The Bright Side of the Dark Side?
(sounds more interesting than “the silver lining of a market correction”)
A few years ago, I pivoted from investing in consumer tech startups to investing in “tough tech” startups tackling the big issues of our time. There were several reasons for this, including that I wanted to spend my time working on what I perceived to be more meaningful endeavors and I thought the best founders (probably the single most determinant success factor for startups) would also feel this way. However, another reason was that I couldn’t understand how the existing model was sustainable, with ever-increasing valuations justified only assuming global domination of a category seen through rose-colored glasses. It seemed like investor returns would have to come from elsewhere, and building the businesses our civilization needs to thrive in the next century made way more sense (Side note: when I explain the “crazy stuff” Starlight Ventures’ invests in to others, I like to explain that I believe it’s crazier to not invest in this at all out of a diversified portfolio, given the fundamental and massive issues we need to tackle).
I’ve been waiting for years with bated breath for the cracks to begin and the market correction to happen. Thankfully nothing has happened yet, and perhaps it won’t happen at all (I do not claim any capability whatsoever to predict this). All the bad things associated with a big market downturn would happen, and it wouldn’t be fun to say the least — less investment, less jobs, less profits, etc.
But today I was thinking of something. My kids learned in a school workshop an exercise to help cultivate positive attitudes. So, for example, if a child says: “it rained and I couldn’t play soccer”, the guide will make them think until they come up with something like “well, the grass will grow and the field will be healthy for my other games”, and no matter how bad the negative statement the child says, the person works with them until they coax something positive, and it’s a really beautiful thing to watch and a great life skill.
Soooo…. What could be the bright side of a huge correction? And here is my hopeful answer: Faster resource reallocation to more urgent matters like mitigating climate change, enhancing human health-span, developing new systems for fair and functioning democracies and economies, figuring out how humans can thrive in a world full of technology and big data, etc. Think if we could take all the brainpower and capital currently dedicated to incremental improvements or frivolous consumption and rededicate them to these issues. What if an economic crisis became a wake-up call for citizens, governments and investors to reprioritize their needs and wants? As the story goes with the boiling frog, slow declines often do not generate the appropriate reaction — perhaps the upshot of a near-term crisis will be a reorientation towards a brighter future before it’s too late? The world is vast, but from my little corner of it, a reallocation of venture dollars and entrepreneurs’ attention, and a collective focus on building a constructive economy and a society more values-driven and engaged with the world and less materialistic and absorbed by social media would be a great start.
I see incredible entrepreneurs building our better future, and a small but burgeoning ecosystem of like-minded investors willing to tackle the big challenges, which are often more complex, more regulated, require longer time horizons, and carry overall bigger risks. But the group is still small and the dollars a drop in the bucket of VC dollars.
So while a soft landing would be great, perhaps a market shock and the re-pricing of assets will open up incredible opportunities for those with the resources (capital, talent, time) to invest and build the companies of the future.
Thoughts?
