
Advice for troubled times: Build war chest - raju
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/21/BUVR14PHKR.DTL
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mdasen
I don't know if I agree with this. Basically, the argument is that you should
borrow money before borrowing becomes difficult. The problem is that it isn't
so easy. Heck, if we all knew that the stock market was going to slump in the
summer/fall, we would have sold in the spring and bought back in. We didn't
know. Most of the best investors didn't know. The chance that a start-up CEO
will know is probably nil.

You aren't a financial genius as a tech CEO. Doesn't mean you aren't smart,
but it isn't your field. You're just as likely (if not more) to be wrong than
right. Even people who make their living this way were almost all wrong this
time.

Live frugally, save money, and make plans for rainy days.

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motoko
Lore has it that Peter Thiel is a financial genius, or at least, would have
access to information financial geniuses would be able to conjure. You are
right that Max probably has little idea himself about the financial industry.
However, his business associates do.

Ultimately, Max is advising to buy cash (raise capital) when it's cheap
(bubble) so you can sell cash (spend capital) when it's expensive (recession).
Your advice to "live frugally, save money, and make plans for rainy days"
reduces to the same, though maybe with a less ambitious connotation.

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dhouston
they're not quite the same. if you raise an absurd amount of cash -- say $50mm
on $500mm pre -- your bar for even a 2x return is over a billion dollars,
eliminating virtually all your possible exits. especially in this environment.

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motoko
No, this is advice for preparing for troubled times.

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mikeryan
While this works out for the company, how does this work out for the
investors? Maybe companies should build a profit.

I can't tell yet but it seems Slide is horribly overvalued, especially with
giants like Digg and Facebook's valuations dropping precipitously.

Over investing in companies like this makes it all the harder for the littler
company with a legit product.

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zandorg
As far as I'm concerned, Michael Chabon lost it after Wonderboys in a big way.

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kleevr
May be good advice, but aren't they giving it out a little late?

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unrealwh
does levchin really have the midas touch? are slide and yelp ever going to be
viable? yelp missed the boat, they should have sold out in 2006 when the hype
over "local" was peaking. slide will be indeed likely end up as the king of
the widget makers...for all that matters. yelp's site and reviews data will
likely get bought for a song within the next three years....slide will slide
into irrelevance as the widget market flames out

