Irrational Exuberance Upstages Silicon Dragon NY
This past Monday evening I attended my fourth NYC Silicon Dragon event hosted by Rebecca Fannin of Silicon Dragon. Rebecca (author of the 2011 book Start-up Asia and 2008 book Silicon Dragon) always puts together an interesting program and she conducts these programs all over the globe but primarily in the U.S. and in Asia.
This was by far the most well-attended event (and well-run too) in NYC that I have attended. The venue – at NASDAQ – is perfectly appropriate for the subject matter: what’s happening in the startup world in Asia and the United States (primarily). Panelists and speakers from China and the U.S.; as well as Israel and Hong Kong offered opinions on the general state of the tech and startup investing environment.
I enjoyed the straightforward style of Brian Cohen (co-author What every Angel Investor Wants you to know) and Jim Robinson (who I’ve met before), as well as Alessandro Piol (co-author of the 2013 book Tech and the City), Claudia Iannazzo, Annemarie Tierney and Nihal Mehta. It was mentioned (out loud!) that most angel investors do not make money on their investments. In fact more than most – nearly all angel investors invest in companies that ultimately are unsuccessful.
So why do Angels invest? Besides having the money to do it (“Stupid money” as Brian Cohen mentioned on multiple occasions), Angel investors have belief, ego and desire, (my words not theirs, and not necessarily in that order).
The possibilities are intoxicating and the energy in the room was palpable. Until the very end, when Brian Cohen pointed out an industry legend in the audience – Harry Edelson of Edelson Technology Partners who per Mr. Cohen was there at the outset of the VC industry as someone to be respected and admired. Shortly thereafter in a brief Q & A Mr. Edelson raised his hand to make a point.
The point he made was that many of the panelists were smart, earnest and honest. They discussed the upsides and downsides of investing. But in Mr. Edelson’s opinion they were all talking about a bull market that would be eventually followed by a market correction. There had even been a mention by Jim Robinson that a correction of maybe as much as 20% is in the not-too-distant future (my sense was 2 years or less overall). But none of the panelists/investors mentioned a bear market which Mr. Edelson advanced was inevitable and the risks therein should be highlighted to a much greater degree than he had heard that evening. “What goes up still must come down”.
For ten seconds you could have heard a pin drop. It was a delicious few moments. It reminded me of former Fed Chairman Alan Greenspan’s “Irrational Exuberance” speech back in 1996. And we all know how that turned out.
The program resumed and was completed shortly thereafter but the residue of the cold water that was splashed on all of us remained. To be clear this is an extremely exciting time in the world of startups, investment capital and new ideas. I am no less excited from having attended – in fact I am even more excited as a result. But I still have a little taste of that cold water in my mouth and I think that may be a very good thing.
See full post: Irrational Exuberance
Viewpoint by Mark Kollier, The Way I See It