The Silver Lining of Tech Downturns: How 2001 and 2008-09 Cleared the Path for Innovation

A Great Depression By 2025? - The Man Who Called The 2008 Recession Sounds The Alarm | Peter Schiff 

Are We In A Recession? - I asked Chat GPT Some Related Questions

What is considered a recession?

A recession is generally defined as a significant decline in economic activity across multiple sectors of an economy, typically lasting for a sustained period of time. It is characterized by a contraction in the gross domestic product (GDP), which is the measure of the total value of goods and services produced within a country.

Successful Angel Investments Have These Top Elements

Angel investing in startups is probably the most challenging form of investing there is. Having been involved with the Tech Coast Angels for the last 10 years I have seen 150+ companies funded and very few successes. One thing I have learned over that time is that about 90% of the investors in each company "didn't know what they didn't know". Why? Unless you are a full-time investor looking at business plans all day long or have some particular domain expertise, angel investing will turn into a charitable tax exercise for you. 

Successful angel investments usually had these top 10 elements going for them:

1. Investors had to earn their right to be part of the investor syndicate and invest
2. Investor syndicates typically had less than 5 investors investing $50K-$250K each
3. The investor syndicate only had domain experts in the deal
4. All investors contributed contacts, industry knowledge, or competitive intelligence
5. The investment was sourced through contacts and NOT blindly through random submissions
6. Sophisticated angels (like VCs) had looked at many other competitors from around the U.S.
7. The valuation was never an issue in negotiations and was understood by both parties
8. The market was in a recession and lacked institutional Venture Capital competition
9. The management team had worked on previous start-up successes and failures
10. The company had bootstrapped itself into a beta product and had to pay customers

Many angel investors may lack awareness or understanding of certain aspects of the investment landscape or specific industries. While it is true that angel investors, like any other group of individuals, may have knowledge gaps or areas of limited expertise, it's important to note that angel investors can bring valuable insights and experience to early-stage investments. Here are a few points to consider:

Diverse Backgrounds: Angel investors come from various professional backgrounds and industries. While they may not be experts in every domain, their diverse experiences can provide unique perspectives and insights. They often bring expertise from their own industries or successful entrepreneurial ventures, which can be valuable in evaluating startups.

Learning and Continuous Improvement: Angel investors, like any investor, should strive to continually learn and expand their knowledge base. Successful angel investors recognize the importance of staying informed about industry trends, market dynamics, and emerging technologies. They often engage in networking, attend industry events, and seek advice from mentors and experts to enhance their understanding.

Collaborative Approach: Angel investors often collaborate with other investors and industry experts during due diligence and investment decision-making processes. This collaboration allows them to leverage the collective knowledge and expertise of a group, mitigating individual knowledge gaps and increasing the chances of making informed investment decisions.

Subject Matter Experts: While angel investors may not be experts in every area, they often seek advice from professionals, mentors, or industry experts who possess specialized knowledge. They may bring on board advisors or consultants with expertise in specific industries or technologies to complement their own skills and enhance their investment decisions.

Learning from Failures and Successes: Angel investors gain insights through their past experiences, both successes and failures. By reflecting on their investment track record, they can learn valuable lessons and refine their investment strategies. This iterative learning process helps angel investors become more knowledgeable and informed over time.

It's important to recognize that while angel investors may not know everything, their participation in early-stage investments brings valuable financial resources, industry experience, and networks to startups. The key is for angel investors to be open to learning, seek expertise where needed, and engage in continuous improvement to make informed investment decisions. Similarly, entrepreneurs should actively seek out angel investors who align with their industry and domain expertise to receive the most value and support.

Biggest Failures of United States Regulatory Agencies

See Syndicated Maps Slide Deck

Regulatory agencies are not effective at their jobs, but we still need them.  How do we make regulatory agencies more transparent and hold them accountable for their actions? 

S&P Low 666 (2009) x 2 = High 1332 (2012)

S&P Low in 2009 of 666 x 2 = 1332 High in 2012

The rigged stock market will undoubtedly become a key issue in the 2012 Presidential race.  The Obama administration will promote the fact that the stock market is up almost 100% since he took office in 2008.  Mitt Romney is going to attack the fact that the market is up 100% but so is the unemployment rate, which went from 5% to 10%.  Pick your poison.  The Federal Reserve's balance sheet is bloated and helped to rig the stock and bond market game.  How will it end in the next few years and what is the best path to long-term free market prosperity and organic economic growth in the U.S.?

The stock market has become a rigged game in the last few years.  It is being propped up by the Federal Reserve and Ben Bernanke's team by printing unlimited dollars to buy futures and bonds in the open market.  Bond prices are artificially low in order to encourage people to spend and not save.  However, the smart people running big corporations are sitting on hoards of cash earning 0%.  Its because the market has been propped up in a phony way and there is no organic growth.  Executives are expecting a stock market crash of grand proportions that will wipe out all of the Government businesses that have been propped up.  Cash will be king in the future and there will be no safe havens.  It's just a matter of time before the huge "House of Cards" bonds and stocks all fall at the same tim,e wiping out the wealth that has been artificially created.

Yes, the United States can print endless amounts of money in order to create inflation and promote growth.  The experts think we can grow our way out of the debt crisis and reduce the current 100% debt-to-GDP ratio that has doubled under the Obama administration.  However, the austerity in Europe is nothing compared to what we might see in the U.S. if Mitt Romney gets elected and the Federal Reserve money printing press is halted.  It will be painful in the short term but the long term gain for my kids and grandchildren will be tremendous.   The U.S. Government must feel the pain of overspending and let the free markets take over their bloated and egregious spending habits.   Don't forget Mitt Romney has been a private equity / restructuring guy in the private sector and will have the biggest turnaround project of all time on his hands once he pulls the Fed plug.

Mitt Romney knows that a healthy economy will grow through organic investment and capitalism at the local level.  In healthy economies, the Venture Capital & Private Equity industries thrive and so do quality IPO's that foster the cycle of wealth that has built the foundation of the United States.  However, the recent financial crisis has led the Government to step in and act as the market "Big Brother" to prevent big investors from losing money.  The VC industry and private equity industries are shrinking drastically because large LP's (limited partners) have no incentive to invest with below 0% annual returns due to overbearing Government regulations.  We all know in healthy free markets there are winners and losers.  However, now the losers are being prevented from losing and this is not capitalism.  Bailouts have been preventing huge bankruptcies and progress towards creating new and more efficient businesses.  

Thousands of banks should have gone out of business and so should have many of the auto companies like General Motors.  Restructuring and bankruptcies are all part of the free market cycle and we have yet to go through it on a large scale downturn.  The 2009 downturn was prevented by the Government by double its debt load in the trillions and now the next recession could be even worse and deeper.

In summary the only thing that is going to help the economy in the long run build a foundation of growth that is sustainable is if the Government simply gets out of the way.  We investors are all "Big Boys" and taking loses is part of the game.   Trying to impose regulations on the financial services industry to prevent loses only restricts the free market capital flows and prevents investors from doing anything.  We need investors to be excited about investing and now restricted.  These two bills / laws need to be repealed by the next President and then you will see healthy organic investment growth come back to the private sector.

1)  Repeal Sarbanes Oxley
2)  Repeal Dodd Frank Bill  

How About Some QE for Venture Capital?

"Quantitative Easing" from the Federal Reserve just sounds like another theoretical way to pump up the markets and the economy when they can't drop interest rates any further than 0%. $2 Trillion dollars of Qualitative Easing has already gone into the banking system and what has it done for you and me?  What is another $600B going to do? Absolutely nothing.

It really makes me sick to hear that $600 billion dollars is going to be pumped into the banking system when these are the same "bone heads" along with the Hedge Funds that got us into the mess.  What is the last time you heard a story about a Bank giving money to a company that really needs it?  All bankers do is lend money to companies who don't need it because they are risk averse.  All these morons do take your money and the Feds at 0% and "try" and lend it at 5-15%.

Venture Capital and small business is what drives the US economy and this sector of the economy is still being overlooked.  Organic growth is the ONLY thing that will get the US out of this recession and create jobs. Why not give $100B dollars to some VC Fund Managers or Private Equity Groups at no cost and require them to invest it in the next 12 months?  I guarantee you they will get a return on this investment.  The Venture Capital industry has shrunk drastically in the last decade and I think this is the sole reason why we are still in a recession and will be until politicians recognize this. VC fund managers cannot raise money from LP (Limited Partners) because the returns have been horrible as a result of the IPO market being virtually closed.  Sometimes I think the Federal reserve spends too much time listening to politicians and not enough time in Silicon Valley, Boston, New York, Chicago and Los Angeles where new ideas are created and organic growth is created.

Media Optimization Firms Are Red Hot In Southern California in 2009

Media optimization is starting to become a headline buzz word in 2009 as the recession drags into the near year. Optimization is one solution to cutting costs that will virtually guarantee a return on your advertising investment if executed properly. If you are a savvy agency, advertiser or publisher and you are not using a platform or service to optimize your paid search, display and landing pages, you are getting behind the curve. Advertisers are demanding accountability and performance in this economic downturn and are increasingly moving toward performance based arrangements or CPA deals. Why, because it hedges some of the risk and the publisher or agency is required to produce results. The old model of buying impressions or clicks and hoping for conversions to sales is GONE for the sophisticated online marketing companies. Here are 4 companies using optimization technology to build competitive advantages in their respective spaces:

Magnify360 - Landing page optimization using predictive data analysis

Adisn - Display advertising optimization for advertisers

Rubicon Project - Publisher ad network optimization

Oversee.net – Domain parking ad network optimization

Stay tuned for a list of large publisher advertising networks in Southern California that I am gathering information on: Demand Media, Gorilla Nation, Specific Media, Tsavo.