Time to pay closer attention to the tea leaves(Unicorn Companies)
Posted at 11:15h, 21 Jul 2015 in List Archive by Bonnie Halper No Comments 135 Likes Share

Good morning, All,

In case you missed it, the subject line is a reference to a song by Prince. A lot of attention is being given to the number of tech companies that have hit unicorns status (Total Number of Unicorn Companies: 119. Total Cumulative Valuation: $448B) and the number of angel investors/the fact that there’s too much money out there right now. The reason why the first bubble burst – and we’ve said it before – was that there was too much money/stupidity chasing too much youth and inexperience. What to speak of the number of newly minted and thoroughly clueless investors in the field, suffering from FOMO Syndrome. Brian Cohen almost never fails to mention this lately – and for good reason.

We’ve seen this before

, and FYI: Yours Truly went on record in the WSJ (above the fold) that the Web 1.0 bubble was about to burst, long before it had hit the zeitgeist or the tech/mainstream press. And was excoriated for it. So it goes, but it’s simple history and physics: the pendulum always does swing back. It’s the way of the world.

Said Greylock’s John Lily in the aforementioned article, “I think there’s a new Google to be built; I think there’s a new Office suite like Microsoft to get built. There are some really big, important companies that will feel expensive and then turn out to be cheap.  I think the truth is some stuff is wildly overpriced and will look obviously so in retrospect.  There’s some stuff that feels wildly overpriced and will look the opposite in retrospect.” Note to self: after a very long run, Adobe is finally putting Flash to bed – and it’s way overdue. Steve Jobs was right after all.

With economies melting down, we’re at an historic crossroads and speaking of bubbles, given the recent economic events in Greece, Rome, Puerto Rico and China – with more no doubt to come – this is not the time to stick your head in the sand: CBO: Debt Headed to 103% of GDP; Level Seen Only in WWII; ‘No Way to Predict Whether or When’ Fiscal Crisis Might Occur Here

This may well be the time of the Summer entrepreneurs and sunshine VCs, to take a page from Thomas Paine, and as the article says, “This isn’t a conversation of whether we’re in a bubble or not. Suffice it to say that when you can read a new article about the bubble every single day from a reputable media source or venture capitalist, you can at least assume we’re not in a normal economic climate…this is a piece about the state of entrepreneurship and venture capital and how it will react when the turn comes, because it will come.” While we’re ever the optimist, always wise to follow the money: the smart money and in case you missed it: Bitcoin and space travel are two of the fastest-growing areas of venture-capital funding and note the Venture Capitalists Backing Nuclear for the Post-Obama Age.

Tech is really not about disruption: it is and always has been about revolution. The so-called unicorns are not true disruptors: at best, they’re about disintermediation. All well and good but lest we forget, disintermediation was more or less the rallying cry of the Web 1.0 days, when valuations (also) went wild. True disruption is about reinvention. Not to merely change or add a tech layer to what’s there, but to reimagine possibilities; to cast off the old and start with a tabula rasa. It’s not about changing the game: it’s about moving the game.

A gaggle of geese. A murder of crows. A pride of lions. A host of angels. An exaltation of larks. There’s no such thing as a herd of unicorns, but that’s what we’re seeing. True disruptors arrive in packs. They stand singular and apart. The square pegs in the rounds holes. The people who see things differently. The ones who ignore the present climate – political and/or financial – and cast their glances 20 minutes into the future, to where the world is going. It’s a waiting game, and all that’s required is patience and vision. They know it. They wait. They prepare. Because as always, the future belongs to those who can see it coming. It can’t be stopped, ignored, sidetracked, intimidated, or dissuaded. Many of the current unicorns will not survive the next wave – pun intended – and a correction is long overdue. Not to worry: even that will not stop the true visionaries and entrepreneurs. It’s in their DNA. They will always keep moving – and take the world with them  – as they go onward and forward