At the All in Summit in Miami this week, we had the pleasure of hearing an interview with Elon Musk. The segment covered many issues, including politics, policy, immigration, the Twitter acquisition, plus more (you can watch it here). One of the biggest takeaways is Elon’s quote regarding the misallocation of capital. He stated, “It has been raining money down on fools for the last couple of years. The country needs an economic enema.”
An economic enema is what appears to be happening. I have seen scores of articles about VC and PE dollars pulling back from the markets. The public markets are a red sea of despair. However, I think this kind of soup de jour (it will be something else in a couple of weeks). I believe we are in a full-blown economic recession. This deleveraging of US debt and sobering up after all this economic stimulus will be painful. As Ray Dalio said in his book “The Big Debt Crises,” it is like pushing against a string.
The following are some articles I have read that have been very constructive for startup founders by some credible sources.
A Framework for Navigating Down Markets – a16z
The 4 Startup States During a Recession – Thomas Tunguz
Cash Flow Shockwaves – Thomas Tunguz
