A look at the market from July 21 through Aug. 8.
By Matt Price
Since last week’s downgrade of the credit worthiness of the federal government by S&P, the markets have become more volatile than they already were earlier this summer.
What does that mean for startups and early stage financing? I don’t know. I didn’t major in finance or econ (even after being pressured to by my father).
So, I turn to two people who are much smarter than me, Mark Suster and Eric Ries. They have two very interesting takes on the current situation.
Mark says, and has been saying for a while recently, to raise as much as you can right now ’cause the gettin’s good and it won’t be forever.
He says:
I have to imagine the speed and severity of the stock market decline and political instability will likely weigh on investors for some time to come – even if we rebound.
Make sure you’re still here in 10 years. Get yours. Then go build your companies.
Eric Ries, the creator of the Lean Startup methodology, wrote a compelling piece that I feel is a little more poignant and cutting:
It doesn’t matter if you call it a boom or a bubble. The startup business moves in cycles, and what goes up will eventually come down. We’re in summer. One easy way to tell: notice all the startup experts and prophets that have sprung up in the last two years (myself included). Notice how many of them made their money during a previous boom. George R. R. Martin
would call them summer’s children.
Eric is quick to throw himself in the mix of folks that are adding to the froth in the market right now. He also says that he expects a whole crop of incubators to disappear.
I don’t have enough experience to have a great perspective on this, but I do know when I launched my first startup in 2008, things were very different and seemed a lot harder. I think Ries has the best advice for entrepreneurs: “The surest way to be successful is to create more value than you capture.”
(Little Rock entrepreneur Matt Price is an adviser to nobody, but does blog at KitchensAreCool.com and sometimes works at LittleRockMedia.com. He also met Willie Nelson once.)
Copyright © 2013 Innovate Arkansas and ArkansasBusiness.com
All rights reserved.
