I'm doing some accounting work, smiling at how different things are now, so I thought I'd share a story. By sharing this, I hope this can help inspire anyone else going through a tough period right now. On June 24 2013, I had got back from a weekend Vegas trip with a tough decision looming. The Friday before, I realised we would run out of cash to finish the never ending construction project of StartupHouse before we could make revenue that would fund the rest of the project. Adam Broadway had kindly offered a loan for what I thought we needed but that Friday the new estimates made me realise it was no longer enough due to delays and cost blow outs. When I came back from Vegas, I told Adam I couldn't take his money because I couldn't assure him of paying him back and it was unethical for me to do that. Bankruptcy was the only option. My visa to stay in the country, my life's savings, anything I had ever done in the US including StartupBus and affiliated projects -- ruined in addition to a damaged reputation, personal disappointment and more. But never underestimate the power of hope. Life has taught me not giving up always creates another option. You just need to not give up to find it. I said to Adam to give me that week, until Friday, and if I couldn't raise another $20k by the end of the week (I would need an additional $50k to get us to a point where we could open the doors to customers) that I would have to turn down his offer, default our debtor obligations and begin the process of bankruptcy. Being the crazy man he is, instead of being scared, he said he would back me all the way and to ask if he could help in any other way. I might just add that the only thing more daunting than this was the fact that I had never raised investment before in a business. And the only people I thought I could turn to weren't interested from previous discussions. Not to mention this was to be a real estate business, which has little interest in silicon valley. So what happened? I got on it. And thanks to angels by the literal definition of the word -- Bardia Gower Zos Naval and several months latter Matt, Conrado and Dave -- I hit my target and enough to get us to profitability. And one year on, we are now covering our OPEX and the significant debts we owe are 90% paid off. And what we are doing is so interesting apparently, that we now have a founder of a billion dollar property group making a small but strategic investment in us. Don't get me wrong: there's still a long way to go and it's premature calling success. But what can't wait is appreciation because I want to thank everyone who was with me during this difficult 18 months of my life. Now that life is back to normal -- or at least at a position where I was two years ago when I first transitioned into life as a full time entrepreneur after 7 years as an employee -- I can reflect that financial stress is one of the most damaging things a person can experience. It doesn't just affect you but the people around you, and it comes at great personal cost but what matters is that you are still standing at the end of it. And it's only because of the amazing people supporting me which is not just the above but the people who gave me emotional backing (and you all know who you are). Too all of you -- thank you! And to anyone going through a tough period in life, remember: it's not over until it's over. And by over I mean you're kicking-and-screaming-tied-down-and-the-oxygen-has-run-out-to-stop-the-screaming over. UPDATE: You often hear stories about running out of money to meet payroll. Well, we actually ran out of money and couldn't pay payroll -- and in the case of StartupHouse, kudo's to Karolis Karalevičius who stuck with it despite a delay in being paid until we could find money. I couldn't have done this on my own -- you need kick arse people to with and Karolis is a big part of this story.
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Every opportunity I get, I ask smarter people than me what they think about the economy. I'm fortunate to have a smart group of friends in my life. I also meet smart people who should know such as on Friday, when I asked this same question to the CFO of Westpac ($700 billion under management) and the CEO of St George banking group at a private dinner function. Below are a collection of thoughts I've generated over the last few months from discussion and observation (from chats in San Francisco, and NYC, Dublin, Berlin, London, and Sydney). Feel free to correct me, I'm always wanting to learn more. * Cheap debt, due to the US, is fueling a boom right now around the world. The party has to end eventually because it's not sustainable. * But because debt prices are at an all time low, investors don't want to lend money because the returns are so low, so they are pumping that money into equities. Which is why we are seeing these inflated valuations. * The US real estate market is picking up, with all that bad gunk almost flushed out -- it took 7 years. But collatorised loans are coming back (the source of the sub prime crisis where loans are packaged up) and according to a Macquarie banker I met with on the weekend ($150b in assets and an LP in many venture capital firms), he said the seeds of the next crash can be observed with what is going on right now. * Everyone was expecting the US federal reserve to increase interest rates recently, which they didn't. And the reason they didn't is because inflation is low and the economy is still shaky; jobs data is improving but it's not stable enough for the economy to handle an interest rate hike. * The Australian dollar which is super high, has had a crippling impact on the economy for export's and manufacturing. With China slowing down its consumption, mining has gone down so what's propping up the Aussie dollar is the fact it has such high interest rates...which I was fascinated to find out is directly tied to the US interest rates (correction: link to the currency's demand, not Australian rates themselves). * On a side note, it's amazing what's going on in Sydney: since I moved five years ago, how the prices are out of control but at the same time I've heard salary growth are at the lowest in like 40 years. It seems like everyone is Sydney is not as happy as last December and May when I visited. ----- But wait, I have more! * Silicon Valley really is booming the Californian economy (the bankrupt state is now in surplus!) when the rest of America is still suffering. It's amazing the amount of people I meet now from all around America -- and why? Because the jobs are here. People that normally would have gone to places like Chicago, Miami, or Los Angeles -- and the amount of New Yorker's and Texan's I meet now recently relocated --are all coming here because of the job market is superior to any other one. * And not just jobs, but money. Obama was recently in town for two separate fundraisers in the one day in San Francisco and on the Peninsula, whilst Hillary was doing her own tour at the same time. I really think it's a golden age for the San Francisco Bay Area and this matters because government policy is impacted by the people who fund the politicians -- this is why immigration is such a hot topic for example. * I'm hearing from so many entrepreneurs that now is the best time to raise money, some even urging me to do it myself before the party ends! A VC from the middle of America told me in the last month half of the companies they met had crazy valuations due to the ridiculous "Yo" sensation that recently was valued at $5-10m. On the other hand, I've heard a VC friend that enterprise startups have had decreasing valuations in the last two quarters. * There is startup mania in the world. In London, office space is being targeted at tech with advertising to the point whereby my friend not in tech is now tracking tech and his estimate is that it's impacting 10+% of the commercial market. I saw a big sign in Sydney last month saying "office space for high tech" and the same thing is going on in Berlin, New York City and of course San Francisco (the new centre of silicon valley). I keep meeting people launching or running a new corporate venture capital firm (the main reason why is "to learn") and government and executives all wanting to do tours of "silicon valley". * On a related note, it's funny asking women in San Francisco about geeks and how tired they are of "tech" guys. Arrogant with no substance, who think they are a big deal due to the company they work at. Engineer's are also frustrating founders not just due to their scarcity, but because of their attitude. It's as if developer's are the new banker wankers. * But...this is only going to get worse. What's interesting are the "Developer bootcamp" training where you do three months and pay $10k to learn how to code which are becoming a new industry around America. Tech is becoming like what finance is to the global economy: silicon valley might be the mecca but every economy is going to have a tech sector. And the ones that do first will be at the forefront of growth. So in a nutshell: there's a lot of money flowing around right now which is having some bizarre impacts and startups are having a fascinating impact in this depressed economy with some impacts on society...but change is in the air with the next US interest rate rise which will have a huge global impact. End of brain dump.
Writing an employment offer letter to myself, by a board of directors I appointed, of an organisation I own that is on track to make more money in two years than I've been paid as an employee in 7 years. Here's hoping the US visa overlords will finally give me the keys to being a full time entrepreneur so I can *officially* become dangerous.