The UPSide of Venture Capital’s Slowdown

Photo-illustration: Intelligenmer; Photo: Getty Images

AFTER YEARS OF EXPLOSIVE Growth, Much of the Tech World Is Notably Frothy than it was – Which May Mean A Return to Some More Sustainable Business Practices. On the latest Pivot podcastKara Swiser and Scott Galloway Discuss the Current State of Venture Capital and the Benefits of Higher Interest Rates.

Kara swiser: Let’s talk about the start-up bereal, which is a very good product. Their Downloads Are Down 95 Percent From Their 2022 Peak. Venture Capitalist Sasha Kanetsky Tweeted That The Numbers Show How Difficult It is to Keep Consumer Apps Growth You’ve Crossed a Chassm. The Home-Fitness Start-Up Tonal, Another Pretty Cool Product, is Looking for A Buyer AFTER AFTING BIG ON HARING-SORT OF THE Peloton of this year. It feels like a lot of stuff has been tried and a lot of stuff’s not sticking. What would you imagine is going to stick?

Scott Galloway: Well, first off, of Advise Two VC Firms. They want to talk about what we go from here – which investments, which categories. My Advice is to sit on their hands and do nothing right now. Because What’s Happening in the Housing Market is happy in the venture market, which is that everybody’s anchoring off. People Think, “The Smiths Sold Their House for $ 800,000 15 Months Ago, SO I Should Get $ 800,000.” Well, No, The Market’s Changed dramatically. And so even if they put their house up for sale, they don’t want to access a lower price. Meanwhile, Buyers Read Everything in the News About A Recession or Housing Price Coming Down and Think, “This House is Worth $ 650,000.” SO right now, there’s total stasis. The Same Thing’s Happening in the Small-Business and Entrepreneurship Community. Companies that Raise Money Still Have Capital, but they don’t want to acknowledge that their valutes is probably down 50, 70, Maybe 80 Percent.

I think there’s a ton of opportunity in what i’ll tech-enabled services. I’ll tel you do i’m Investing-I Invested in a Company Called Zero100 that Collects a Ton of Data and Research on Supply-Chain Innovation. Becuseeee Company, Slowly but Surely, is elevating the supply chain to the top-level decision-making and capital allocation. They’re realized that suply chain is how Amazon won, and it’s also how almost every company goten down throough Covid. Its no longer this necessary Evil; it’s a Key Component of Strategy. And this is a tech-enabled firm, but it is a bunch of Smart People Writing Research, Hosting Events, and Helping Big Companies Out Their Supply Chain.

I think a Company like, and i want to be clear – we’re not going public for $ 5 billion – but it is a great business. The Guy Who Runs it is a fantastic operator. He’ll Build It Slowly, He’ll Build Enduring Value, and in Seven to Ten Years, We’ll have a Company Doing $ 30 million or $ 40 million in ArrivalThat’ll get sold for $ 200 to $ 300 million. And that’s an amazing way to make a living.

In a World of Zero Interest Rates, Where Money Is Free, You End Up With Wag. You end up with a cute concept that not a business. You end up with Cathie Wood Talking About Bitcoin at A Million Dollars. You end up with just all of this crap, and it is got to get cleaned out.

Swisher: It does.

Galloway: There’s a lot of underbrush that needs to be burned in a bit of a super-Fire, which will spawn new ideas. The first advice of give to entrepreneurs, and i’m Old School – is that the thing that makes a business is revenues. Find something another person or a company will pay you for immediately. And that’s how I always Built Businesses. Grant, of Never Had a Big Win. All My Companies Did Tens of Millions and Got Sold for Three to Six Times Revenue, but I find it was a Lower-Risk Way of Building Value. I’m Writing This Book, Wealth algebraand i generally believe i know how to get you rich. That’s the good news. The Bad News is the Answer is Slowly. It ‘Thinking ThoughtFully.

Swisher: I will think People have got to let this idea of ​​boom go a little bit. They tried to boom with cryptocurrency. They tried to boom with him, which, yes – but now they’re overinvesting in it. Unless aliens show up and give us new Technology, which is my great hope, I feel like we’re in a period of technology that will be Very Slow in how benefial it is going to be. And I WOULD AGREE WITH YOU: START OFF SLOW AND STAY SLOW. Its not going to be this sudden crop of billionaires just out of nowhere.

This Transcript has Been Edited for Clarity.