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You need a counter-cyclical business to really make that work however. And given how interconnected things are these days, what out there is counter-cyclical?
by Espressosaurus 4y ago
You need a counter-cyclical business to really make that work however. And given how interconnected things are these days, what out there is counter-cyclical?
- gen220 4y agoHaving a counter-cyclical business is helpful but not strictly necessary and actually not sufficient. What is actually most important are a long-term outlook, backing from shareholders to pursue anti-fragility at the cost of short-term growth, and well-managed and well-protected cash reserves. Few well-known, public or VC-funded companies operate this way, because collective greed is a far more powerful force than the desire to build an anti-fragile, long-lasting company. And in a world where it's fairly easy to close a company's book and move on to start the next thing, and where the economy hasn't experienced real stagnation in over a generation, this arrangement of incentives makes sense. Berkshire Hathaway has historically worked this way, as an example. One of Buffet's basic playbooks was to combine the books of cyclical and counter-cyclical businesses, and harvest temporarily high prices of the former to plow into the latter, and vice versa.
- klempner 4y agoYou don't need a counter cyclical business, what you need is somewhat counter cyclical funding. You develop during recession when it is easy to hire people, and when the economy is on the up side of the business cycle you have a product that's ready to sell.