Is History A Guide In Business?

I was at a fascinating dinner with a bunch of founders and investors last night. Until I was 35, I was often the youngest guy in the room. While this was a seasoned crowd, much of the experience – both around creating companies and funding companies – started around the mid-2000s. As someone who has been doing this since the late 1980s (I started my first company in 1987) I definitely felt like one of the old guys in the room.

At some point, the conversation turned to the current state of things in the broad entrepreneurial ecosystem – both company-side and investor-side. It rambled around for a while but kept locking down on specific issues around the current state of financings and exits, alignment between founders/investors/acquirers, cultural norms that were front and center in today’s startup communities, and a bunch of other issues that tied back to the wonderful Game of Thrones line “winter is coming.”

Throughout the evening, I was regularly reminded of my favorite BSG quote. “All of this has happened before, and all of it will happen again.”

Another one of my favorite quotes is the one attributed to Mark Twain, “History does not repeat itself, but it rhymes.Phil Weiser, Dean of the CU Law School and a good friend, often pulls this one out to remind us to look to the past to understand the future.

While we’ve been in a particular strong part of the startup / entrepreneurship cycle for the past four years, many people are nervous, talking about it, reacting to it, and getting confused, frustrated, and scared by what is going on. Others are in total denial of reality, which never works out well in the long run. Whether you follow the BSG theology or subscribe to Mark Twain, or are somewhere in-between, you recognize the value of understanding the past to exist in the present and deal with the future.

I came out of dinner with about 20 topics for blog posts, many which reflect on lessons I’ve learned multiple times over the past 30 years, which can be applied to today, and tomorrow, and the next few years, regardless of what actually happens. Until last night I wasn’t particularly motivated to blog around this stuff, but the discussion, and people in the room, really stimulated me to put some energy into this. So I plan to.

But remember, all of this has happened before, and all of it will happen again. So if you are impatient, I encourage you to go look at posts from me, Fred Wilson, and David Hornik from 2004 – 2007 for a taste of what I would characterize of “the re-emergence from winter.”

  • Johann

    Hi Brad,

    thanks for the great article. I thought about applying this knowledge to certain business models already before.

    Would you say that it’s a good idea to screen failed startups from 1990-2010 and find reasons why it failed to see whether a formerly failed business model could work now as certain factors changed (ie mobile adoption)?

    Do you know if there are VCs doing this already sort of “automated” in a structured way?

    Thanks!

    • I don’t know of anyone doing this in a systematic way.

  • When will my time come?
    Has it all been said and done?

    Missing Persons, “Destination Unknown”

  • 100% agree. I notice you started your company in 1987. Interesting October in the stock market that year. The old saw is “start your company in times of financial distress”; and 1987,1998, 2001, 2008 proved to be great times to start companies.

    My gut knew exactly what you wrote about. When I joined the board of the NationalWorldWarTwoMuseum.org; I was able to speak deeply with several historians about the events leading up to, and during the war. It’s remarkable to pick their brains about that point in history, and then ask them to talk about the run up to WW1, or how they would extrapolate what they know from then to what they are seeing today.

    I truly love history of all kinds. Maybe that’s why I like investing. Cycles repeat, patterns repeat. You just have to know where to look for the signs. Most of the time the channel markers are blocked by fog.

    • Fog, rain, and … denial.

  • Sebastien Latapie

    Love that Mark Twain quote – so simple and elegant. Looking forward to all the new posts!

  • RBC

    Can’t tell you how excited I am that you’re rejuvenated! Your voice has been missed of late!

  • Isn’t it strange going from the youngest in the room to the oldest??? I remember when our Arthur Anderson principle would only show up with a full suit and tie with a formal coat and a hat when his team finished the audit.

    • Weird at some level but fun at another. I’m embracing being 50.

      • I love it. Don’t get me wrong. Friday one of the best coders I know turns 50. We are going to give him a big surprise birthday party. I look back and think, wow can my next 30 be like my last?? I don’t know, but I just think could I have had a better run??? And think no.

  • tgodin

    I was at some real estate investment conference several years ago during a down cycle and a panelist remarked to the room that the only difference between that particular downturn and the one before it was that “now we’re the ones in charge.”

  • Glenn Whitney

    Winter, slumbering in the open air, wears on its smiling face a dream…of spring. – Samuel Taylor Coleridge

  • In terms of magnitude, do you/other VCs see the current slow down as signaling a reversion to the mean after a solid investment year of 2015($59B) or a collapse in activity similar to 2001/2002($22B)?

  • As someone who founded my first venture in June 2001, just 3 months before the dot-com bubble burst, this is a poignant reminder of how bad things can get. But when I compare then and now, at least one key factor is different: the prime lending rate. It was 6.00% in September 2001. It’s 3.5% now. I hope it’s enough to keep the bottom from falling out.