'We're in a Bubble'
The post examines the recurring narrative of a tech bubble over the past decade, highlighting various articles that have predicted its emergence and potential burst. It reflects on the cyclical nature of tech valuations and the skepticism surrounding them, suggesting that while the bubble may eventually burst, the current environment continues to thrive amid warnings.
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Upside risk
The post argues that many angel investors misunderstand the power law of returns, often focusing excessively on mitigating downside risk rather than recognizing the greater risk of missing out on exceptional investments. It suggests that investors should prioritize reasonable pricing and align incentives with founders to capitalize on potential high returns, rather than fixating on unfavorable terms that can hinder opportunities.
What to do if a bubble is starting
The post discusses the potential early stages of a startup bubble, highlighting signs such as rising valuations and increased investor activity. It emphasizes the importance of financial preparedness for startups, advocating for a focus on profitability, frugality, and strategic decision-making. The author suggests that while bubbles can be unpredictable, adopting these practices is beneficial regardless of market conditions.
Black Swan Seed Rounds
The post discusses the author's experiences with seed investing, highlighting that successful investments often come from contrarian choices rather than popular, competitive rounds. It emphasizes that many high-performing companies initially appeared to be poor ideas, suggesting that founders should not be discouraged by a lack of oversubscription in their seed rounds, as conventional wisdom can mislead investors.