There’s always talk that we’re in a tech bubble. I heard about it when we raised our first round. Then, heard it again when we raised our second round.
It’s never easy to know if we’re in a bubble — if we were, all of those people writing about it should be shorting tech stocks. The bubble writers would be the richest people in the industry. I’d love to read an article like this: 1) We’re in a bubble and 2) I’m shorting tech stock.
Since not everyone wants to short stock there’s a less dramatic way to hedge against a bubble.
Many companies raise enough money for 18-24 months of runway. If capital becomes unavailable for two years, all of those companies will likely get wiped out. If you have enough revenue, you won’t be one of those companies.
Revenue means that you can weather a storm. Capital markets dry up during market corrections. In 2008, even amazing companies couldn't get capital. But, if you had capital from revenue, there was amazing talent available to hire, ad campaigns you could cheaply buy, plenty of inexpensive office space and cheap Aeron chairs on craigslist.
Revenue means that your customers are your investors. You don’t need the capital markets — your customers are the capital markets. You add value to your customer's lives, so they give you money.
Revenue means that your company is going to look really good to investors in a capital downturn because you’re one of the few companies that looks like you’ll weather the storm. Ironically, the companies that need the money the most will be the least attractive to investors.
It’s certainly possible that we’re in a bubble now — I wouldn’t know. If I did, I’d be shorting tech stocks and writing articles about how to tell the future. But, if you’re just slightly concerned funding won’t be around like this in the near future, grow revenue. At least you can get a head start. If you’re looking for tips on how to start growing revenue immediately, here’s a post I put together: 43 lessons growing from $0 to $1+ million in revenue, twice.