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It Is A Great Time To Start A Company
Howard Lindzon
October 04, 2022
Good morning from Phoenix.
Rachel is here working from home for a few days as the Jewish High Holidays close out. I have my sisters Robyn and Fern visiting this week so the house is crowded. So far it has been a lot of laughs.
I have been traveling around the world the last month which forces me to consider the macro as I go fro city to city, talk to people, see prices and the streets.
The macro almost always gets me excited about opportunities and worried about the future.
If you are going to commit to a startup, the macro is not something you can control or impact so stop obsessing about it and move ahead.
Bill Burley gave an interview on why this moment in time might be the best of the last 10 years to start a company.
The biggest problem Bill sees and I agree is the ‘memory’ of pain and we all need to do our part to get founders and investors to get their head around this new reality in the markets….
In 2001, there were a lot of nascent companies going public with, like, $1 million in revenue. That’s not the case this time around. Here, you’ve had a lot of companies with huge amounts of revenue, some with massive losses. There has been a huge volume of capital, and the scale of the companies is radically different. Some have raised $500 billion, $3 billion—there was no precedent for sums like that. And some of that money might be dead money.
Then there’s the fact that this run went on longer than people thought. That may well make the pain a little bit bigger. It also means that there’s less institutional memory.
The collective venture community needs to get its head around the new reality as fast as possible. The more people see what’s really going on, the quicker that will happen. In ’09, the response to the downturn was pretty swift. But you had the benefit that ’01 was only seven or eight years in the rearview mirror. While there’s still some institutional memory around the Valley, it’s been a very long time since 2009.
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