I’m guessing he wasn’t investing in 2001..

Each crisis is different. GFC was a banking crisis. This is a human crisis with business impacts. https://twitter.com/jrichlive/status/1247288919051268097

I’m more bearish than most on adtech and the cloud. The two things that are resilient.

You’ll note most “legacy” companies aren’t on the cloud yet. This means most cloud revenue are startups and the startup ecosystem.

A lot of startup ideas are DOA right now. What happens to cloud spend?

I remember being able to buy tech assets for pennies on the dollar after dot com. Zero demand.

What’s the tipping point for AWS/GCP? I think Azure is resilient because their core market is legacy IT.

GCP is already on the rocks. If they sustain a 20-30% revenue hit do they continue?

Cloud is expensive. For example. I have a 25Mbps circuit. This is “slow” compared to broadband. We have near 100% utilization on it.

I pay $25/mo for it. On AWS this would cost me $1,250 a month!!

Adtech. Again. Legacy companies have multiple channels to advertise. Nike doesn’t have to buy Google ads to keep mindshare. In many ways the ad spend is a net negative.

Ad spend are smaller companies. They need online targeted ads to hit customers. These are the companies with $0 in revenue right now.

An example are local companies. It’s really hard to discover local companies. So they have to buy geo targeted ads. This isn’t a negative, just how things work. They aren’t spending on ads now.

Ad spend won’t go to zero. Neither will cloud. But at some point the operating leverage on those companies go negative. That’s a danger for shareholders.

A second thing is a lot of startups are suddenly looking at costs and thinking “do we really need to spend $x-grand on...?”

One thing I love about small businesses is that they have to have a profitable business model day one.

Startups are great but they need to think like small businesses instead of just eating at the VC trough of “free” money.

There are SO many startups I know personally that no amount of VC capital or scale will make them profitable. They just want to burn cash long enough to exit. For a lot THAT is the model.

Create an idea, burn someone else’s money and cash out.

Like I said in the beginning. Each crisis is different. You can’t just say “everything worked well after 2008 so it will again”. It’s just lazy.

There are banks that will fail. But they will fail due to delinquent commercial loans to companies with no buffer and no revenue. That will feed into falling CRE prices which will further pressure portfolios.

Depending on the duration of this the lessons of the Japanese crash in the early 90s is probably more instructive.

A few years ago everything thought it was insane for Japanese companies to have years of cash on the BS.

How many execs wish they had that cash to maneuver now?