Bubbles
I have to agree that although it is nowhere near being the same scale of a decade ago, the valley certainly has the smell of a bubble right now, at least in certain segments (social+mobile networking anyone?).
The funny thing for me is that I have never been able to really believe in them even when they were happening right around me. From the time I said no to a position in a small startup that would have landed me close to $6M in cash 9 months later, through the several times I gave up joining certain technology giants in 96 and 97 with large option packages, the time I said "no" to $6M in funding for a technology concept I came up with just a bit later because I could not understand how on earth I was supposed to actually execute and I hated - and still do hate - taking someone else's money without being confident of being able to pay it back... funny thing is, that particular idea is now a big field called "localized marketing" on mobile devices. Great idea, 10 years too early. In a way, I'm glad I didn't take the funding cause it would have failed miserably for lack of experience (on my part) and infrastructure (on the world's part), and I would never have been able to gain the experience I have since then.
Anyway, that's besides the point.
The point is... if there's a bubble, how does one capitalize on it without having the ability to disconnect one's sense of incredulity about the underpinnings of said bubble? in other words, if I can never bring myself to believe that, say, a company like Facebook is worth or ever will be worth 15 billion dollars, how can I ever seriously consider selling my soul to work there before the exit? because make no mistake about it, working in this industry means selling your soul.
I am cursed with rationality.
I guess it's a good thing in a way; it has certainly played a role in the growth of my own company - profitable, with highly positive cashflow, low fixed costs, high margins, and solid growth - you know, a real business. But that's the thing. Real businesses get judged by real metrics, because, well, there are real numbers to look at. So our nice little cash cow of a consulting business can get maybe a 2.5x revenue valuation, whereas a company that has so little revenue as to amount to a statistical error can get a 1000x or higher valuation.
I keep scratching my head in puzzlement. Something here doesn't feel right to me. What am I missing?
The funny thing for me is that I have never been able to really believe in them even when they were happening right around me. From the time I said no to a position in a small startup that would have landed me close to $6M in cash 9 months later, through the several times I gave up joining certain technology giants in 96 and 97 with large option packages, the time I said "no" to $6M in funding for a technology concept I came up with just a bit later because I could not understand how on earth I was supposed to actually execute and I hated - and still do hate - taking someone else's money without being confident of being able to pay it back... funny thing is, that particular idea is now a big field called "localized marketing" on mobile devices. Great idea, 10 years too early. In a way, I'm glad I didn't take the funding cause it would have failed miserably for lack of experience (on my part) and infrastructure (on the world's part), and I would never have been able to gain the experience I have since then.
Anyway, that's besides the point.
The point is... if there's a bubble, how does one capitalize on it without having the ability to disconnect one's sense of incredulity about the underpinnings of said bubble? in other words, if I can never bring myself to believe that, say, a company like Facebook is worth or ever will be worth 15 billion dollars, how can I ever seriously consider selling my soul to work there before the exit? because make no mistake about it, working in this industry means selling your soul.
I am cursed with rationality.
I guess it's a good thing in a way; it has certainly played a role in the growth of my own company - profitable, with highly positive cashflow, low fixed costs, high margins, and solid growth - you know, a real business. But that's the thing. Real businesses get judged by real metrics, because, well, there are real numbers to look at. So our nice little cash cow of a consulting business can get maybe a 2.5x revenue valuation, whereas a company that has so little revenue as to amount to a statistical error can get a 1000x or higher valuation.
I keep scratching my head in puzzlement. Something here doesn't feel right to me. What am I missing?
posted by Blinkered at 7:55 PM
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