Babbling VC

It Could Be Worse: 10 Thoughts on the Economy

Somehow, during the span of my career, I've had multiple groundhog day type occurrences. I feel we are in the midst of one right now. My first occasion was the bubble bursting after the turn of the century. Then we had the 2008 financial crisis. Now, we have what I'll call the Trump crisis and unfortunately, there will be more before I am done as the cycles are accelerating. 

This isn't a post about economics or why such things happen and the economy turns. We may be in for a long phase of shitty market conditions. I haven't yet completely become convinced that the markets are done for. Nevertheless, if you look at what's been happening in the run up to Xmas one could presume we are going to be going down for a bit. The VC's are all getting their RIP presentations out (wow, has it already been 10 years) and the press is piling on on the downturn bandwagon. We might as well get ready for it. 

Having been through a couple of these already, here are some comments on all of this from me. This isn't necessarily advice because what do I know? This is more my experience in the past and how I plan on behaving accordingly now. 

1.  Stop looking at your stock portfolio. If you own stocks and haven't sold yet, it's too late. The drop has already happened and if you start panic selling now, you will eventually regret it. Just hang on. 

2.  If stocks are your thing, don't miss the buying opportunity. As long as things are going down I wouldn't necessarily start buying. But once things settle a bit, make sure you actually buy stocks to ride them back up. This was a major mistake I made in the past. I entered the markets too late and clearly should have been buying when the buying was good. 

3.  If you own a house or apartment and don't have to sell, I wouldn't. Prices have already started going down. Just as with stocks....hold on and only sell if you have no choice. 

4.  If you wanted to buy a house or apartment and planned to, wait. It will get cheaper. Don't ever rush yourself to buy. If you are renting, doing so for a while longer won't change things much. 

5.  You may lose your job although it isn't likely. No matter how much the press makes you fear losing your job, chances are good you won't. On the other hand, if you are losing your job because your management is panicking, there is probably nothing you can do to save it. Don't sweat this. It will make you absolutely crazy. 

6.  If you already lost your job, thank yourself for putting cash aside to tide you over when things go to shit. (You haven't saved up and have no reserves....then this post is probably not the right one for you. I recommend you waste no time reading blog posts and get employed as fast as possible, regardless of the work. If nothing else, it brings in cash until you find something better.)

7.  You've planned large expenditures in the near future like cars, vacations or whatnot? Put them off. There is nothing which you can purchase now that you won't be able to purchase later. You go a year without vacation somewhere nice? No big deal....stay home, relax, go see some movies. Regardless, it's not the time to be splurging and Bora Bora ain't going away. 

8.  You've always been thinking about starting a company? Regardless of the economy, if you want to start a company, it's said "there is no better time than now." Well, technically, when the economy is going to shit, it's better. All those people losing their jobs? Yup, some will come work for you. Those high salaries at large corporations have scared you? Those prices come down. Everyone says fundraising will be a bitch? Well, it's always a bitch. You will suffer raising money one way or another. Might as well do it when there is less competition, less noise in the market and more run time to build your business. 

9.  You hate your job or your boss? Quit and go work for a startup or see 8. Even if you aren't the founder, you will never learn more than when in a startup. Once the economy turns, large corporations love to see that you've had startup experience. Short-term you will take a salary cut and not have as much security but mid to long-term, you benefit. The startup can become a rocket ship and your equity becomes worth millions. Or the economy turns, and you have one more thing on your resume making you that much more worth it to the corporations. 

10. You have a large cash reserve since you earned well or had some exits? Well, if you've thought about being an angel investor, your opportunities are about to increase. People don't stop starting companies and historically, some of the best businesses are started when the economy is shit. Why wait until prices are astronomical? Most founders that start up when things look bleak are usually the most committed. Not only can you get a good price but you can be part of something that truly has upside. 

Again, this is not advice but some thoughts to chew on. The markets may recover as soon as 2019 starts but I highly doubt it. I am preparing for a longer downturn but am greeting it too. Just like in the past, these phases clear out the market. The crappy startups disappear and their best employees can be recycled to better opportunities. The crappy VC's also get destroyed. Unfortunately, they never disappear fast but they are easier to spot when things go south. Their portfolio companies automatically see how they behave. You can reference them before taking their money and their portfolio founders will let you know who is on their side when things go south and who isn't. It becomes quieter with less hype. As much as the excitement grows with hype, when things aren't going so good, you put your head down and work. Finally, everything eventually gets better. It always has and always will. The question is just how long until then and will you take advantage of it?

Meditate On This

I recently read a post about needing a "strenuous age" to start again. I highly recommend reading it if for no other reason than to see the parallels between the turn of the 20th century and now. It's scary how similar things seem and a bit worrisome what those parallels will lead to. Nevertheless, this article came at an interesting time for me. Having reflected a bit on what I've done in the past 43 years, I can attest to the fact that the next 40 plus years of my life won't be driven by meditation, drug use, and journaling. Yet, if you look around, you will see that this seems to be a trend.

Alone in my lifetime, we have come quite far with technology. I grew up in the days when rotary dial phones were still around. We weren't always on and connected in my childhood. I could be described as having been "free range" as a kid. My mom joked to me recently that I was running around with other kids my age alone in the woods at age 7. She'd be arrested for that nowadays. We had a cabin in Upstate New York and not only were we unparented most of the time, but we also had access to guns and there were abandoned hotels we considered playgrounds. Yes, one of the kids there ended up shooting a hole in his foot. He learned his lesson about guns. Without it sounding too idealistic, it was a childhood I look back at as healthy. 

Fast forward 30 or so years. Remember all the noise in the media in the 90's about supermodels (then basically women...think Kate Moss) being too thin? There was an uproar about the media projecting an unattainable image and women were getting screwed. Now think about where we've come to. No longer is it about being thin for just women. Now it's about being perfect, everyone and everywhere. We are being assaulted by images of perfect lives: thin yet muscular...happily married....wealthy....happy and thriving children....careers one wants and likes....leisure time. Social media and technology are projecting Photoshopped lives on to all of us. 

I shudder when I see things like Burning Man. I can imagine it being an artsy, alternative world 20 years ago. Now it's just so commercialized and attended by people thinking they are tuned in to the times. Yet, if you look at Silicon Valley and beyond, you will realize that people are living in a neverending Burning Man like existence. The popular bloggers, VC's, tech leaders and podcasters I've mentioned on here before have all come from doing some Crossfit and eating "clean" to full-on monk-like lives filled with meditation, micro-dosing of LSD, smoking weed plus constant journaling as well as lists of gratitude. Forget not that this is a lifestyle usually afforded only those who have earned enough to support it. 

Reality and life remain far-less exciting. At least my life does when compared to these curated lifestyle projections. Yet, I refuse to believe that I need to life hack myself to a better place. I could, on one hand, be super unhappy about where I have come to at this mid-point in my life. But for what? I like my life with all of its warts and scars. I work out regularly but I enjoy a glass of wine and a good martini here and there. I try to eat healthy most of the time but carbs are just fun. I work too much sometimes but I compensate by making time for my family. I work on being a "better man" but who are we kidding? At 43 I ain't changing all that much anymore.  But this too is perfectly fine. I don't need to meditate or use drugs to detach from a life I am unsatisfied with. I don't need to write gratitude lists every morning because I can be thankful for what I have without writing to myself about it each morning. Maybe I've just continued living a "strenuous enough" life post-free-range parenting to not feel like there needs to be "more" there.