article thumbnail

Praying to the God of Valuation

Both Sides of the Table

2001–2007: THE BUILDING YEARS The dot com bubble had burst. We had nascent revenues, ridiculous cost structures and unrealistic valuations. I learned to avoid unnecessary conferences, avoid non-essential costs and strive for at least a neutral EBITDA if for no other reason than nobody was interested in giving us any more money.

Valuation 466
article thumbnail

What’s Really Going on in the VC Industry? What Does it Mean for Startups?

Both Sides of the Table

The VC industry grew dramatically as a result of the Internet bubble - Before the Internet bubble the people who invested in VC funds (called LPs or Limited Partners) put about $50 billion into the industry and by 2001 this had grown precipitously to around $250 billion. VC will shrink. Oh yes it will.

LP 311
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

On Bubbles … And Why We’ll Be Just Fine

Both Sides of the Table

But this mania to not miss out on the next big thing is driving some investors to pay growth-equity prices for traditional market risk (as in, they’re paying up before it is clear there is product / market fit). And well they should be. And so on down then line.

article thumbnail

The Great VC Ice Age is Thawing (for now) – Part 1 of 3

Both Sides of the Table

Just ask anybody who was trying to close funding the fateful week of September 11, 2001 or even March 2000. This came in part due to the huge influx of money into VC but also because hedge funds and private equity shops with no VC experience wanted part of the action. While the company continues to perform well it has come at a cost.

Burn Rate 263
article thumbnail

Bad Notes on Venture Capital

Both Sides of the Table

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. And so forth.

article thumbnail

What Everyone Should Take Away from Twitter’s 8% Staff Reductions

Both Sides of the Table

The truth is that the brutal reality of public markets is that they self correct much more quickly than our shitty little private equity illiquid corner of the universe. I encouraged them to stay in shorter-term space, higher per-unit costs but no capital outlays. I put up this slide as part of my discussion. Does this suck?

Burn Rate 150
article thumbnail

The Economic Antidote to COVID-19

Startup Lessons Learned

The Economic Antidote to COVID-19 Eric Ries & Ryan Beck In 2001, Apple's revenue fell by 33% in the depths of the dotcom bust. As revenue contracts, orders slow, and capital markets freeze, conventional wisdom drives business leaders to cut costs and shy away from new projects. The rest is history. This crisis could be different.