The Guardrail-to-Guardrail Markets

One of my morning meetings today was with a CFO, who is looking for his next gig. He has headed up finance for quite a few start-ups.

He recounted one such company, in the 1998/1999 time frame. It went public. Revenue was $1 million. Its market cap was $2.2 billion. “Those were the days!” he and I said.

When I look back at that time, it’s hard to believe that it actually happened. It was a weird period during which the cost of capital was negative; in other words, the more money a company raised, borrowed and spent, the higher its valuation in the public and private markets. It was all about go-go growth.

What’s odd is that all of us involved (investors, entrepreneurs, bankers, lawyers, etc.) didn’t think it was weird during that time. It was hard to know, while you’re in it, that you’re in a Bubble. “This time it’s different,” we all thought (or hoped). It’s easy to spot bubble-like conditions afterwards, but when you’re living in the moment, it feels absolutely normal.

I write this because another morning meeting I had was with an entrepreneur, whom I like and respect greatly. This person commented that business-to-business (B2B) start-ups were “in favor” again, but she wondered whether the crowds can be right.

I don’t know whether a space is “hot” or “cold” is relevant to entrepreneurship, for by the time you switch your capabilities to that “hot” sector, it may be too late. The market, IMO, seems much more guardrail-to-guardrail these days.

So, at our VC firm, we don’t time the markets. When B2B was out of favor, we continued to steadily plug away, investing in companies such as VoltDB and Paradigm4. When Internet consumer was “down” during an advertising recession, we invested in OwnerIQ.

We just want to work with great people on awesome ideas that matter.


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