(Zoho CEO here)
My analysis of financial bubbles informs how we operate in Zoho. I believe the Greenspan-Bernanke-Yellen era will go down in history as one of the biggest bubbles the world has ever seen.
The economy is now fully addicted to bubbles, and the start-up ecosystem is particularly affected. Withdrawal from this bubble-drug is going to be painful.
A couple of anecdotes about the last big tech bubble of 2000. At that time, there were 300+ optical networking companies in silicon valley. We had sold our network management software to about 150 of them. By 2003, only 2 were left standing. We survived because we had saved up some money for that eventuality, and we reinvented ourselves using those savings.
One painful bubble memory I have is the real estate lease that we had no option but to sign in 2000. We moved from San Jose to Pleasanton to escape the worst of the bubble-rents but even in Pleasanton, while the rent wasn't ruinous (about $20 per square foot per year), the landlord forced a 7 year lease on us. Still, the rents fell to about $10 per square foot per year by 2002, but we were stuck with the higher rent for 5 more years. Fortunately, the company was financially strong enough to withstand it but the episode taught us a lesson in bubble-planning and bubble-survival.
I am shocked that people are signing $50-100 a square foot per year leases for 10 year terms these days.
Our goal right now is to survive the present bubble, bigger in some ways than even the one in 2000. I tell our people that there is going to be a serious bust and we should aim to survive it first.
The thing about bubbles is it sort of hard to predict. Also how many times have we seen the same bubble. Investors have already learned from 99 and they will short any IPO/Public company stock that does not have any significant growth and/or profits. Look at Zygna and Groupon, probably made allot of short sellers rich.
What happened in 99 is already factored into the market. The public stock market is dying to short sell over hyped companies that under deliver.
The situation right now is unprecedented. With the Fed keeping interest rates low for so long. LP's have no other choice but to invest more of their money into public stock market and the private markets through VCs. I can't seem reduce their exposure until there are viable options. The Fed won't let that happen.
I can see a scenario where if somehow startups burn up all their capital and go under. Somehow the entire VC fund goes under. LPs might have to pull money from public equities to cover their startup investment losses.
If one or two big startups like Airbnb or Dropbox go under. The worst case scenario could be really bad, as it could have sever ripple effects through the start up ecosystem. Eventually hitting the public markets and normal people.
> A couple of anecdotes about the last big tech bubble of 2000. At that time, there were 300+ optical networking companies in silicon valley. We had sold our network management software to about 150 of them. By 2003, only 2 were left standing. We survived because we had saved up some money for that eventuality, and we reinvented ourselves using those savings.
That's eerily similar to the situation today. A lot of startups today count other startups as their largest customer segment. It's not often talked about, but accelerators have greatly contributed to this trend.
The big question is how many of today's startup-dependent startups are saving their money and will be in a position to try to reinvent themselves when their customer ranks are decimated.
To be clear, there are extremely few Indians who hold any kind of grudge about the British. On the contrary, the English language is more popular than ever, 60 years after the British left.
History is full of injustices. I don't see why the present generation of Indians should hold onto what happened to their grandparents generation. We don't need to suffer history now, we get to live in the present - that is the attitude I see in most people in India. That is why India is as peaceful as it is (we have to normalize whatever good or bad is happening to the population - "India" is not an aggregate in the same sense that, say, "Sweden" is an aggregate - so whatever happens in Sweden once a year would happen almost once a day in India, simply based on the relative population sizes).
I had a short debate with pg a while ago on HN, where I said something to the effect "Finance has created far more wealth in recent years than technology or entrepreneurship". I don't think that trend is good for the economy but that is the inevitable consequence of the monetary policy the Fed has been running. The economy is well and truly financialized, and finance rules.
I have to disagree with the "can easily tell within ten minutes if someone cannot pass muster" part. Interviewing is hard. We tend to make such snap judgments but those judgments reflect our own biases.
I have come to believe over the years that interviewing measures interviewing skills. Test scores measure test taking skills. Success on the job requires success-on-the-job (to coin a phrase) skills. All those things correlate, but the correlation coefficient is not super high. In fact, ignoring those correlations can be an effective strategy to find great people.
Aren't "interviewing skills" essential to founders? Isn't a YC interview basically a chance to pitch your company and answer probing questions about your plan? Seems like a pretty fair qualification to me...
Fundraising is not a CEO's endgame, but it's very similar to the day-to-day of CEO work: promoting the company to others; being the public face; communicating clearly, concisely, and effectively; making sure that the company 'works' in all the ways that matter.
All of these are 'soft skill' competencies that hackers tend to downplay. But you need someone who can do this and do it well.
I don't downplay the importance of those skills, but are they essential to all CEOs? Does every company need a public face? Absolutely not, at least not for startups, depending on your core competencies and what makes you a good CEO, the public facing stuff to the extent that it is necessary in any given company can be delegated.
I think of most VCs as "money brokers" or "money salesmen" rather than as capitalists or investors. A company taking in $100 million in venture capital is basically enabling the VC partner(s) to earn $2 million a year annuity until an exit. That 2% annual commission (that's what I call it) on every invested dollar is a substantial incentive on the part of the VC to push more and more money on companies that a) may not need it b) would be unwise to spend it.
I don't see any justification for the 2% on ever-larger rounds of investment. The work VCs do on a $100 million investment is not 100x more than the work they do on a $1 million investment. I hope that model gets disrupted!
--- abstract --
Autism spectrum disorder (ASD) is a spectrum of behavioral anomalies characterized by impaired social interaction and communication, often accompanied by repetitive and stereotyped behavior. The condition manifests within the first 3 years of life and persists into adulthood. There are numerous hypotheses regarding the etiology and pathology of ASD, including a suggested role for immune dysfunction. However, to date, the evidence for involvement of the immune system in autism has been inconclusive. While immune system abnormalities have been reported in children with autistic disorder, there is little consensus regarding the nature of these differences which include both enhanced autoimmunity and reduced immune function. In this review, we discuss current findings with respect to immune function and the spectrum of autoimmune phenomena described in children with ASD.
-- end quote ---
The immune system in new-born babies and young children is immature and under-developed.
In purely economic terms, China has performed a fascinating ongoing experiment.
The Party looked at the "end state" of an industrialized, prosperous middle-class nation and then decided to will that end state into existence. In that end state, China needs to urbanize on a massive scale and these cities are simply the physical manifestation.
This is the grandest scale human experiment ever, collectivist decision making at its finest (those farmers who are forced to give up the land don't have much of a voice).
Will this work? I don't believe we can begin to calculate all the consequences of this experiment. In any case, it is not obvious the causality runs the way that is implicit in this experiment: build cities, move people, and forge a vast urban middle-class out of rural peasants.
This book is a somewhat sympathetic description of that grand experiment (mildly sympathetic to the Party):
Interestingly, this has long been one of the main Marxist criticisms of the policy of centrally driven industrialization (which Marx didn't believe in, but Lenin did). The traditional Marxist view is that socialism can only be instituted after capitalist industrialization, because it's a revolution driven by the urban proletariat that capitalist industrialization creates, not something that can be artificially created absent those material conditions. Hence the view of orthodox Marxists that "socialist" industrialization driven by a vanguard party would be internally incoherent, or at least non-Marxist.
(One hears less about this today, because the German revolution failed while the Russian one succeeded, so Lenin won out over Kautsky in dominating 20th-century leftist discourse.)
In typical state-planner fashion, the Chinese government completely misses a critical component of the rich-country population distribution: people (more or less) choose where they are going to live, i.e. it's not just a question of available bedrooms. Detroit has plenty of available bedrooms, and so does the most of the South and mid-West.