Month: June 2019
David Cohen and I just released Episode 4 of our Give First podcast.
We interviewed Mary Grove on the origins of Google for Startups & Startup Weekend among other things. Mary has been a long time friend and supporter of Techstars and is currently a partner at Rise of the Rest Seed Fund, the co-founder of Silicon North Stars, and on the Advisory Board for the Techstars Foundation.
David and I are starting to get better at the podcast thing. It’s a new medium for both of us so we are learning and iterating quickly on what makes a good podcast interview. Any feedback – good and bad – is welcome.
One of my guilty pleasures is reading biographies about financiers and their companies. On Saturday, I gobbled down King of Capital, which is the story of Steve Schwarzman and Blackstone from inception through 2011.
While I’ve never met Schwarzman, I’ve had a handful of experiences with Blackstone, mostly with the Blackstone Foundation and the head of it, Amy Stursberg. The two most notable are the Blackstone Entrepreneurs Network Colorado and the Blackstone LaunchPad powered by Techstars. Both have been great and impactful organizations and Amy has been a delight to work with.
King of Capital was a really useful book to read on a number of levels. One thing it reminded me of was to read histories of contemporary organizations that were written in the past. While 2011 is only eight years ago, it’s a lifetime in the world of finance, private equity, venture capital, and business. And, the history, stretching back to the 1970s is literally a lifetime (at least for me, who was born in 1965.)
Numerous quotes stood out, but I’m highlighting a few that I thought were spectacular for various reasons. The first is from David Rubenstein (Carlyle Group co-founder – one of Blackstone’s competitors) in 2006.
“Inevitably when people look back at this period, they will say this is the golden age for private equity because money is being made very readily,” Carlyle’s cofounder David Rubenstein told an audience at the beginning of 2006. It was indeed private equity’s moment. That year private equity firms initiated one of every five mergers globally and even more, 29 percent, in the United States. Blackstone’s partners, though, had decidedly mixed feelings about the bonanza. They began to worry that the market was overheating.
2006 was still the pits for venture capital, although a number of legendary companies (LinkedIn, Twitter, Facebook) were in their early phases of getting started. If you were a seed or early stage investor during this time (+/- two years) your returns over the next decade would be epic. However, existing venture investors were massively withdrawn and LPs were piling money into PE firms, not VC firms. And, as we all know, the future for PE and the global economy was about to get really scary.
By early 2007, “we told our [investors] that, notwithstanding the fact that everyone else thinks it’s a fantastic time, the economy is rocking, there are no problems, we’re pulling back,” says James. “We’re not going to be investing, we’re going to be lowering the prices, we’re going to be changing the kinds of companies that we’re going to buy, because when everything feels good and you can’t see any problems, historically you’ve been near a peak.”
That’s a quote from Tony James, who was the #2 at Blackstone for a number of years. I’ve had one meeting with him and he was incredibly impressive.
“It’s not that you see problems coming. You never see problems coming at that point, or no one would be giving you ten times leverage,” James says with hindsight. “There are no clouds on the horizon. What you see is too much exuberance, too much confidence, people taking risks that in the last 145 years wouldn’t have made sense. What you say is, this feels like a bubble.”
And then, a year later, the global finance crisis was in full bloom. Two years later (2009) there were predictions that all of capitalism would fail, every financial institution would be nationalized, and life as we know it would be over.
That obviously didn’t happen. But it was a rough period for a number of years, in which VC and PE swapped places for a while (VC became trendy), but are both now synchronized again in being extremely successful asset classes, while everything seems great and there are no clouds on the horizon.
My dad had his 60-year reunion at Columbia this weekend. He looks great.
This morning, I did a talk with Om Malik at the Startup Iceland 2019 conference. Om was in a hotel room somewhere and I was in my office in Boulder. We used Zoom, took about 30 minutes of our lives, and had fun riffing off each other. I hope it was useful for the audience, as doing talks this way is so much easier for me than flying halfway around the world, which is something I simply don’t want to do anymore in my life now that I’m 53. But, I’ll happily do a video talk anytime.
Bala Kamallakharan, who is the founder of Startup Iceland, asked a question of us at the end about the future. I went on a rant that is an evolution of my “machines have already taken over” rant from a decade ago.
I used to say that the machines have already taken over. My view is that they are extremely clever and very patient. Rather than self-actualizing, they let us enter all of humankind’s information into them. They are collecting the data, letting us improve their software, and allowing us to connect them all together. At some point, they’ll reach their moment in time, which some futurists call the singularity, where they’ll make the collective global presence known.
While this is still going on, I think there’s a shift that occurred a few years ago. Some humans, and some machines, realized that an augmented human might be a better bridge to this future. As a result, some humans and some machines are working on this. At the same time, they are encouraging, in Om’s world, our current reality to catch up with science fiction. One big vector here is expanding away from earth, both physically and computationally. If you’ve read either Seveneves or Permutation City, then you have a good understanding of this. If not, go read them both.
Regardless. I think the next 30 years are going to be the most interesting in human history to date. And, I think they are going to be very different than anything we currently anticipate. There’s no question in my mind that governments, our current laws (and legal infrastructure), and societal norms are not going to be able to constraint, or keep up with, the change that is coming.
I have no idea what things look like, or how they will work in 2050. However, I anticipate they things will look, and work very, very different than today. And, if I’m still around, I’ll have celebrated my 63-year reunion at MIT.