as much VC money flowing, and so convincing someone to give you money was a lot harder, and it took a lot more capital to build things. Nowadays, there is plenty of money, and [it’s] much easier to build because of the cloud and all the tools that are available. But in terms of making it a successful startup, I think it’s just as hard.
To be a successful startup, you have to be resilient, creative, and treat it like you are on a mission. You have to be willing to give it 100 percent.
X: You were working in the tech industry during the dot-com bubble and subsequent crash. In your opinion, how does the current tech environment compare with that period? Are we headed for another crash?
SKR: Back in the bubble days, we did have big valuations, but I think they pale in comparison to some of the things we see today.
The valuations were wild in the public market. Many of the public companies had some financial reporting tactics that were not sound, which made them sound like they were doing much better than they actually were. (Sarbanes-Oxley has fixed this). And some of the Internet high-flyers had unproven business models. All this contributed to the crash as soon as things got shaky—because of the lack of a solid foundation.
I don’t think the public markets are in a bubble now—[valuations] may be high, but not based on unproven or unsound business models.
But what I see nowadays is the crazy valuations startups are getting, with little to no proof points, or unproven business models. This is not in the public market, but in the private sector. There are too many entrepreneurs who seem to be fixated on being the next “unicorn” ($1 billion valuation), and so are willing to accept financing terms that do not make sense, just so they can be called a unicorn. I am hearing that this trend is slowing down due to reduced interest from the venture and equity community to play the game. So, I think the bubble is starting to deflate in the private sector.
