Will Smith doesn’t much credit for his prescience and foresight.i But if you watch his music video “Will 2k” you’ll note that he kicks off his fin du millénaire party by turning the clock to 1929 and the height of the roaring 20’s. One can only imagine that, just as with 1999 and its dotcom bubble, the markets in 1929 were similarly poised to pop. Sure enough, in both cases they did exactly that. Of course, right up until each unraveling, the words on the lips of executives and investors sounded a lot like this contemporary Mason Jar CEO:
Now that my fellow executives and I are goddamn beverage conquistadors, we’re going to enjoy this cocaine-fueled rocket ride for as long as it lasts.
I’m blasting off to fucking Mars, dicksuckers, and I’m headed straight through the belly of the goddamn sun!
This will sound acutely familiar to anyone currently in and around Silicon Valley, what with its utterly, monumentally, outlandishly ballistic valuations. $19 bn for WhatsApp? Sure! $220 bn for Alibaba? Hell, I’ll take two!ii Yup, it’s 1929/1999 all over again.
Not everyone is oblivious to this, however, but it certainly feels that way sometimes, so it’s always refreshing to see an investor of Bill Gurley’siii calibre speak up, even if he is wasting his breath on the fucking muppet show that is fiat finance. No matter, the following are some choice quotes from his recent interview with WSJ:
I. Every incremental day that goes past I have this feeling a little bit more. I think that Silicon Valley as a whole or that the venture-capital community or startup community is taking on an excessive amount of risk right now. Unprecedented since ’99. In some ways less silly than ’99 and in other ways more silly than in ’99.
II. And I guarantee you two things: One, the average burn rate at the average venture-backed company in Silicon Valley is at an all-time high since ’99 and maybe in many industries higher than in ’99. And two, more humans in Silicon Valley are working for money-losing companies than have been in 15 years.
III. In ’01 or ’09, you just wouldn’t go take a job at a company that’s burning $4 million a month. Today everyone does it without thinking.iv
IV. In the software-as-a-service world, where the risk is potentially among the highest, Wall Street has said it’s OK to lose tons of money as a public company. So what happens in the board rooms of all the private companies is they say, “Did you see that? Did you see they went out and they’re losing tons of money and they’re worth a billion. We should spend more money.” And there are people knocking on their door saying, “Do you want more money, do you want more money?” So it takes the burn rate up.
V. Excessive amounts of capital lead to a lower average fitness because fitness, from a business standpoint, has to be cash-flow profitability or the ability to generate cash flow. That’s the essence of equity value. And so I think we get further and further away from that in the headiest of times. […]
This is all spot on. SV is heading for a glorious, fiery fireball of a train wreck.v Those of us who see it coming, like Taleb did when he penned The Black Swan (2007), can either a) short the thing for fun and profit, or b) sit back, kick our feet up, light a cigar with a hundo, and enjoy the spectacle.
There is, however, a third option : build a new economy distinct from such insanity. This is precisely the purpose of #bitcoin-assets.
Now if Bill would just get in the WoT already maybe he wouldn’t feel like he was talking to the fucking wall all day. Unless, y’know, he likes that sorta thing.
Hey Bill, please to PGP.
___ ___ ___
- Though giving credit where credit is due, particularly for vision, is rare. Probably because no one likes to hear “I told you so,” much less “they told me so.” Such is the cotton-ball brained functioning of the “independent” mind. Else we’d have Forbes, NYT, and CoinDesk articles praising Mircea Popescu for calling out Butterfly Labs 21 months before the US Federal Trade Commision shut them down. Maybe next life.↩
- mp_colonist: kakobrekla: alibaba is supposedly worth as much as all the properties in slovenia. << 1. list slovenia on alibaba for price of 1 alibaba ; 2. have alibaba buy slovenia. 3. slovenia now worth two slovenias.↩
- Gurley, like myself and the rest of the #b-a blogs crew, but unlike Twitter ranter extraordinaire Marc Andreessen, maintains his own blog. Good man.↩
- This sounds very much like BitPay and their NCAA bowl sponsorships.↩
- Think Bitcoin start-ups are immune from such nonsense? Well now you can put your money where your mouth is with F.DERPS, which can be invested in directly on MPEx or via WoT-approved broker CoinBr.↩