3 ms·
The thing of it is that a bubble is not the right time to start a lifestyle/sustainable business. During a bubble there is all sorts of investor money floatin
by lsc 14y ago
The thing of it is that a bubble is not the right time to start a lifestyle/sustainable business. During a bubble there is all sorts of investor money floating around driving up prices on things you might want to buy as a sustainable company, and as a sustainable company, you can't compete with investor money for inputs.
So yeah; right now? PG is absolutely doing the right thing. But if I'm right, after the crash? assuming he comes through financially able (which I assume he will; he doesn't seem the type to bet the farm on facebook stock) and wanting to continue investing, at that point? he will look for sustainable companies. If you are trying to start a traditional sustainable company, in many ways, it's easier to do during a downturn. There is little competition for inputs, so you can get everything you need much more cheaply, and there is a lot less competition, so if you come up with something new, you won't have 5 other 'me too' companies copying you in the first year.
Really, there's less opportunity cost for the founder, too. I mean, right now, the temptation to get a job at facebook or google is really strong, even for me; I'd get to work with some really great people, and probably make about 3x more 'profit' than I do now.
During the downturn, getting those plum jobs that pay really well while letting you work with really great people is a whole lot more difficult, so taking the pay cut while you get your business off the ground is not as big of a deal.
- Andrex 14y agoIf you are trying to start a traditional sustainable company, in many ways, it's easier to do during a downturn. This was basically the message of PG's recent leaked "bad times" email: "The startups that really get hosed are going to be the ones that have easy money built into the structure of their company: the ones that raise a lot on easy terms, and are then led thereby to spend a lot, and to pay little attention to profitability. That kind of startup gets destroyed when markets tighten up. So don't be that startup." [1] What I take away from all this is: have a revenue model built into your startup from the start. Use it. Generate profits of some kind. Not only will this help when you need investors (since they like businesses that can stand alone), but it will help you even more if they don't come. [1] http://www.businessinsider.com/facebook-fallout-y-combinators-paul-graham-just-emailed-portfolio-companies-warning-of-bad-times-in-silicon-valley-2012-6#ixzz263AllOkW http://www.businessinsider.com/facebook-fallout-y-combinator...
- lsc 14y agoInteresting. That's completely the opposite of what I was taking away from PG's essay; My takeaway from the essay was that investors want you to swing for the fences; in my mind, that means not worrying about profitability early on. I mean, twitter didn't introduce advertising at all until they were absolutely huge. I had the impression that facebook was similar (though I could be off; I'm not a regular user of facebook) - I mean, in a very real sense, it's easier to grow if you don't monetize (assuming you can still keep the lights on.)
- Andrex 14y agoI get the feeling from PG's other essays that he regards Google, Facebook, Twitter, etc. as the extreme outliers that succeeded in defiance of the "rule of revenue," not because of it.
- lsc 14y agohuh... but wasn't he saying, in this, that he was looking for the extreme outliers? I thought that's what a 'black swan' was.