Bubblicious

Some thoughts on all the bubble talk that comes up every time our Apple stock app has a lot of red on it. Funny how it doesn’t come up as much when it’s green. Also I read the Stripe Press Bubbles book (Boom: Bubbles and the end of stagnation) so you can trust me on this. Would recommend.

Great founders survive. [something smart] you can’t time the market. [something smart] power law.

The basic point I want to make in the midst of the "is this a bubble” talk is that it shouldn’t really matter for the best companies and if you’re worried that the company/founder you’re investing in wouldn’t survive if money was tight than you probably shouldn’t invest in the first place. I won’t act like I’m above this or immune to greed in it’s many forms, but these seems like a good rule of thumb for everyone.

I mentioned it on my CoreWeave commentary last week (clearly I’m a genius - up 30% since posting), but the world needs more compute. More broadly, I believe that digital intelligence (AI solving problems that humans used to spend time on) is fundamentally valuable. Very much unlike the NFTs I used to own (or I guess still own - I haven’t checked).

So let’s just start off by agreeing that the value of AI isn’t zero.

If it’s not zero, it’s something greater than zero. Maybe 1. Maybe 100. Depends on how multiples look. This is where things get more complicated.

In the public markets and with more mature companies generally - this is a much bigger part of the game. To throw some Warren Boofay quotes at you:

"The most important thing to do when you find a stock you like is to not look at the price."

When you’re talking about earlier stage companies. Mostly private companies in this environment. One of the best parts about venture investing in general is that the timeline is so long that if it’s really a great company - the power law company - and you’re taking a long enough view - it should all work out in the end.

So if you’re investing in a company because you think they can “take advantage of the moment” you’re probably going to get smacked eventually.

If you’re investing in a company because you think the founders are solving a fundamentally important problem, you’ll probably do better.

Again, not personally above greed. But, trying to be.

Talk soon,
Adam