Remaining Calm through ‘The Cycle’

I had coffee with a friend who has been at a few VC firms. We talked about today’s frothy environment and how some of the Unicorns’ valuations are at risk. They’re in a race to go public, raise more VC money at a higher price, or face a painful “down round.”

Eric and I ran into the head of marketing at one of the Unicorns in town; he asked us about the state of the IPO market and whether we are in a Bubble or not. He admitted his company does not yet have the revenue predictability to go public.

So, I’m guessing here, but this probably means that his company is in a race to get to revenue predictability before it runs out of cash and before the IPO window shuts.

My answer to him: I don’t know about a Bubble, but The Cycle is real. Markets go up, down, then up again. These cycles often last five to 10 years. The IPO window is binary: it’s either open, or it’s shut–it is never half-way open, IMO. So, when it’s open, race to go public.

The thing about The Cycle is this: the slope of the line is always changing, and you don’t know where the line is going. Will the markets be up six months from now? Or, will there be a market correction?

The hard part of venture is to be steady during The Cycle: keep investing steadily in start-ups about which you develop high conviction, even if others give up. When other firms are investing at a rapid pace, control your own. When a global recession freezes most investment activity, keep investing.

Be consistent, have faith, persist. Don’t get too high when things are rocking, don’t get too low when obstacles occur.

One of our CEOs and I had a long call the other night about a particular challenge with a strategic partner. He was very frustrated. He was down. I told him: “Remember the Malcolm Butler interception? Play to the whistle. Don’t give up.” (Video up top, or click here.)

In other words, remain calm and keep going. If you keep persisting until the end, anything can happen. It’s how I deal with the vagaries of The Cycle.

And, wouldn’t you know it, through the CEO’s persistence, the above issue with the strategic partner appears to be resolved.

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