Bear Stearns and the rest: why I’m worried
I don’t expect anyone to be particularly happy about JP Morgan buying off Bear Stearns for $2 a share - with the Fed supporting the transaction with a $30B loan to JP. But what worries me more than anything is this sort of downward spiral the economy is in right now. Subprime crisis, recession looming on the horizon, and a terribly weak dollar.
This type of economic environment directly affects entrepreneurs, because (a) access to capital (VCs or banks) is harder, and (b) customers generally tighten up their budgets and postpone their technology investments till things get better.
I’ve lived through the 2000-2002 technology recession and learned a few lessons. First, cash is king. Startups with soft business models (like advertising) will feel the pinch, and this is the time to nail that business model before it’s too late. Second, it’s not just about surviving the recession. It’s about leaving the recession with a strong position as a company to start growing fast again. Keep investing in your technology. Keep listening to your customers. Keep believing in what you do.
And last, no matter what, good times will come back. And so will future recessions. That’s just part of the game.
posted from iPhoneSlide.com
