We are coming back a full circle after this last cycle. Cash is a commodity was the mantra during dotcom cycle and we know where that got us. This cycle was all about the growth/land grab as plentyful cash was available very cheaply. Or so every body believed.

Cash is the mother’s milk for startup, cash is the lifeblood for startups. These were the common ditties in Silicon Valley when I was a young entrepreneur. Alan Shugart, founder of the Disk Drive industry (Shugart Associates and Seagate Techology) was an iconic Silicon Vlley entrepreneur. He was fond of saying that “cash is more important than your mother”. You can always apologize to your mother and expect to be forgiven but there is no forgiving when you run out of cash.

There has been an iron law of capitalism that can not be violated for very long. Capital seeks the investments where it gets the best returns on the risk adjusted basis. Unicorn phenomenon violated that law, so could not last long. It is surprizing that it did last as long as it did.

Only three companies survived the brushfire that burnt down the dotcom industry: ebay, Yahoo and Amazon. ebay and Yahoo were very profitable. Amazon had a great story to tell and was able to convince the hardnosed Wall Street to go along. We will see what happens this time around. I don’t expect any of the big investee companies of The Vision Fund to provide returns commensurate with the risk, that is if they survive at all.

I feel less disoriented now as I am back in the familiar territory.

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