I am a founder of a bootstrapped company, that has been profitable for a couple of years. The profits have been reinvested, and the company is growing. We never planned to take money. So far, we mainly see the negative sides of this bubble: it's harder to hire quality people, services (lawyers, bandwidth, etc) are becoming expensive or harder to get. How can we take advantage of this boom? How long will it last, or at least, what will be the mechanism for its deflation, because it's only limited to tech sector so far, unlike '99.
>If you just want stability build up a little cash hoard so you can grow during the crash and pickup talent cheaply.
This is why I am interested in the timescales involved: how long will it last, and why will the bubble deflate? This input is highly desirable to make the correct decision.
I don't think it's possible to say for certain, because there are too many factors involved. Here's my mostly uneducated opinion on it though: we're seeing huge valuations and investor commitment in startups while at the same time seeing big co's throwing lots of money at each-other in lawsuits of various kinds. I think these are two symptoms of the same problem: that the consumer market is still stagnant, and will be for a while. Well, that coupled with commodities speculation and other unstable markets.
From an investor standpoint, I think startups are where the smart money is, if you have enough cash to play the game. So, of course capital is going to gather there, and it's going to keep doing it as long as it's the best place to put a few million dollars if you want to make a few million more.
So how long will it last? I think it'll last a while -- until the consumer markets start to improve and other investment strategies become stable again, and there are enough Groupons to seriously hurt the perception of the startup investment strategy.
There's no sign so far of real improvement elsewhere, and right now only the crazy people are the ones saying that startups look like a bubble. So, I'm guessing this will go on for at least a year or two.
Purely from a business standpoint, if you can get access to any of this capital, and if you're willing to play the game and give up some amount of control over your business, then you'd be foolish not to take the money. If nothing else, it might give you a tremendous edge over your competitors.
However, there are no free rides. The capital could come with a big risk: that when the market finally corrects again, your business has been spending beyond its revenues for a couple of years and the adjustment is so painful that it kills your business.
I think this really comes down to how you think; if you think in terms of, "what do I want to be doing in three years", then you should probably take the money and get rich and have a good time, and if the business collapses afterward, who cares? But, if you think in terms of, "what do I want to be doing in thirty years", and if your business is important to you -- then maybe still take some money, but be more conservative about it and make sure you can survive once everybody decides that startups are a bad investment again.
But I really don't know what I'm talking about, and I bet a bunch of folks are about to turn up and tell me so. :-)
I don't see a crash until the next recession. Of course, the crash could cause the next recession (consumer confidence and all) but we're likely on the way up for a while.
I agree - the problem with the bubble is that it makes all relatively sane business people seem insane. It now seems insane to create a profitable business that lives within its means...
If you want to build a sustainable business you should keep up the discipline of living within your means and grow slowly through the bubble.
If you want to make money rite now (and lots of it) ride with the bubble. The answer depends on what your objectives were when you started your business.
Because he is an opportunist and likes money? I take advantage of everything I legally and ethically can. I expect everyone else to do the same when it comes to business.
and why would anyone want to do business with you knowing your goal is to take advantage of anything you can for your own end? . . . why wouldn't your business partners always be watching their backs. not an efficient way to interact with people, and an impossible way to create. creative endevours require trust, trust isn't compatible with opportunism.
I think he is using it properly, the boom is negatively impacting his business (Lemons) so he is trying to see if there is a way to take advantage of this (Lemonade)...
But that response was in reference to the comment asking him why he would want to take advantage of a bubble rather than rely on his own talents. To that comment, his response makes little sense.
