So what if it’s a bubble?

Founders don't do macro

One of the more fun ways to spend time on X is to get into an argument with someone who thinks we’re in a bubble. Or get into an argument with someone who is convinced we are not. I don’t mean fun in the sense of “oh boy this is enjoyable, let’s have a playdate” but in the “this definitely isn’t work and actually is enjoyable if you get to play an extremely certain character in this meaningless debate.”

Though to caveat this, the debate wouldn’t be meaningless if you had any power to change the wider market dynamic or if your job - ahem, hedge fund people and managers of central banks I’m looking at you - was to actually do something with the bubble/no bubble information.

But I’m going to assume based on the standard demo of my readers that most of the people that have gotten this far are either founders or VCs. And, for you, the whole bubble thing is totally irrelevant but makes for good dinner conversations. The conversation has a strange sort of irrelevance because if we are in a bubble and it pops, it could potentially be very bad for a lot of companies. And if we’re not in a bubble, then there could be a whole lot more good stuff coming.

But on a practical day to day level, the existence or absence of a bubble doesn’t matter for 99.9% of us. One of the important things about startups is that they are and should be hyperfocused on the immediate challenges in front of them, and more than that on the set of challenges over which they have meaningful control. It is the accumulation of wins in these specific scenarios - one new customer, one new engineer, one new well designed hat - on which era defining companies are built. Of course the best founders have an eye toward the extremely long term, but I’ve found that the most interesting ones do this with a true appreciation for the scale of “long term.”

That definition, incidentally, extends well past the near term will it/won’t it bubble stuff.

Which goes back to my point at the top. The reason the bubble dynamics don’t matter to most founders is because we all live in today’s market and not on a specific branch of the multiversal future. Founders that have the ability to take advantage of the specifics of that market should do so as long as it benefits their companies.

If money is plentiful and valuations are good and there’s a productive use of cash, you should probably take it. If it turns out that we were in a bubble, and the bubble bursts, then having the money will probably be useful. And if you had perfect hindsight and knew we were in a bubble and knew that the valuation at which you are currently raising was too high, would you do differently?

Probably not, honestly. In fact, if you play it right, you can always try to adjust your value down (Ramp, Stripe, some others) and then back up as you ride the long waves of the cycle. Because great founders live in the long term, the kind of long term that radically reduce the impact of individual bubbles.

So have fun. Go debate. And then go back to accumulating wins and climbing whatever hill you’ve chosen. Step by step.

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