I was on the phone this weekend with a colleague I knew from my old DLJ days. We found ourselves commiserating: “haven’t we seen this all before?”
And we have.
Right about now in 2000-2001 we were seeing colleagues resigning in droves to join dot-coms to become the new dot-com billionaires. We were seeing old ideas (selling toys, pet food, stamps, computers, etc.) simply going on-line at huge valuations.
Then the market corrected, and it was over. In a blink…Gone.
What’s different? Not much:
· New corporate animals exist: unicorns. Then it was sock puppets selling pet food.
· Same business models, new name. Now: The “Uber” shared model. Then it was called “lead gen”
· Pundits telling us that this time it’s different.
· Is there truly anything new in FinTech today? Didn’t we see the majority of these in 2001?
· Inexperienced CEOs with little to no domain expertise.
· Illiquid companies with massive private valuations.
What further validates my skepticism? Existing strategic investors, who are not buying. They are partnering and eating at the trough. But they aren’t acquiring at VC premiums.
Why bother when they can buy at a deep discount a-la NorthWestern and LearnVest? Strategic investors are now simply waiting for the inevitable.
If you are a unicorn, you should be raising a LOT of money now. Take a page out of Peter Thiel’s book from PayPal prior to the dot-com crash. Forgot what he had to do? Read it here.
If you are not a unicorn, you should be thinking about selling now (especially in FinTech). Do your investors a favor and get out now. If they don’t want to sell, get your resume out ASAP. They are signing your death warrant.
I regret all of this is happening before the SuperBowl. It would have been good to see the unicorn ads this year.
But my gut tells me the unicorns are smarter this go around.
Otherwise, I have some old sock puppets they can use. Remember these Pets.com ads?