Surviving Bubbles And Busts By Buying Low And Selling High
from the up-and-down dept
This discussion reminds me of a conversation I recently had with some startup execs about how you survive the ups and downs of bubbles and busts. It goes back to the question of "when's a good time to start a company," and the answer is always that it depends on the company. However, the idea that there's a bad overall time to start a company is false. There are always opportunities, and it's always in figuring out what is cheap relative to other things. So, during the original dot com bubble, raising money was relatively "cheap." There was so much competition for funds, it made sense to raise a significant amount of money, since you could do so without giving up too much equity. After the bubble burst, there were a lot of out-of-work, but smart, people available who could be hired cheaply. Technology was also pretty cheap. So you could build a startup with cheap technology, cheap labor (and eventually cheap publicity). So, these days, it seems like money was getting cheap again (as evidenced by some of the crazier VC deals), though not as cheap as in the last bubble. People are getting expensive, thanks to Google and Yahoo snapping up lots of good people, but it looks like marketing is getting expensive again too. So, for any entrepreneur who is looking for the best way to survive the up and down swings of any market, never assume that what's cheap now will be in the future, and learn to stock up on whatever is cheap when it's cheap relative to everything else. As for what actually is cheap or expensive right now... well, that's up for you to decide.