I was on a flight yesterday from SFO to JFK and took the opportunity to dust off the old substack and put some confounding thoughts on paper.
As a consumer of endless waves of content that crash onto the shores of my inbox, Twitter feed, and the occasional in-person dinner conversations, it feels like the question behind the question for many people following technology and markets is:
Are we currently closer to 1999 or 2009?
To elaborate a bit further:
Are we currently in 1999, where there is a massive bubble fueled by irrational exuberance that will soon pop as our collective hopes and dreams for the promise of these new technologies collides with the harsh reality of the hype cycle and the rigidity of the physical meat-space we exist in today?
OR
Are we currently in 2009, where a recent, massive economic shock, a historic recession, massive unemployment, death, and destruction was met with an unprecedented monetary and fiscal response from the Fed and the US Government, respectively, resulting in resetting the economy to a new beginning? Another period of an enormous technological and economic boom that will define the next decade as this century's "Roaring 20s".
Depending on your response, it could mean a drastically different outcome for all of us here. Where we choose to live, work, exist, the career paths we decide to pursue, and the risks we take professionally and personally are impacted by the response to those questions.
I am generally biased towards optimism. I have a limitless belief in humanity's ability to create technology that is seemingly indistinguishable from magic.
So I am less a believer in the 1999 hypothesis than the 2009 hypothesis.
Though I am not blind to the reality that there are risks that cannot be known. The unknown unknown tail risk scenarios are out there. They are always out there.
One risk I think about often is "narrative risk." The current narrative seems to be about the limitless possibilities of Software, AI, Metaverse, Web3, NFTs, Crypto, CRISPR, Space, EVs, and any other technology you can name.
Feels a little like we are saying, “yeah, we totally did not see how much the world was going to change over the last decade, and this time there ain’t no way we are missing out!”
That probably explains the incredible amount of capital that has been distributed. There is an article out in The Economist about the new age of venture capital. They write:
“Global venture investment—which ranges from early “seed” funding for firms that are only just getting going to funding for more mature startups—is on track to hit an all-time high of $580bn this year, according to PitchBook, a data provider. That is nearly 50% more than was invested in 2020, and about 20 times that in 2002.”
That’s A LOT of capital to ensure that A LOT of people do not miss out.
There is a popular saying that goes something like “a startup doesn’t die when it runs out of money, it dies when it runs out of belief”.
What will cause the breakdown of this dominant narrative? The collective belief that many of us hold about what is possible this decade.
Uncontrollable inflation? A variant of the virus completely resistant to vaccines? War?
I am not so sure.
We all just experienced an incredibly risky and fearful time in our lives. We all had to contend with our own mortality on a daily basis. If anything, I feel like new variants of the virus will just lead to more risk-taking as it makes individuals feel like they are playing with house money, free lives.
By staring and facing the greatest risks in front of us and surviving, we are emboldened to take even more, crazier risks.
One might think, “Well, I am not dead so why not just ape into whatever technology excites me and gives me the ride of a lifetime.”
Anything short of a hockey-stick curve feels like failure…