed to $155. The product was the same. My net worth wasn’t and that is really what messes with your head.

    If you are working on a startup and your customer base is growing, or your revenue is growing-You are onto something. The market will be what the market will be and you don’t have any control over it. Believe me, it’s a very hard lesson to learn and I re-teach myself it every day when I am trading.

    But, man do I meet some totally awesome founders building some really cool stuff. Focus on that. Harness your fear. You will be surprised at what you can do.

  • Brad,

    I think you’d enjoy this interview with Barry Eisler from the Commonwealth Club of California: http://www.commonwealthclub.org/events/2016-02-03/barry-eisler-former-cia-directorate-operations

  • “Take a very deep breath. Figure out what you can actually impact today, and then go do it. And shut out all the rest of the noise.”

    YES!! Focusing can be so hard yet it is so critical.

    This shift that’s occurring seems very healthy. It’s not like investments have frozen but investors are being more cautious. There’s less FOMO which drove up valuations. There’s still a TON of money that will be invested and the market will determine the right valuations. The public markets are saying the private valuations were just over the top and they need to come down.

    But I’m sure glad I’m not a CEO of a startup needing to raise a later stage round and facing a reality of raising a down round or having to quickly cut burn (layoffs). Tough position to be in for sure.

    And it’s great that you’ve inspired some really smart folks to blog and add value to the community.

  • DaveJ

    I don’t know what to make of your quoting other people’s blogs quoting / paraphrasing you.

    • Recursion …

    • I was immediately struck by the narcissism of it, but what do I know.

      • Interesting. I’ve never thought of myself as narcissistic. I guess I don’t feel like referencing other people who are writing things I strongly agree with, which are based on things I had previously said, is a narcissistic trait. However, when I reread those paragraphs just now (which I just cut and pasted from the original post) I can definitely see how someone who doesn’t know me might quickly conclude that the self-adulation is important to me.