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The Pressure of This Boom….Revisited

Last March I wrote about the pressure of this boom. As the rising tide recedes in May 2014, we are seeing some of the damages.

When the last boom ended in 2008, we were awash with ‘Asshats’ in the financial world. The Fly and I singled out Bill Miller as ‘Asshat of the Year’ and I was reminded of him when I penned the pressure post. In the financial world, nobody dies, so it’s best to make a ton of predictions. Bill Gross now likes Groupon…Asshat.

In the world of startups, the pressure and silliness has taken on a new level. This boom has gotten to the point where you are allowed to call yourself a startup post $1 billion valuation. Startups are once again allowed to burn over $100 million a year.

Times may be changing. The macro conditions have not (low interest rates, low fear), but recently, technology momentum stocks have been punished. It’s a small ‘chink’ in the armor but enough to wipe out a bunch of hedge funds and traders and enough to close down the IPO window for the moment. This is what I thought would happen when I wrote the post in March of last year, but I had no idea when.

The pain is really cornered off to small biotech and high cash burn technology companies, but markets work in mysterious ways.

The ‘arm chair’ quarterbacking with respect to Twitter is at all-time highs. It’s dead, it’s got a ‘marketing’ problem, it’s not dead…It’s not important because Twitter has a war chest. Twitter is FINE.

Twitter is not worried about you. Bill Gross could care less. The IPO bankers are worried about fresh kill.

It’s all misdirection because you should only be worried about yourself and your own money management. If you are a startup, your runway to profitabity and your cap table have always been what matters so manage them both with respect. I know from experience this is all that matters.

  • http://avc.com fredwilson

    there is so much i love about this post Howard. i love every bit of it.

    • http://www.howardlindzon.com howardlindzon

      thanks buddy

    • http://www.larry.com/ LE

      Just read this post because you mentioned it.

      The ‘arm chair’ quarterbacking with respect to Twitter is at all-time highs. It’s dead, it’s got a ‘marketing’ problem, it’s not dead…It’s not important because Twitter has a war chest. Twitter is FINE.

      Twitter is fine?

      So I will repeat what I said on AVC.com today and have said over and over in the past.

      Twitter needs to get their PR act together [1] and get the right message across. Otherwise you lose the spin war, just like Marilyn did. [2]

      [1] There is a well oiled machine called public relations that handles this type of thing. Look at the NBA and what happened with Donald Sterling.

      [2] Remember the Elton John song “Candle in the Wind”?

      And all the Press had to say was that Marilyn was found in the nude

  • http://www.startupmanagement.org/ William Mougayar

    “your runway to profitabity and your cap table have always been what matters so manage them both with respect.” Wise words Howard.

  • http://www.moneyblog.com/ Paul Rubillo

    Great post Howard! It should be interesting to see how angel investors will react to the winds of change. Will they continue to put money to work in riskier startups or turn to looking for value in the public markets, of which most assets are priced as close to perfection as possible (ex. recent momentum stocks blowing up)?

    • http://www.howardlindzon.com howardlindzon

      thanks Paul

  • Rob

    Great post (as usual) Howard!

    • http://www.howardlindzon.com howardlindzon

      thx rob

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