If you were awake during 2023, it was a tough year in pretty much every way. War was the top line news story, second only to tales of the total breakdown of our political system. Women’s rights were shattered, and rising bigotry and prejudice of all kinds were in evidence. We have had environmental meltdown, and have yet to recover from our pandemic hangover. If you were looking close enough, the ongoing downers were downright biblical. My God, we have even had locusts, no really…locusts!
You have to read that locust story to see this line of prose, “The big red bugs leave behind a stench so horrible, akin to burning flesh, that it forces residents to plug their noses while driving.” If you were an entrepreneur or a venture capitalist in 2023, that was how you might characterize what it was like to drive down Sand Hill Road during this particular year, now mercifully coming to a close.
2023 was indeed biblical in its awfulness on the entrepreneurial front, seeming like the end of the world as we know it, to steal from REM. And yet, and yet…the thing about the entrepreneurial spirit is that it tends towards near hallucinatory upbeat-ness. What great entrepreneurs have is the ability to see the opportunity in the middle of the maelstrom, to believe that things could be different/better/awesome if only your own dream could be brought to life; the willingness to try to make that happen; and, the ability to lead others into the storm and create hope, even when it seems that everything is on fire. Venture capitalists, like myself, like to believe we enable this entrepreneurial spirit, but what we really do is pour fuel in the form of money onto a fire that could not be kindled or put out by anyone other than those who actually dare to dream and do.
I wrote a blog post a year and a half ago about the predictable cycle of these times and how they tend to play out, step-by-step. That process is characterized almost perfectly by Kubler-Ross’s 5 Stages of Grief (denial, anger, bargaining, depression and acceptance). The process for both investors and entrepreneurs always seems to start with surprise, despite all the warning signs that things have gotten frothily out of hand ($1 Billion pre-money value for an idea on a napkin, anyone?). The cycle ends with upturn and a return to a more positive outlook, despite all the hand-wringing and hard-knockness and money that is burned to a crisp in the process. If there were one song that characterized the venture capital zeitgeist of the last few years, it is this:
Well I ain’t sure how it happenedAnd I don’t know exactly when But everything got bigger And the rules began to bend
From: Money Becomes King, by Tom Petty
Fortunately, the bust/boom cycle of the market has a sixth stage beyond grief, which is recovery and return of the good times. In the end, people find the will to move forward, and I am seeing/hearing inklings of that part of the story now. We may not be completely ready for recovery yet, as the cycle tends to be about 10-12 years long and it’s only been 3 years since the meltdown began in earnest in 2020, but there is some emerging light at the other side of that tunnel. Or so it appears. And hopefully it’s not a just a train’s headlights. Time will tell.
It’s likely that 2024 will still be very hard for the entrepreneurial and venture capital world. Money, despite there being “tons of it sitting on the sidelines” will still be unavailable to most. Even if the stock market positively and sustainably (for now) returns for this cycle in 2024, the startup world lags the stock market by at least a year, by and large. It takes a while for the public market money to flood back to the private market coffers, just as it took even longer in this last bust cycle for private market valuations to begin to experience public market gravity. It’s always remarkable to me how the private investors and entrepreneurs don’t realize that if they wade into the rapidly declining economic pig pen, they are going to get covered with pig poop. There is no escaping it no matter how clever we all think we are.
I think some of the excessive hype around AI could well contribute to our next big bust cycle. Yes, AI is a big deal and can and will change many things. But the circus-like parade of companies purporting to be the next big thing in AI has a bit of the smell of “bitcoin/blockchain” based on my last two downturn rodeos. Let me predict now that at least 50% of those “out in front” on the AI hype train are going to be tomorrow’s company obituaries. Even OpenAI/ChatGPT tried to commit hari-kari. It didn’t, but it tried. If you wanted a song to capture this whole topic, go with In the Year 2525 by Zager and Evans, which is the best AI commentary out there that happens to have been written in 1969. That year is, incidentally, already more than 10 years AFTER the invention of AI, which tells you why all of the exhortations about how AI is the new, new thing are pretty overstated, at least on some levels.
In the year 5555Your arms hangin’ limp at your sides Your legs got nothin’ to do Some machine’s doin’ that for you
From: In the Year 2525 by Zager and Evans
I will go out on a limb and make even more enemies by saying that the ongoing pressure on private companies and related investors is kind of a good thing. Money does, as the song goes, change everything. It is a necessary evil in so many ways. Too little of it makes people do desperate things. Too much of it makes people do stupid things. There isn’t a great Goldilocks “just the right amount of money story” that hinges on the money itself – it’s always about the people. Never has that been clearer as we have watched some great successes rise up, Phoenix-like, during the hardest of economic times. After the 2001 semi-apocalypse, good things happened, great companies got greater, and people made money again. After the 2008 meltdown, the market came roaring back like never before What great things will we see after than 2020-2023 pandemidownturn? When we look back 10 years from now, or at least 10 years from the true recovery year if it isn’t 2024, we will be able to tell the tale of the great entrepreneurs that, despite the unbearable nightmare of the last few years, came out the other side with something great that also actually mattered.
I usually write a holiday post that is my own lyrical take on a popular holiday song. This year I decided to let others’ lyrics tell the year-end story. On my own Spotify site my most often played playlist of 2023 is one I called “Cranky and Stressed.” The list below isn’t that one exactly, but it does have that 2023 j’ne sais quoi that I think captures the entrepreneurial/investor arc of 2023. In other words, it’s definitely not a bunch of songs about sunshine and roses and IPOs. But I do believe that you will find the 2023 groove here and, hopefully we will all be able to write a much more upbeat retrospective song list at the end of 2024.
Here goes Lisa’s Six Stage Songlist That Tells the Story of 2023. OK, kids! Let’s start rocking:
The Denial song list:
1. It’s the End of the World As We Know It, by REM, which I think particularly captures the spirit of fiddling while Rome burns.
A tournament, a tournament, a tournament of liesOffer me solutions, offer me alternatives and I decline.
2. Eve of Destruction by Barry McGuire. It’s key lyric:
And you tell me
Over and over and over again, my friend
How you don’t believe
We’re on the eve of destruction
3.Enter Sandman, by Metallica
Somethings wrong, shut the light
Heavy thoughts tonight
And they aren’t of Snow White
Dreams of war, dreams of liars
Dreams of dragon’s fire
And of things that will bite, yeah
Sleep with one eye open
Gripping your pillow tight
Anger song list:
1. Burn It Down, by Linkin Park does a great job of telling the story about how you just can’t avoid the conflagration once it has started, denial be damned.
The cycle repeated
As explosions broke in the sky
All that I needed
Was the one thing I couldn’t find
And you were there at the turn
Waiting to let me know
We’re building it up to break it back down
We’re building it up to burn it down
We can’t wait to burn it to the ground
2. Gives You Hell, by All American Rejects
When you see my face, hope it gives you hell, hope it gives you hell
When you walk my way, hope it gives you hell, hope it gives you hell
If you find a man that’s worth a damn and treats you well
Then he’s a fool, you’re just as well, hope it gives you hell
3. In the End by Linkin Park (boy, they’re good at anger!)
I tried so hard and got so far
But in the end it doesn’t even matter
I had to fall to lose it all
But in the end it doesn’t even matter
- If This Were a Movie, by Taylor Swift – Taylor Swift may be the only person in the world who had an unmitigatedly great year. She has songs for each of the stages of grief, really, but this one is perfect for the bargaining phase:
Ever since you’ve been gone
I just want it back the way it was before
And I just want to see you back at my front door
And I say
Come back, come back, come back to me like
You would before you said it’s not that easy
Before the fight, before I locked you out
But I take it all back now
2. We Can Work It Out, by the Beatles
Try to see it my way
Only time will tell if I am right or I am wrong
While you see it your way
There’s a chance that we might fall apart before too long
3. Start Again, by One Republic
I’ma get it right now, don’t know howBut I promise that we’re gonna make it somehow I’m all in, it’s from the heart again Open up your mind and maybe we could start again
1. Stressed Out by 21 Pilots
Wish we could turn back timeTo the good old days When our mama sang us to sleep But now we’re stressed out (oh)
2. Under Pressure, by David Bowie & Freddie Mercury (my personal favorite – I have it on replay all the time)
That’s the terror of knowing what this world is about
Watchin’ some good friends screamin’, “Let me out”
Pray tomorrow gets me higher
Pressure on people, people on streets
Chippin’ around, kick my brains ’round the floor
These are the days it never rains but it pours
3. The Man, by Taylor Swift, which really gets at the depression and frustration of female entrepreneurs in general, who took it the hardest during this downturn, raising even less money than previously. While finally recovering, female job loss also outpaced male job loss during the pandemic, when 18% of all employed women lost their jobs (vs 14% of men). Women’s civil and reproductive rights? Don’t get me started…
I’m so sick of running as fast as I canWondering if I’d get there quicker If I was a man And I’m so sick of them coming at me again ‘Cause if I was a man
4. All Good Things by Nelly Furtado
Flames to dust, lovers to friendsWhy do all good things come to an end?
Acceptance song list:
1. You Learn, by Alanis Morissette
You live, you learn,
You love, you learn,
You cry, you learn.
You lose, you learn,
You bleed, you learn,
You scream, you learn.
2. Let It Be, by the Beatles
And when the night is cloudy,
There is still a light that shines on me,
Shinin’ until tomorrow, let it be.
3. Big Girls Don’t Cry, by Fergie
It’s personal, myself and I,
We’ve got some straightenin’ out to do,
I’ve got to move on with my life.
Refresh and Recover song list:
And lastly on the DJ front, here is my my 6th stage addition to the 5 Stages of Grief , fortunately, these economic downturns are cycles and have a way of finding their path back to prosperity. The entrepreneurs and market-makers ultimately lead us out of the muck through their unfailing inspiration and imagination and their ability to convert that, at least sometimes, to great things.
1. Winner by the Pet Shop Boys
Looking back on all the times
We felt downcast
Didn’t think we were going anywhere
Just living in the past
But in that desperation
You get inspiration
2. Unbreakable by Four Year Strong
We are the ones that stand our ground
We are the ones that won’t back down
We are the rise but not the fall
We are the writing on the wall
We are unbreakable
3. One Moment in Time, Whitney Houston
I’m only oneBut not alone My finest day Is yet unknown
You’re a winner for a lifetime
If you seize that one moment in time
Make it shine
As we wait for bona fide signs of recovery, renewal and the return of actual up and to the right-looking revenue, profit and stability in the emerging company world, I also take comfort in a list I keep of work-related reasons to be optimistic:
- There has actually been at least one useful medical instance of AI predictive algorithms that could actually save lives. Scientists developed an algorithm that predicts, up to three years in advance, whether people might get diagnosed with pancreatic cancer. They did this by analyzing the records of nearly 3 million U.S. veterans spanning 21 years, a process which accurately identified 4,000 individuals who were subsequently found to have the disease. The study shows that AI models can actually work if there is rigor behind them and have the potential to be as or more accurate as other biometric tests and to be more financially realistic to perform on a large scale. Just think how many lives this could save if we can actually figure out the workflow integration and how to scale the damn thing.
- Scientists have figured out specifically what causes hair to go gray and, more importantly, are hot on the heels of figuring out how to fix the cells that cause this phenomenon. This could potentially lead to saving me hours of time getting my hair colored which I can instead spend on more important things, like buying shoes.
- Once again, modern medicine has proven that coffee is medically good for us, positively impacting blood pressure, lipid profile, glycemia and insulin resistance. In case you’re looking for me, I’m at Peets.
May your next year be better than this last one – a resolution that is likely not even that hard to achieve! Happy New Year everyone, and I look forward to seeing you in a locust-free zone, even if it’s in Menlo Park. My hair is going to look great.
PS- if you want the best review of 2023 from a real professional write, look no further than Dave Barry’s piece in The Boston Globe. It’s a hilarious and poignant read.