Lessons from the Facebook IPO

Posted on May 25, 2012 by jjamison101| Leave a comment

The most anticipated tech IPO since Google’s offering a decade ago, Facebook‘s going public was today called “A Perfect Storm” by the Wall Street Journal’s AllThingsD, pushing further the narrative that Facebook’s IPO was a failure.  There is plenty to support the storyline– NASDAQ faced serious technical glitches to being able to fulfill all the activity, underwriters were reducing Facebook revenue forecasts during the roadshow, and two key banks on the IPO, Goldman and JP Morgan were helping hedge fund clients short Facebook stock (the horror!). Listening to the radio out here in Silicon Valley, the narrative has been that the IPO has been a disaster, in particular for the retail investor who fought to buy shares at the IPO and were expecting Facebook to surge in the first day of trading.

I see things differently.

Facebook acted in a particularly rational and concrete manner, and I think if anything should be applauded for its approach.  Notably, it priced its shares high at offering.  Recall that the preset range was between $28-35 per share according to a Wall Street Journal article from May 3, 2012, several days before Facebook began trading.  When it came time to pricing the IPO, Facebook chose $38–22% above the mid-point of the range, and well above the $35 high-end.  Facebook signaled very clearly with this pricing, that it was uninterested in providing early IPO investors with the opportunity to get a “quick pop” at the opening of trading.  Investors should never buy a product at any price, and those who didn’t re-calibrate their expectations as the prices got solidified should be looking in the mirror, as opposed to blaming Facebook.  In fact, there is no law guaranteeing that hot IPOs sizzle in upward price appreciation, and there shouldn’t be.

So why did Facebook set its price so high, when it could have been so easy to set it lower, get a pop and silence all this noise?  I think two factors came into play.  First, Facebook likely didn’t want to leave money on the table.  Setting its IPO price high would yield Facebook as much cash for its balance sheet (and for pre-public investors) as possible.  Second, Facebook likely reasoned that it didn’t want to attract investors looking for quick, short-term gains, but rather wanted investors focused on the long-term.  Certainly this approach has been consistent with how Mark Zuckerberg has built and driven his company–with a clear focus on  delayed gratification and for the longer-term.  Given that that’s been Facebook’s approach over time, its totally logical that its approach towards offering its stock to the public would similarly be optimized towards longer-term focused investors.  So the unsaid message from Facebook to its public investors with this pricing approach is this: “If you want to be an early investor in Facebook’s public stock, you had better be ready to hang on for a while.”

I applaud this approach for a few reasons.  First, when selling its shares to the public, a firm should get as much capital as it can for its balance sheet.  That is the key purpose and reason for the IPO in the first place.  Second, this approach addresses one of the key problems with today’s investment environment, namely its ultra-short-term focus.  From my perspective, Facebook’s behavior is spot on.

Those who should be excoriated are NASDAQ, retail brokerages who f*cked up trades for their retail clients, and retail investors who expected to make money on the initial pop.

NASDAQ has long positioned itself as the tech-centric exchange for stocks.  Not anymore.  The incompetent exchange is more like it, 30M shares were excuted imporperly, the largest problem the exchange has experienced.  This would be like being the wedding planner for the Royal Wedding in the UK and basically screwing the whole thing up.  This was something NASDAQ had to nail, and it didn’t.  It will be interesting to see how they recover here.  To fail this badly in this high profile an IPO is amazing.  In a world where the next Facebook will have its choice of exchanges, expect NASDAQ to be playing catch-up.

The New York Times has an interesting article about how retail brokerages like Scottrade, Charles Schwab, and Fidelity have basically universally declined to take direct responsibility for losses their retail investors suffered owing to the NASDAQ’s screw up.  Further, as retail investors are not members of Nasdaq, they can’t file complaints, whereas large institutions can.   Instead, the retail investor whow as screwed by NASDAQ’s incompetence has a totally fugly remediation process that I can only imagine involving lots of automated phone trees with cut rate brokerages like Scottrade or Fidelty.  ”Dial 3 if you’d like to talk to someone about your trade… current wait times are unusually high, we expect someone to be with you in approximately 95 minutes.”   Yuck.

So retail brokerages who won’t stand behind their retail customers and who offer crumby service deserve to be called out.  Definitely.  But there is also some accountability that retail investors have to take here.  They should not come into an IPO expecting to see a quick pop.  That’s lotto thinking, its not stock investing.  It exposes you for a sucker and your foolishness deserves to be repaid with you losing your money.  When you buy a share, you are buying a share from someone ready to sell.  You need to ask yourself if you’ve really thought carefully enough about the trade you’re making, as its likely that the person or computer on the other end has dedicated a lot more brainpower to what they’re doing.  If you’re ready to put your money into the market or into Facebook, you’d better understand that its a long-term game, you really shouldn’t be doing this with an eye towards what happens today, this week, this month, or frankly this year.  To do so is foolish.

This tough love message is especially important now.  With all that we have been through in the last 10 years–DotCom Crash, WorldCon, Enron, the banking crisis, Bernie Madoff, the housing crisis–we should have learned that you’ve got to be mindful when you invest.

To see how quickly these lessons were forgotten, and how quickly the mirage of a sure thing of Facebook’s IPO took hold of the psyche, is cautionary indeed.  Fools and their money.

Disclosure: I have no investment position in Facebook.  I plan to be a long-term buyer, but frankly plan to wait a little longer, as I think the price is still too high.  I expect it to drift down over coming months, and will hope to pick some up.

 

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Great Start-up Lesson from Berkshire Hathaway Letter, 1978

Posted on May 23, 2012 by jjamison101| Leave a comment

Quick follow-up from yesterday’s post on the 1978 Berkshire Hathaway Annual Shareholder’s Letter, authored by Warren Buffett.  It’s a great lesson around running lean and frugal, applicable to any manager in business, any start-up in particular.

Buffett updates his shareholders on Berkshire Hathaway’s Banking business, specifically its Illinois National Bank and Trust Company.  It described its long-term performance, which had been “first-class” since opening its doors in 1931.

The experiential lesson though is a great one:

Our experience has been that the manager of an already high-cost operation frequently is uncommonly resourceful in finding new ways to add to overhead, while the manager of a tightly-run operation usually continues to find additional methods to curtail costs, even when his costs are already well below those of his competitors.  No one has demonstrated this latter ability better than Gene Abegg [the founder of Illinois National Bank and Trust Company].

If you are going to be known as one type of manager, be “the manager of the tightly run operation… find[ing] additional methods to curtail costs, even when his costs are already well below those of his competitors.”

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Day 2 : Berkshire Hathaway Letter, 1978

Posted on May 22, 2012 by jjamison101| Leave a comment

The second Berkshire Hataway letter, authored by Chairman Warren Buffett, is a treat to read.  Starting with a bunch of clarifications on accounting owing to a merger, he then dives in to his discussion on performance during the year.

A few key observations from the 1978 letter.

Value focus means low prices.  

Buffett has been remarkably consistent and long-term in his view on investment approach.  He says the same thing here in 1978 that he says today, which is :

We get excited enough to commit [investment] to equities only when we find (1) businesses we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people, and (4) priced very attractively.

In his 1978 letter though, he specifically calls out the difficulty in finding opportunities that fit gate #4–an attractive price.

We usually can identify a small number of potential investments meeting requirements (1), (2) and (3), but (4) often prevents action.

This is a useful lesson for investors everywhere.  Whether growth or value focused–price matters.

A quick side note.  This has some interesting and at times difficult implications for venture.  For super hot companies, valuations and prices can get very hot very fast.  For example, Facebook’s Series A price was rumored to be near $100m on a post-money valuation.  This was way back 6 years ago.  At the time, it would have seemed to many to have been unreasonably high.  Now, it looks like it was an extreme bargain.

 

Minority/non-controlling common stock purhcases versus outright acquisition

Buffett again talked about bucking the fashion of M&A activities in favor of buying non-controlling blocks of common stock on the open market.  His rationale here is simple:

[Our] program of acquisition of small fractions of businesses (common stocks) at bargain prices, for which little enthusiasm exists, contrasts sharply with general corporate acquisition activity, for which much enthusiasm exists.  It seems quite clear to us that either corporations are making very significant mistakes in purchasing entire businesses at prices prevailing in negotiated transactions and takeover bids, or that we eventually are going to make considerable sums of money buying small portions of such businesses at the greatly discounted valuations prevailing in the stock market.

He tweaks pension fund managers who are move their money in and out of stocks with prevailing sentiment, as opposed to pushing to drive to find something to buy cheap and sell dera.

Work with great teams

Buffett closes his letter with an explanation of a recent acquisition of therAssociated Retail Stores, a Chicago-based women’s clothing store.

His description of the founders of the business, still involved at later ages is terrific:

 Ben is now 75 and, like Gene Abegg, 81, at Illinois National and Louie Vincenti, 73, at Wesco, continues daily to bring an almost passionately proprietary attitude to the business.  This group of top managers must appear to an outsider to be an overreaction on our part to an OEO bulletin on age discrimination.  While unorthodox, these relationships have been exceptionally rewarding, both financially and personally.  It is a real pleasure to work with managers who enjoy coming to work each morning and, once there, instinctively and unerringly think like owners.  We are associated with some of the very best.

An inspiring statement to be able to make as an investor about the leaders of a company you’re involved in.

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Day 1 : Berkshire Hathaway Annual Letter 1977

Posted on May 18, 2012 by jjamison101| Leave a comment

This post starts off the Berkshire Hathaway Project, a series where I’ll read all the annual shareholder letters that Berkshire Hathaway Chairman Warren Buffett has written.

The first letter that I found on the web site  is from 1977.  Disco was big. The Steelers were awesome.  And the economy was moribund.   As I read the letter, a few elements jumped out, useful for anyone in business–tech or otherwise.

Have an approach.  Buffett talks about in the letter the decision the Berkshire Hathaway has taken towards buying up less than controlling shares of companies it believes in.

We select our marketable equity securities in much the same way we would evaluate a business for acquisition in its entirety.   We want the business to be (1) one that we can understand, (2)  with favorable long-term prospects, (3) operated by honest and  competent people, and (4) available at a very attractive price.   We ordinarily make no attempt to buy equities for anticipated  favorable stock price behavior in the short term.  In fact, if  their business experience continues to satisfy us, we  welcome lower market prices of stocks we own as an opportunity to acquire even more of a good thing at a better price.

Our experience has been that pro-rata portions of truly outstanding businesses sometimes sell in the securities markets at very large discounts from the prices they would command in negotiated transactions involving entire companies. 

Consequently, bargains in business ownership, which simply are not available directly through corporate acquisition, can be obtained indirectly through stock ownership.  When prices are appropriate, we are willing to take very large positions in selected companies, not with any intention of taking control and not foreseeing sell-out or merger, but with the expectation that excellent business results by corporations will translate over  the long term into correspondingly excellent market value and dividend results for owners, minority as well as majority….

This is an unorthodox view, but one we believe to be sound.

Clearly, Berkshire Hathaway had an approach.  And if you read Buffett’s statements over time, the 4 key elements they look for when investing have remained unchanged over the many, many years he’s been investing.

What is interesting in this snippet is the clear willingness to focus on buying non-controlling shares of companies and common stock, if he were convinced that the propsect was a good one.  He basically justifies this view on two fronts.  First, he can buy in more cheaply–makes sense. And, he clearly signals that when he buys in and doesn’t control, he’s making a direct bet on management.

It’s an approach.  Clearly one that’s worked.  The lesson: an approach, have one.

Market dynamics matter. 

I’ve written before about the importance of big market opportunities in being critically important for a startup.  That a great team in a crumby market will get trumped by the crumbiness of the market.  Interestingly, Buffett makes this exact same case in this letter, from 1977.

In his note, he compares and contrasts the performance of two portfolio businesses within Berkshire Hathaway: its textile business and its insurance business.  Both textiles and insurance had great management teams, according to Buffett.  But the market dymaics were totally different, leading to different results.

It is comforting to be in [the insurance] business where some mistakes can be made and yet a quite satisfactory overall performance can be achieved.  In a sense, this is the opposite case from our textile business where even very good management probably can average only modest results.

One of the lessons your management has learned – and, unfortunately, sometimes re-learned – is the importance of being in businesses where tailwinds prevail rather than headwinds.

Again, sage advice that I agree with–aiming for a  big market opportunity makes a tremendous difference.

Recognizing the role of shareholders.

Buffett’s tone in the letter is one that strikes me as doing a great job dileneating the different stakeholders’ roles in the venture.  He discusses the accomplishments and diligence of the different management teams building the different businesses.  He also uses a lot of ‘you’s and ‘your’s’ to reinforce that the shareholders are indeed the owners of the business. See quote above as example.

Deft touch.

 

 

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The Berkshire Hathaway Project

Posted on May 16, 2012 by jjamison101| Leave a comment

I remember back in 2006, well before the financial crisis of 2008, reading one of Warren Buffett‘s Shareholder‘s Letters that he authors every year to the shareholders of Berkshire Hathaway.

His foresight in his 2005 letter was prescient, and foretold with chilling clarity the financial crisis of 2008 and the huge impact that derivatives trading had in that market collapse.  In the 2005 letter, he talked about Berkshire Hathway’s long-term attempts to get out of their own derivatives business, which they’d inherited as a part of their acquisition of General Reinsurance.  He talks first about how he’d taken years to try and get out of Gen Re‘s derivative positions, and how they’d wind that down too slowly and in too costly a way.  But he then also makes the following statement as a reflection on this for the broader market:

Our experience should be particularly sobering because we were a better-than-average candidate
to exit gracefully. Gen Re was a relatively minor operator in the derivatives field. It has had the good
fortune to unwind its supposedly liquid positions in a benign market, all the while free of financial or other
pressures that might have forced it to conduct the liquidation in a less-than-efficient manner. Our
accounting in the past was conventional and actually thought to be conservative. Additionally, we know of
no bad behavior by anyone involved.

It could be a different story for others in the future. Imagine, if you will, one or more firms (troubles often spread) with positions that are many multiples of ours attempting to liquidate in chaotic markets and under extreme, and well-publicized, pressures. This is a scenario to which much attention
should be given now rather than after the fact.   The time to have considered – and improved – the reliability of New Orleans’ levees was before Katrina.

(emphasis added.)

He basically called the CDO crash of 2008 exactly, didn’t he?!

As I thought about how insightful and prescient that report was, I wondered if there might be more useful treasure in the whole series of Shareholder Letters.  So starting tonight, I’m going to start reading one Berkshire Hathaway letter per year and write a quick set of observations from the perch of today.

Not sure it’ll be useful, though I expect it’ll be interesting reading indeed.

 

 

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WTF! CFO Loses Job for Facebook & Twitter posts

Posted on May 16, 2012 by jjamison101| Leave a comment

From today’s WSJ, Gene Morphis, CFO of Francesca Holdings was let go because of his use of Twitter and Facebook to make company related posts.  The posts don’t appear to disclose anything all that juicy, else I’d expect the WSJ and other business journalists would be decrying the insider secrets that the CFO was exposing, pulling the business equivalent of ‘the Weiner.’

Some of Mr. Morphis’ offending posts: “Cramming for earnings call like a final. I thought I had outgrown that…” or “Earnings released. Conference call completed. How do you like me now Mr. Shorty?”

I think that this firing — for cause — is exactly the wrong step for this corporation and indeed for Corporate America writ large.  Facebook and Twitter open up society and connections, indeed they are freeing up information and societies.  Given the corporate scandals and failures that have rocked the US over the last decade–WorldCom, Enron, Madoff, Bear Stearns, Lehman, etc–the business community should be pursuing more openness, not less.  

Indeed, we want and need more transparency from Corporate America, not less.  These tools provide opportunities to do this.  Having  Mr. Morphis getting into a habit of sharing his genuine and open musings across social media drives this transparency, albeit in a small, focused way.  But I do wonder whether these tools and a CFO’s participation in these communities would serve as a deterrent to corporate scandals.  Of course, there’s no evidence here, but I’d wonder.  It drives the CFO to communicate more, generally a good thing.  It also gives more information to investors, even if non-material, also a good thing.  More communication, I would think, should have a slightly positive benefit towards deterring malfeasance or at a minimum exposing incompentence slightly more quickly.  Both good things.

Having a CFO share perspective on non-material, non-insider information through these channels should not be a fireable offense.  It should be applauded.

I’m saddened to see Mr. Morphis go.

 

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Thoughts on the JPMorgan Chase loss

Posted on May 15, 2012 by jjamison101| 1 Comment
JPMC, bitch!

JPMC, bitch! (Photo credit: Matt Stratton)

I suspect that at some level, JPMC’s CEO, Jamie Dimon, is thinking, ‘Geesh, we can’t even do a bone-headed trade anymore without everyone making a federal case out of it!’  And it turns out, he’d be right, as today surfaced reports of the FBI beginning an inquiry into JPMC and its $2B trading loss.

No one is going to miss an opportunity to pile on to Wall Street broadly and JPMC in particular, and this is especially true for our ruling class in Washington when so much is at stake with the financial regulation/Volcker rule, etc.  We’re re-writing the rules, and JPMC’s loss is a great exhibit as to what can go wrong.

At the same time, JPMC has and should continue to point out the following…  First, it made over $27 billion in revenue in Q1, with over $5B in profit.  So this loss is a little less than one week of revenue.  Second, JPMC has nearly $60B in cash on its balance sheet.   Granted, you’ve got to assume that its not sitting with a toxic set of loans and other assets on its balance sheet–no small feat–but assuming its managing its roughly $2.2T in total assets reasonably well, they’re plenty profitable and cushioned from this fumble.  Not something you want to see happen again, if you’re an investor or employee, but certainly recoverable.

Which brings me back to where we go from here.  Is increased regulation from Washington the answer, or should we just let JPMC continue on its way?

In my view, we need a Volcker rule that works.  In other words, if you’re a bank and you’re getting an explicit or implied guarantee from the government–either by taking government insured deposits or by becoming too big to fail–then you’ve got to divest out of proprietary trading.  I think this makes sense.

In the case of JPMC, they are likely too big to fail and they have retail deposits.  For them, in the event of a larger calamity and downside, its never as simple as just telling them that we’re just going to let you fail–this is too difficult, too many retail accounts get hit, too negative a fall out politically as the debt markets would freeze, etc.

But how to square this with my more libertarian tendencies?  I square it with the poker table.  At poker, a central tenet is that if you bust out and can’t put another chip in front of you, then you’ve got to leave the game.  You don’t get to draw for free.  If you can’t take downside, then you really can’t take any upside.  Very simple.  It makes every player accountable, and it works fine.  Same thing should be true with trading on your account.  If you’re trading, then you need to be able to shoulder whatever losses you undertake.  And if you’re in a situation where we can’t just let you fail, then sorry, you don’t get to play.

 

 

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Facebook disrupting Carrier’s SMS business

Posted on May 11, 2012 by jjamison101| Leave a comment

Today’s New York Times reports that “Facebook Is Killing Text Messaging.”  Cites that operators are seeing customers moving their SMS traffic off of network (where prices are very high) and are just using Facebook messaging.

It calls out specifically the Philippines, “one of the top texting nations, sent roughly 400 text messages a month each in 2011, down from about 660 a month in 2010,” according to the study.

Makes all the sense in the world: users will take the free versus the pay every time on this trade.

Expect this trend to continue and to accelerate.

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The Vice Tightens

Posted on April 24, 2012 by jjamison101| Leave a comment

Nokia warned this week of softer than expected revenues and a slower uptake of its new line of gorgeous Lumia phones running Windows Phone.  Nokia also announced aggressive price cuts to drive volume.

Its an expected, necessary response to slow consumer uptake on this launch.   The  price cut also exposes the challenge in front of Nokia and Microsoft–namely that to become a credible “third ecosystem,” they’re going to have to carve out a niche that is distinctly different and protected from Apple/iOS on the high-end, and Google/Android on the low-end.

Though Android is now clearly winning on unit volumes in the smartphone market, Apple is still earning the bulk of profits.  Consumers yearn for Apple products, and Apple appears to still have a lot of marketing magic in terms of whipping us into a frenzy for its new product releases.  And more importantly, the developer ecosystem around Apple  remains strong.  Developers know how to make money on iOS and it remains a ‘must target’ platform from a developer standpoint.  So long as these factors remain true, expect Apple to retain the high end.

Google Android has arrived big time.  Now the leader in terms of unit share run-rate, Android is now the market leader in smartphone shipments.  Being #1 has benefits, in particular, any hardware manufacturer not named Apple basically has to be in the Android ecosystem.  Google’s strategy of giving away the OS and its better than free value proposition to hardware OEMs, which Peter Fenton discusses in this great post, is great competitive defense.  If there’s any weakness in the Android ecosystem, its that the profitability of the developer ecosystem seems lower than iOS’s.  Developers I speak to generally find Android users less likely to pay for an app, less likely to complete in-app purchases etc.  Android runs too many units for developers to not target the platform, but the developer revenue seems less clear.

With these two leaders in place, then the question is how does Nokia / Windows fit?  It will be difficult to compete with Android’s less than free.  To the extent it is successful in gaining (buying?) share at the low end, this strategy has to problems.  First, Nokia/Windows have a business model that will have to likely compete against the better than free model of Android.  While charging nothing to handset manufacturers, Google makes revenue on default searches and reportedly shares this revenue with carriers/handset makers.  This is better than free, and MSFT/Nokia will have a challenge responding.

The second issue here, also important, is the signaling to mobile app developers.  Most mobile app developers I speak to tell me that Android is a broadly distributed platform, but it is nowhere near as profitable (in general) as iOS.  Developers will run you through a litany of complaints: the Android Market is a mess, the in app purchasing platform is weak, users don’t upgrade to the latest versions of the Android OS (or their apps), etc.  The other issue is a function of price point: Android users are generally cheaper and more price sesnitive than iOS users.  Developers know this.  With Windows / Nokia chasing this segment, they are heading into a problem area for their developer efforts–namely, developers will want to understand what the profit profile is for building apps on the platform.

So Windows Phone / Nokia will have challenges fighting against Apple.  And opening a front against Android will I expect prove both costly and difficult to attract developers.  This is the risk of becoming a third ecosystem.  This is what happens when the vice tightens.

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Don’t Go All In, Unless You’re All In

Posted on April 18, 2012 by jjamison101| Leave a comment

With last week’s monster acquisition of Instagram by Facebook, much discussion ensued.  Is it the dawn of a new bubble?  What happened to RIP Good Times?  Is now the time to start a new company?  Or is Instagram/FBK just too much of an anomaly for us to draw anything from?

FounderInstitute’s Adeo Ressi penned on TechCrunch Instagram Aftermath: It’s Time For Entrepreneurs To Go All-In, which argued that the good times were now in full roll.  Now was the time to start a company, take the leap, etc.

One of the first comments however came from 500startups’ Dave McClure, who basically said, hey don’t go crazy, dawg.

I consider both of these guys terrific for startups at a global scale.  You won’t find two more dedicated to helping founders build and scale their businesses.  So that’s great.

In my own view, I’m more McClurian in my views.  Before I get into the substance of my current views, I do want to provide some historical perspective.  I was in tech during the first bubble, working for Microsoft.  What I saw during the run up of Bubble 1.0 was a lot of people who had no real interest or business in getting started in startups, they just read a bunch of magazine articles and watched CNBC showing the huge pops of an overinflated IPO market and the riches that founders were attaining.  This drew a glut of folks who weren’t really involved in startups for the right reasons, they were interested in getting rich really really fast.  Nothing wrong with that desire per se, but frankly SV appears to be a magnet to this type of thing, and I want to be a caution against it.

So learning from the  97-00 run up, I’d say here what should have been said then: don’t come out here just because it seems like the market is great.  A small group may get lucky, but more likely, you’ll not be one of them, and you’ll be wasting precious time chasing a dream that’s not really yours.  Instead, come out here if you really believe in startups and if you can’t be stopped–by anyting, least of all the state of the market.

OK, history lesson over, now on to my substantive views on the Instagram / Facebook deal as it pertains to whether you should go “All In.”  This is basically just a bit more detail on what I’ve already said, but here goes.

On the one hand, Instagram / Facebook signifies that for truly extraordinary, breakout products, the big guys are going to have to pay up at real prices.  Its also all the more notable given that Instagram didn’t have any revenue.  With the thawing of the IPO markets that we’ve seen in watching Groupon, LinkedIn, and Zynga go out, we’re seeing more paths to liquidity.  All this is good and supports that the market is improving.

At the same time, I’d not go so far as to say that now is the time to go “All In.”  Starting a company is really, really hard for the vast majority of companies.  Finding and building the right founding team: difficult.  Building something that people want : difficult.  Figuring out how to recruit and keep the team on board before you have money to pay them: difficult.  Growing your measly user base: difficult.  Etc.  Etc.  Even in a *GREAT* market, its difficult.

So while FBK-Instagram is exciting and signals an increasing momentum in the marketplace, it doesn’t really change the reality of startups, which is that they are really difficult.

Given that startups are really difficult irrespetive of market, then my view is that you want to think much more about whether you are really well-suited to be involved in startups before you get into starting a company.  If you are wired for the hard work, for the uncertainty, etc., then I’d say anytime is a great time to start a company.  I’d say that you’d probably want to start with Paul Graham‘s blog, which I think is the most useful and concrete place to find useful advice.  And then I’d figure out how you go about getting involved in startups.  Again, irrespective of market.

 

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