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.