I got invited as a guest even though I barely knew the founder. We rode up the glass elevator to the top of a skyscraper, where we arrived at one of the most expensive restaurants in the world.
I once checked the prices to take a date there. It was $700 for two people.
When we walked through the door I could hardly believe my eyes. They’d decked the place out. Everywhere I looked people were doing shots. They had blow-up unicorns. And glorious canapés came out of the kitchen faster than Mcdonald’s.
I walked over to talk to the young founder. He had a tuxedo on and black hair parted to one side. He looked like a young Tony Stark.
“Yeah, Sequoia is in and now we’ve made it.”
The business had done $0 in revenue and couldn’t explain what they did. It sort of sounded like Alibaba but with a Stripe angle.
I was one of the few people that’d seen their bank accounts. I knew they were full of sh*t but my employee contract prevented me from saying anything. Nobody else knew their lies. The media lapped it up. They hailed the founder a boy genius.
He wasn’t really. He lied. About. Everything.
I ate my free canapés and realized I was working through a boom. Anyone with a voice box could talk and get money thrown at them.
The boom times made us lazy
Silicon Valley icon Jack Altman said something interesting recently.
“The people working at startups through this downturn are going to become such stronger operators than people who only went through the boom.”
I nodded my head up and down the way a puppy dog does at dinner time.
Since 2008 it’s been nothing but good times and great classic hits. You didn’t need to be that smart to start a company. As the Theranos, FTX and WeWork founders proved, you didn’t even need to tell the truth.
All you had to do was sound like you knew what you were doing.
It’s not just founders either. Employees in sectors such as tech got lazy because work got too easy. You could get a job at Google, walk around making day-in-the-life TikTok videos of your #AmazingLife and pocket a cool $500K plus stock options.
It turns out the stock options were bullsh*t. It was basically free cash but these companies had a few accounting tricks to hide the secret source of funds and pretend they were more profitable than they were.
Once you add back in all the employee stock options, profitability looks a lot worse. Cash is cash after all. These stock options allowed workers to be overpaid for basic jobs.
Companies that didn’t have employee stock options found it 10x harder to attract and hire talent. Tech employees became more and more complacent.
In 2020 I became one of these employees.
My expectations were wildly disconnected from reality. I thought all I had to do was land a few new clients and I should be paid some oversized salary. Now I realize that was the tech boom deluding me.
Tech made me lazy AF.
A downturn creates problem solvers
There are problem solvers and problem creators.
Many spoilt workers from the boom era I came from became entitled. From 2020 onwards they spent their time complaining about everything.
CEOs from companies like Shopify and Coinbase had to put their foot down. “Activism” as it became known had to stop. Why?
A startup can only have one mission. You can’t be the best eCommerce software in the world and solve world hunger and a war in Europe. No.
Focus is needed.
So all the problem creators were told, politely, to leave. And they did. Then interest rates began to go up and the stock market crashed.
The entitled workers from the boom times found work began to change. Their free lunches got cut off. Their activism distraction teams got laid off. And now we’ve started to come back down to reality.
People have realized you have to work hard and solve problems to hold a job down and get paid nicely.
This is the greatest time in history
Times have never been tougher.
Banks will continue to collapse. AI will continue to remove lazy jobs from the economy. The housing market may actually become affordable once again. I’m bullish.
One reason I’ve been thriving in this economy is because I had a startup in 2008. It nearly crushed me. I went from having hundreds of customers to a handful in a matter of days after Lehman Brothers collapsed.
It made me realize business isn’t easy and customer demands are real.
I found I became more disciplined and lowered my expectations. I also became grateful for every single customer.
The startup employees of the recent boom could learn a thing or two from 2008. We may be heading toward this type of recession again if banks keep collapsing. And when we do … all the free money, perks, and unicorn dreams will be gone.
Investors will simply ask “does this business make a profit?”
If the answer is no then money will exit a startup faster than my wife leaves the room after I lay a fresh fart due to eating too much baked beans.
Downturns humble us. Good. We’re starving for it.