#58 - How To Navigate The Upcoming Depression

what's up good people sean here i just recorded in an episode with ish sean who is my producer editor right hand man who helps me out with all my different projects and we talked about coronavirus and we went through this email that i sent out to every sunday night i sent an email out to the rest of the executive team and it's called one two three and normally this is private but for this podcast i made it public i talked about what was in the email it's all about coronavirus i gotta warn you it's a little doom and gloom it's not the most optimistic podcast but i think it is interesting and i think you like it and then around the forty minute mark i announced something new so if you are checking this out make sure you check out what we announced at the end think it's kinda cool came up kind of organically but i like it we're gonna do it and check that out okay hope you enjoy this episode we're all quarantined and we're going crazy so yeah we wanted to to just do a conversation how you doing man could be doing better but best of day by day so i'm halfway across lot in australia and this is you know just is getting pretty bad here as well so we're just hoping for that best and every part of the world is different right now right you've got china which is sort of like over it there's no new cases or at least that's what the reporting and yep you have some countries that have the situation unlock you have italy and spain which are sort of you know dev evolving very quickly yeah the us which is growing and you know by the end of the week will probably be bigger than china what's going on in australia australia so far a few of the states going into the stage one of lockdown so all non essential businesses sort of closing down supermarkets hospitals are still up so you know society as generally in australia is hasn't been responding to it very well people are still going out a lot of the bars and restaurants like just last weekend before lockdown was completely packed people are showing up to bond beach swimming and you know even after the government as to not go there so you know it's they've been training it a bit like a meme but things i think should get better and people should start listening hopefully but yeah hopefully is right it's just i think we're seeing this in waves we're like you know like like you said earlier today in the us two weeks later we're gonna be where you guys are you know because you know there's a lot of inaction happening and yeah is just gonna follow through yeah unfortunately this is one of those things where you need to take action before it becomes a big problem because once it's a big problem it's too hard to contain and you know the the tragedy of this is there's a a certain type of problem this is this is like a a problem like in your company you'll have with security or fraud prevention where you do a whole bunch of work upfront and you hope that like nothing happening is a good sign like i used to joke with my head of security if you know if we're not talking things are good you're doing your job right now when i come and we have to talk that's because there's a problem and by then it's usually too late the damage is done and unfortunately with something like this where you have believers and non believers the problem is you it's a losers lose so let's say you don't take action you don't take action and now the problem strikes and a bunch of people could take a bunch of people die and you know bad things gonna happen let's say you let's say everybody took precaution we locked the whole country down we we stop you know travel business all this stuff and if you succeed in doing that the virus won't really proliferate it'll look harmless and then what people would say is actually not good thing we did that they'll say it was an over reaction and so it's like a lose lose in terms of perception because if you take massive precaution the winning scenario makes it look like it wasn't gonna be a big problem right and it's a it's a dangerous thing there should be a word for these types of situations where that's the case you know like they they have that word anti fragile anti fragile describes when if you haven't read a seem till book yeah anti fragile when a system breaks and the break makes the system stronger for the next one so it's like plane crashes yeah every time a plane crash happens planes get safer overall the next crash is less likely that's an anti fragile system and so there should be some word for this too where it's like that when you when you do that when you take precaution and you you've reduced risk and then the thing doesn't happen and yeah that's you you don't want people's reaction to it to be oh we all over reactivate it was no big deal right it would have been a big deal you just can't see right and so you sent you send out like this email every sunday it's called the one two three and right it's not it's not public people can't subscribe to it right it's yeah i've talked about it before but it's not public i send this to i used to send it to a private group of my mentors advisors friends when we were doing our startup and the ones we got acquired i decided hey this would be a good way to connect with the rest of the exec team at twitch because everybody's so busy we don't all get to spend much time together so i said maybe i'll use my one two three email which is just me brain dumping a bunch of thoughts on sunday night i'll send it to the exec team here and sort of like a private newsletter private blog and you know my thinking behind it was it's kind of a growth hack i wanted to blog because i enjoy writing i enjoy putting my thoughts out there but i was like man it's so hard to break out everyone's got a blog now so man this was many years ago five years ago when i was like well if i just had a hundred people who i think are badass ass read this that would be a win right i don't need a million unique visitors i need a hundred of the people i like and respect the most and silicon valley to read this that would be a win so how a guarantee that they read this well let me make it something exclusive so your handpicked to get on a list you're only getting this and it's private which means i can share you know things that i wouldn't always put out in the public and so that's how this all started and normally it's private but given coronavirus this week's was all about coronavirus and i wanted to make it public so i was like let's talk through what i put in that email and share it with more people so hopefully this is interesting to people right and so i i thought this email was really interesting when i read it let's just stop like from the beginning how bad do you think this is because in your own words you said that this is really really bad it didn't say one really said two really so double double really and so on a spectrum from you know this is nothing to this is a complete catastrophe we're gonna go into depression where are you sitting and why yeah so i should have actually preface this this is it more of a doom and gloom podcast is that's where for my outlook right now so if you're looking for something super optimistic this is probably not it this is me being realistic from what i'm seeing right i'm definitely no expert in infectious diseases i'm no expert in the economy but i have a lot of smart friends i ask her a lot of really dumb questions to them so i can learn and i read a lot and so that's how i form you know my opinion on this and my opinion is that this is really really bad and i'll tell you why so what's happening right now is that we have a health crisis know a pandemic which there's not that's not often so we have a health crisis and that triggered it started in china so it triggered a supply crisis because the supply chain broke down the global supply chain which depends on china all broke down and then it you know as it's come to the us it's created a labor crisis where all these businesses like you know all of american sport to shut hotels casinos movie theater schools halt the gyms all these businesses are shutting down and they're not gonna be able to go as your revenue for long they're gonna lay off employees so know now you're gonna have a labor crisis where people are predicting twenty thirty percent unemployment which is insane right and then that create labor crisis creates a demand crisis so we have a huge supply shock and we have the demand crisis and we have a labor crisis and the health crisis and so what i wrote in the email was that i stole this for my friend michelle it feels like an alien kid you know was got tired of playing the video game earth and he was on level twenty twenty and he's like this boring and just started mash buttons just to spice things up and that's what twenty twenty has felt like for me so far right yeah that's the really good analogy so you're saying in terms of okay that's this there's a health crisis that started and that triggered all these other sort of would you say like black one i don't know if that's the right word for it but yeah so it is we we haven't really this is like really unprecedented and it's unprecedented we've never seen this or most people in their lifetime have never seen this and even those who kind of have seen things like this it's very different because we've had financial crises right we've had bubbles we've had you know the sars outbreak but we've never had these things stacked together and for that reason it is very much a black swan event who could have predicted my my brother law owns i don't know twenty to forty gyms here in california who could have predicted my sister runs three schools mh who could have predicted that revenue would just go to essentially zero for months like no business really plans for that and it's you know even when you're making your sort of expansion plans you're thinking about growth you're thinking about how well things are going you're thinking about expansion and rarely do you sit down and say well should i prepare for you know the white walkers to across the wall and everything to shut down like but that's actually what happened yeah i think it's it's you know previously whenever something the economy goes down or something crazy happens a lot of the the stimulus packages there to actually try and get people to work right but this is completely different where we're trying to get people not to work we're trying to subsidize their living right we're talking about today like what is two and a half million people have filing for unemployment this week this is way bigger than oh eight and you know the ones before it's this is yeah this is unprecedented sentence it's a this is different kind of like war as long as it's different couple we'll tackling the the war is the exact analogy here yeah we're fighting an invisible enemy and unlike war where we usually you know send people out and we you know the whole country sort of galvanized around it here it's like there's an invisible enemy hiding in your homes that's the answer right and it's very unprecedented it's very uni american really americans love when bravery and valor is what is the solution but here it's patience and it's staying inside it's doing nothing and that's very dangerous so so that's that's why i think you know this is really really bad so that's point one point two i had on here was about the health perspective and as i said from a health perspective we have three pathways forward the first one is mass testing so we need to quickly cheaply and frequently identify who is infected option two from a health perspective you know solution too is we find a miracle treatment and option three and is would just face a massive death toll and you know we should be clearly focusing on mass testing but unfortunately it doesn't seem like we're on track to solve that anytime soon the types of tests we're ordering we're short the testing that we're doing is inadequate you know there's so many carriers out there that are being turned down from testing right and you know within seven to ten days the the chinese virus has trump loves to call it will be the american virus because we're gonna have way more cases than anybody else because we did not lock down and test temperatures and and sort of the infectious in any nowhere near what china did nowhere near what korea did and unfortunately for us that means this is gonna be a problem for a very long time so that was point too right and do you think it's the the main issue right now is that maybe a lot of people may generally skew to like a younger demographic they're asymptomatic possibly to this and they're spread it's spreading faster than ever because of that is that where you see why we need sort of mass testing because the virus is tricky yeah this virus is very tricky because the virus is it doesn't kill you right away it doesn't show itself right away and and in in fact if it if this could kill anybody i think people would behave very differently the media sort of framed it and rightfully so because it's it's worse for the elderly leads it's worse for people with underlying health conditions but the interpretation of that seems to have been if you just judge by the fact that hey in la people are out on the beach their plant pickup up basketball you know like people are not the younger people are not taking this seriously and they're spreading it yeah and so the interpretation of it was okay well you know it's not gonna kill me and unfortunately you we're only as good as our weakest links so even if the majority of people are behaving the sad thing is that as long as some people are out there spreading it whatever that percentage of people is five percent ten percent fifteen percent this thing will continue to proliferate and the longer they keep doing that the longer we wait to get testing in place the longer this persists and then the longer it persists the more itchy people get in quarantine and they start to break and and they start to go out and then it stays longer so i don't i don't see a good solution here from where we're at and really quickly i wanna go over this whole like mask situation i'm guessing earlier on like i don't know feb january february a health professionals were putting out messages saying that you know you shouldn't wear a mask if you're not you having any symptoms and i think that was maybe possibly so people wouldn't obviously be panicking and buying up all mask because people that do have symptoms they should be prioritized and they should have wear masks but also we're seeing a lot of data now that you know places like japan or singapore where wearing masks is very prevalent amongst a lot of the people and there it looks like their their curve is flattened or flattening better than the other countries like us italy and whatnot do you think that this is do you think that everybody should be wearing masks this is like no not other thing that's like this because is a lot of people that think they read one thing and they say oh okay there's no point of wearing masks there's no no coming up you know i think either might be truth to both sides i think it might be true that it would not have been productive if everybody who didn't need a mask bought all the mask right because we didn't have enough for everybody yeah and so i think that part is true that we should have saved it for people who needed it but i think it's also true that if you have a mask you're gonna be less likely to spread and less likely to receive it than anything else because there's a barrier in front of your mouth and nose that's pretty simple so yeah so so i think that would have been helpful but you know at this point i'm not sure what's gonna have right now it seems like you know it's the hospitals that need the masks so you have you know the healthcare workers who they're constantly at risk that need them that need masks and are running out yeah i think that's the scary part now so bezos he did like that announcement and he saying that they ordered you know a lot of masks for the amazon workers is but they can't get them yet because the those masks being prioritized for the hospitals and whatnot so in facebook i believe donated seven hundred thousand masks that they had bought during the wildfire crisis which was yeah tiny tiny speck in comparison to this but they bought seven hundred twenty thousand masks for facebook and they're donating all of them and so yeah people are trying to step up and that's kind of great to see yep and we'll see we'll see how the masking plays out i don't have a super strong opinion there right and so so we've gone through you know how bad we think it is and what we can sort of go what we could do on what you see going forward should happen what about what are you thinking in terms of the economy what are sort of the short term but also long lasting effects of of what's happening right now yeah so i think the economy is gonna crash badly and not a recession but a depression right and i think that on top of that people will blame the virus but the virus is the trigger it's not the cause and you know i i could be wrong about this for sure this is not something that is easy to understand like a the economy is such a interconnected set of pieces and people who are experts in one area you might miss another right it took a lot no very few people saw the two thousand eight crash happening beforehand even those who did were not taken seriously and only sort of later when we do a post mortem we realized okay it was these subprime mortgages that were being sec and packaged up and then rated it in improperly and that's where you know the the sort of vulnerability was building up so in my view here people are gonna blame the virus and say the virus is what shutdown down the economy the virus is why we have high employment unemployment the virus is why the economy is gonna take years to recover and in my view the virus is the needle that pops the debt bubble right and so in the same way that the coronavirus is fatal to people who have an underlying respiratory problem i believe that the virus is fatal to the economy because we have an underlying debt problem that is the under underlying illness that the economy had that the virus is going to expose shortly right and and sorry like you know huge talk right now there's a lot of people talking about you know bailout and a lot of these not just airline there's a bunch of other companies but a lot of these companies that spent most of their profits on these share buy backs and now they're asking for bailout yeah i know you explained this a bit on our last podcast but i want you to sort of can you just give another quick sort of like explanation and what you what are you seeing right now and what are your thoughts on on what's happening right now gosh like corporate potentially yeah you know my reaction initially when i had heard bailout because bailout sounds like that word is just very loaded yeah it sounds like you know somebody's getting a free get out of jail free card and that's how i felt in two thousand eight and then as i started to understand more and i i think i've recommended this video before but i literally rewatch it last night and that's gonna sound silly because it's such a simple video but the reality is really wanna understand the fundamentals of anything it's not like usually the problem is in the fundamentals it's not in you know you know sort of a ph level of complexity around something yeah and so there's this video by ray dal and it's called how the economic machine works it's on youtube it's thirty minute video most people are not gonna watch it this should be required watching for every politician in every ceo go and every college graduate should you know before you get your diploma goes sit in this room and watch this video yeah and what he explains in it is why these cycles happen so why do we even have cycles why do we have these ups and downs and so he explains you know and i can't you know sort of do it justice and explain the whole thing but what i would say is the key to the economy is spending and so one person's you know one person's spending is another person's income and most spending actually is not through cash that you have you know sitting in your bank or under your mattress but through credit businesses spend through credit people spend through credit government spend through credit and so a lot of what's spent is credit that credit becomes income of the next person the when you get income you become credit worthy and people will give you more credit and then you spend it somewhere else and that's how the economy expands so we go through these expansion area periods where people take loans they spend they buy houses they buy cars they buy they invest in businesses they buy stocks whatever they whatever they buy and some if it's with cash and some votes credit and then as when they're spending that somebody else's income that person who it who gets income becomes credit worthy and so then they can take credit you know take loans right and get credit and do their own level of that and that's the expansion cycle and then that that naturally over reaches so it seems like you know this party just don't stop this is working we're all getting rich together we're all this is all growing the banks keep landing blah blah blah and so but you don't want too much debt out there and so you know the government uses interest rates to sort of regulate that they'll raise interest rates which will reduce borrowing for a given time and lower the amount of credit and debt that's in the system and and so they have this instrument that they use to do that so the the video really explains how during expansion times we use credit to expand quickly in the same way that if your company needs to grow you'll take around of venture capital or you'll take an investment round or you'll take a loan or you'll take venture debt you know those are the ways that you fund expansion that's gonna happen in the future and when it all works fantastic you expand you make revenue and now you're more credit worthy you can raise bigger money you can take bigger loans that sort of thing and unfortunately human nature is that we get ahead of our skis and so what's ended up happening here is we have a twelve year bull run of the stock market one of the longest bull runs ever and and so we had this huge amount of expansion and it was stimulated after two thousand eight you know interest rates drops this economic stimulus package happened quantitative easing so we injected you know performance enhancing drugs into the economy and it gave us a period of expansion that lasted from essentially two thousand you know nine ten till till twenty twenty right so you get this a sort of decade long expansion period and then you're going to have you know the the sort of deflation period where that comes to to to root and so that's like a normal recession but what he what he shows in the video is how these that short term debt cycle layers onto a long term debt cycle which is happening over a seventy five to one hundred year time span and what it sure does seem like is that we're now facing not just a recession we're facing a depression and a recession is what's happening when the short term debt cycle is being reversed and a depression is when the long term debt cycle is is on the sort of the downside and you know watch the video it it paints a picture with animations it's really great it it's just well made in general but for you know when you watch that it's hard to watch that and not walk away looking at the world a little bit differently and so my view is that after you know these periods of expansions and and contractions we're now on the sort of wrong side of the long term debt cycle and we're gonna go through a multi year del leveraging or depression if for a better word and that i think that's what's gonna happen at the economy literally i sold all my stocks moved every position to cash everything i could to cash and with a little bit of a crypto hedge and you know if i could sell my house i would've have sold my house unfortunately you i can't sell your house now there's like no liquidity so i i took as much as i could out but the reality is that we're all gonna be exposed and i think everybody's gonna end up less wealthy over the next few years because of this right and so you say so you got out of everything you cashed out you wanna you're transitioning into a cash have heavy position what would you say without being financial advice what should people do in terms of okay now they cashed out do they just like sit do they do they wait nine months and then try and get bargain and try and get rich in a recession or depression well like do you do you just wait for years and years and just watching the sidelines what what do you think is the of to take advantage of of this yeah you know if i knew i would have made my first million a long time ago and so i i don't think anybody really knows but you know i'll give you my point of view and you know you said this is not financial advice why do people say this they they think you're gonna get sued yeah i think that's why if you try to sue a podcast for financial advice like you you know immediate reverse sue to to yourself so so i don't know my prediction would be that you're gonna have these sort of ebb and flows and i think we're seeing that right now where the economy is swinging it's it's swinging like crazy and it's swinging because people are covering their positions and so you get what they call the dead cat bounce and so i think we're gonna have that you know a a few times here where it's gonna the market's gonna plunge and then it's gonna bounce back and there's a little bit of a rally and then it's gonna plunge again and the short term things i try not to really pay too much attention to or try to time it because that's trying to time the market or predict the market i believe is a a bit of a a bit of a losing game yep i'd rather just sort of think about the fundamentals and think about where i think this is going over a bit of a longer term and not try to predict a day to day week to week change if you could do that fantastic i don't believe you if you we you can and so anyhow my plan i'll just my own plan is essentially try to wait for what feels like the bottom and you know just ignore the first two times i think it's the bottom because it's probably not yeah and just as i am assuming that this is a multi year multi year downturn and so multi year might be you know as as low as you know two and as long as ten and and so i think you can pick up some stocks on discount you know along the way but it's a risky game and i i i don't think there is a good answer for that and i don't pretend that i have it for myself either so if we just sort of go away from capital markets or like stock markets and we sort of transition to what a lot of our are the people that are trying to start businesses and if we head into a recession or depression is this not the worst time or be the best time to start something what what would you say like what are the sort of like checklist of like okay you need this much money set aside you need to you know if people get like of their jobs like what are these what do you say to people that were thinking of of starting something but now you know a pulmonary discouraged because of flights that to come yeah it's tricky right i texted several friends so so i advised a couple of startups ups and i i told the startups that i was advising i said need to lower your burn rate immediately yeah and they had already started that and i said no even lower so i was talking about you know one of the companies i invested in they're burning seventy k a month right and they had seven months of runway left so they were planning hey you know things are going well we're making progress in the next two to three months we'll raise around they're in one of the like kind of accelerator programs so they were like hey there's a demo day at the demo day we're gonna raise money and so that's you know seventy k month and they were saying you know we're trying to get that down to like forty five k forty k and right and i you know i was on board with that and then the next morning i woke up and i just texted them and i said find a way to get it under twenty five like get it to twenty that'll get you eighteen months of runway out of your same amount of cash right and i think you're gonna need it and you don't wanna be in a position where this dies because you spent too early i said it's not about growing aggressively right now it's about survival yeah and you gotta know when to switch gears as a company and so i think you know it's very sexy and fun to be in the growth mindset where everything is about grow grow grow but there are times when you need to play a different game and you need to you need to bunker down you need to survive and you need to weather the storm and i think that's what's what that's my advice to the companies that i'm investing in or advising i also our friends were out there raising money they were you know they had done their seat their angel round and they were out there fundraising and i text to some of them i said how's it going he goes well i've had three investors cancel on me this week right like don't even take the meeting you know but you know the the good vcs won't do that the good vcs will continue to operate they will naturally get more selective the the valuations will come down so for example i'm talking to a yc company and you know they're raising their seed round and it's like hey we're raising two million on a fifteen million dollar valuation that's like he's fifteen million and that's the and i said i asked say how'd you get to why fifteen and because he's doing you know basically like a million dollars a year run right and so it's growing is growing fast so you can see how that's gonna grow but currently you know a million dollar year run rate and he said well the way of yc valuation works is pretty much if you've got nothing you're a ten million dollar company if you if you have something yeah you're a twelve million dollar valuation company and if you're profitable like i am you're a fifteen million dollar company you're right and basically was like you know just sort of he was joking but he was he was basically saying well it's yc we get this premium blah blah i'm very curious to see if the yc premium holds up given what's going on because i think there's it's gonna be a tightening everywhere right and if you haven't listened to it there's a podcast a new podcast i really really love so jason cal has been doing podcasting for ages right you listen to it i listen to it he's done thousands of episodes and that's his his podcast called this weekend startups but he has a new podcast which him off called the all in podcast and i think it's still under his channel but they're just doing the all lane episodes like a separate like episodes yes and it's they've done one episodes so far but is incredible it's like you know if you can get math who's a super smart guy don't agree with everything he does or anything but you know yeah i he's smarter than your average bear definitely smarter than average podcast so if you get his thoughts for free that's like that's a that's a conversation you wanna be off a fly on the wall for and jason's a very good sort interviewer pops conversational list and that's great and so they did one about coronavirus already definitely recommend you let go listen to that and tweet at jason and tell them my sense you it's a great podcast so i'd definitely recommend listening in addition to that one of the things they mentioned on there is well how does this affect to start up their recommendations were businesses should have three years of runway in the bank which i think is hard very very hard to have but let's say more what that really signals is you need more than you think not not don't think a year is good enough don't think eighteen months is good enough yeah try to get more if you have any option right now to take money either a a loan you haven't really fully drawn down or investment even if it's not the best terms or not the best investor take take the money and so that was the recommendation there the second recommendation they had was or the second story they told was sort of how does this work and so the way it works you have to understand how a venture capital firm is structured so you have the vcs and they'll re they'll say they raised a billion dollars but what's actually happening you don't get a billion dollars in your bank account and start writing checks to to start you have commitments of a billion dollars let's say our commitments of a hundred million dollars from your lps your limited partners and your limited partners are pension funds you know family offices you know institutional capital pretty much not individuals and those institutions they're basically gonna allocate you know some small percentage of their equities right they're gonna hold bonds they're gonna hold you know stocks the public stocks they're hold private late stage stuff and then they're gonna hold some of this sort of technology or venture venture bets and they'll maybe allocate five percent of their portfolio to that and what's happened what's gonna happen is as the stock market crashes and the bond yields go down now that amount of money they committed fifty million bucks twenty million bucks five million bucks to a venture capitalist now makes up not five percent of their portfolio but like fifteen percent twenty percent whatever it is they can't have that happen that's too much that's the wrong asset allocation so what ends up happening what happened in two thousand eight according to cha and jason was very interesting what they said was the vcs didn't stop investing but they definitely slowed down because what happens is when the vc commits to a startup they do a capital call they say hey lps we found a startup up we need you know that money you committed we need ten million dollars of it in the bank right now and so what happens when a when the stock market starts plunging and there's economic freeze is they sort of go to their lps of the lps come to them and say hey it'd be nice not to have a capital call for a little bit to you know yeah we're committed we're with you but like let's not call in my capital for for the next twelve months or whatever it is right and so the whole rate of investing slows down because the vcs don't wanna pay piss off their lps the vcs still make their you know their management fees so they're fine they're they they don't need to invest this money to eat yeah and so that's what ends up happening that's what slows down all of the start up investing so it's a long way of saying all the shit's interconnected if you have options to take money take it right now and if you don't it's gonna be very tough letting so you're gonna start a business right now and many great businesses have started during recessions i would say starting at literally at this moment is gonna be tough because there's a lot of uncertainty once the crash happens it's gonna wipe out a lot of companies is gonna be a lot of talent that's available for cheaper than it was before is we fewer startups ups in general so it is gonna be less competition prices are gonna go down across the board and so you can start a company then but you have to be prepared to be scrappy the the fat and happy period is over and now it's back to scrappy you know cockroach mode right do you see in especially probably in silicon valley do you see a lot of secondary selling happening during these periods within founders investors maybe employees i don't know is that something that happens usually you know it it all freezes up there's not a whole lot like it's just like i saying about my house yeah sure i'd be happy to sell now buy it's no buyers yeah yeah the buying the buying slows down and so when the blunt buying slows down the yeah know there's just there's no liquidity in the market it freezes right and you know that this is happening at an economy level and the government's gonna pump in trillions of dollars of cash to try to bring liquidity back into the market as they have to do to unlock the economy but there's no such thing in the startup ecosystem no one could print cash and give it to us right so that's a tricky situation right and so sorry for the people listening that was thinking about starting something when the process of starting something you say and a bunch of other people have recommended eighteen to thirty six months of runway and preferably don't you don't already have that you're thinking of starting something it's probably too late to get that too late if you already have if you already have a company running you need to reduce your burn rate so that you can get to having eighteen to thirty six months you're probably not gonna get more cash yeah but you can slow down your burn right and if you haven't started anything yet and thinking about starting you're saying wait out this period possibly and wait tool sort of the market the the economy everything sort of consolidate and then start maybe take advantage of the resources that are like left alive and that's put pennies on the dollar yeah well what i would say is like if you're an entrepreneur and you're gonna start something you're not gonna listen to me on a fucking podcast right you're gonna do whatever you're gonna do that's entrepreneurs which are stubborn and that's why we fail often too but so so i i don't pretend that they're gonna listen this but i what my advice would be you know think long and hard about what you're starting and if you're giving up something that's very very secure you know you know before if you were in a good job you're you're an engineer at google you can quit your engineering job at google go try something if it doesn't work six months later you can go get re hired by google or a facebook or amazon or netflix or whoever and probably at a higher so the risk was low the risk is now gonna get a little bit higher depending on where you're at your level of safety and security is like safety and security you're gonna be a premium now right whereas before was all about growth so i would just say you know think about it and the second thing is if you are gonna start something just be prepared to be in cockroach mode you're gonna get less capital and you're gonna have to be more scrappy than and in the end that might be a really great thing right these are the forcing functions that bring out the relentless or resourceful entrepreneurs who are gonna chase opportunities that you know you had to run through walls for anyways and so so i don't think it's gonna deter anybody i think some great companies are gonna get started here but you need to have the mindset of it's you know it's god time right and i sort of wanna reiterate something you slightly touched on before so what you're saying now is sort of sort of the the start scene silicon valley in the rest of the world they go through this sort of like this pendulum swing of founders and investors and during periods like this the leverage sort of now goes towards the like the investors the founder sort of lose leverage in in raising money and then in bull markets obviously the founders probably have a lot of that leverage and so you're saying over the next probably who knows how long over this last for seven ten years or in the short term definitely if founders you're saying that it founders is it's probably gonna be very hard to to raise money on your terms you're probably going to have to negotiate and sort of settle for what the investors so to say totally my friend i've stolen now two lines for for this podcast he has another great one which is venture capital is one of the few asset classes where the investment manager picks the security right investor picks which company invested but the security also selects the investor right and what that creates is really interesting dynamic where during times where it's a bull market and there's cup the good companies have so much leverage right because they can pick you know money is a is a commodity they can pick this investor or that investor or that investor they're all the same or even if they're are not all the same there's several tier ones or several tier 2s and so you have lots of leverage you can sort of get the price you want the terms you want and this is why you see funds that are like you know no board seats no liquidation preferences blah right you get all these different terms here's you know take a million bucks off the table when you when you take this round so you feel secure or whatever right you can get lots of terms that you want and when the market terms that that changes your leverage goes down and so it's i don't think investors are gonna be in a great position either but i do think that the pendulum potential in the swinging and founders things are gonna be less friendly all around people are gonna be less interested in investing in you when they do they're gonna be unless good terms and you should be prepared for that right and so i think we've been really dark and gloomy for the for this yes this entire episode is there anything anything on the bright side that you wanna say that there's something to look forward to and to probably possibly give or bit hope to people listening yeah you know i think that there are some great things in every situation right like i don't think there are actually good or bad to i started this business and this is really really bad in reality it's not really really anything it's what you make of it and so mh what we're seeing is actually a lot of people make interesting things of this situation so you know like last night they did the the sort of i think solidarity i don't know if you if they're doing that in australia but right they're doing in different countries where in india i saw out in italy i saw it where people go out on their balconies the people who were quarantined and at seven pm or eight pm they go out on their balconies and they cheer for the healthcare care workers i think it started somewhere where that workers were leaving the hospital that's all and people were going out in the balcony cheering for them and so the whole city is out on their balcony just cheering for the healthcare care workers for the doctors and nurses and they thought that was pretty amazing that's great and so we we did it last night we were the only ones we're just cheering to an empty street there's no doctors or nurses walking out trial but there's still something cool of just like shouting it out to the universe yeah so i really love that some people are getting creative there's you know this is thing called love is quarantined have you seen this yeah as looked at it last night when he sent to in the link of email and so did you watch the show love is blind on it yeah i've i've just finished it actually last night yeah interesting show congrats good show good show so so some people recreated the love blind show just using a google docs so they basically said hey we're gonna do is something the go love is quarantined right and they may opened up forty slots and they said they started matching people into rooms and you've looked like a voice conversation you can't see each other and you're never gonna meet or whatever you haven't met and if you if you like them you talk to them again the next day or and if you don't you pass and you go talk to the next person and they're like running this whole thing off a spreadsheet and instagram and that's kind crazy so like you know people are getting really really crafty really creative people are you know coming together in certain ways yeah we're really appreciating what they have because it's all taken like appreciation for the you know the delivery people the workers at the grocery store and at the hospitals i mean you you can't look at these people the same way again because they sort of you know they're saving your life yeah they're providing for you when when you needed to get the most and so i think there's some really good things for myself you know been able to spend more time with my family my daughter was born you know and when she was born when she was born i took off two weeks from work and then kind of you know she's is like just a baby that lays there and i was like as interactive as a staple and so i was like yeah i'm gonna go back to work now and i just myself with that and now with the shutdown i'm spending time with her for the first time and like really quality time extended and now she has much more a personality six months later and so you know that's been great so i think a lot of people are gonna reassess what's important to them people are gonna you know take time to reflect because they're just stuck in isolation yeah they're gonna be grateful for what to have that's my hope as to what's get the good that's gonna come out of this and honestly that is quite a lot of good yeah i think we're in such a unique time in history where especially the last decade with social media and and technology evolving with we you know every single second it was sort of our brain is filled with a lot of distractions and this for the first time people just don't know what the hell to do they're stuck inside right and it's it's probably this is actually probably sort of a net good that comes out this that people i don't know in a way not sounding cheesy they sort of just start thinking about who they wanna be and who what they wanna do and they have just really good this is a really good time to reflect and because you we don't usually have time for that these days yeah the the only thing that could have been more powerful is if the internet went out yeah if there was just no internet and there would be chaos and there were be lots of problems and people also be like what do i do with my time now that i'm not staring at this phone and you know that's not happening but but yeah so so hopefully this wasn't too dim gloom i wanted to share what i kinda wrote in the email i hope i'm wrong i hope i'm over reacting i'd fine with that i'm fine with preparing for the the worst and sort of seeing things through hopefully your realistic lens but skew more towards not what i hope would happened but what i think what i think is actually gonna happen and if i'm wrong i'll be pleasantly surprised that'd be great right and just one last thing before we sort of sigh off i wanted to ask you now that you know people it's sort of hard to wake up in the morning knowing you know every every time you sort of wake up your sort of paranoid or you're you're thinking about it's sort of hard to just ignore what's going around you and sir there's some there's interesting thing you're telling me earlier today actually when you're messaging me about sort of your morning routine yeah i wanna know i want you to explain that to to people listening and there's a like a cool project that we're thinking about doing if you wanna go ahead and explain that yeah so i'm sure a lot of you who are in quarantine or lockdown are you know trying to adjust to in new way of life in a way and and you know people are are are trying to figure out how to make this work for them right it's it's you know you can go crazy just sitting in indoors you can go crazy just reading the news and listening to what's going on and checking twitter and it just the feels that the world is crashing it's very stressful and unhealthy and so one of the things that keeps me sane is my morning routine that i've had for quite a long time and i'm not perfect with it at all you know they'll be sometimes months can go by and i forget it and then i come back to it always but when i'm good i'm doing this every day and you know i always wanted a morning routine but it's in the same way like yeah i also wanna wake you know i wanted to wake up at five am and ago go to the gym every day and i did it for like three days but then you know buy stop going to the gym because it's like such a tall task right and so the one thing that worked for me was i was at of tony robbins event and he advises this thing that he's been doing for a long time and he says you know i do this hour of power in the morning i take an hour for myself and i get myself prime for the day and he makes it makes it sound like a lot of right he's like you know if you were an athlete before you go onto the court under the field you really get yourself in the right mindset you get your body ready you get your your mind ready and you you you have a certain routine that you do that gets you ready to perform and isn't it strange that we don't do that in the sport of life right isn't it strange that we don't try to get our mind and body ready for the day for our whatever our you know sport is and that resonated with me i i as somebody who played sports that was something i felt yeah that is weird that i it would be unthinkable to just you know roll out of bed and and go try to play in a game i would never have done that but i'll do that with my work i'll do that with my family i'll do that you know on a normal day i would wake up i'd hit the snooze button i'd wake up again i'd be groggy i'd be late and then i you know hop in the shower and i'd get dressed and i'm half you know looking at my phone and i'm figuring out what i forgot at home and i finally you know to commute to work and i get there and i'm in the low energy state and i'm not really operating with any i'm just on autopilot and so i got sick of being an autopilot so i i adopted this routine because tony had this one thing he said you know i do this for an hour but if you can't do an hour do thirty minutes you can't do thirty minutes to do fifteen if can't do fifteen do ten if you can't do ten you don't have a life right just let it sink he goes if you don't have ten minutes you don't have a life so there's the thing that i do that's called the nine minute morning routine i've been doing it for several years now and i think can help a lot of people and so we're gonna i'm thinking about this i think i'm gonna do this you know i'm excited about it so i'm gonna make a podcast that's just the nine minute morning routine and i'm gonna record it and if anybody out there wants to you know try this in a morning and i think it'll help you i think it'll help you have a clear mind as you approach your day and i can explain kinda how it works but that's the idea i i have this morning routine it's worked for me it's helped me a lot i'm just gonna record it and then if it work if it helps you you can listen to it while you do it in the morning it takes nine minutes and if you don't have nine minutes you don't have a life and so if you wanna you wanna use this in the mornings great i think if this helps more people like could help me fantastic yeah i think anyone's listening if that sounds sort of interesting should definitely tweet sean and let them know that you want that and yeah we should we should get i i i don't even need to tweet i'm just gonna to do it or at this is like imagine you know how some people are with religion where they're like no this is the way right so you you know you don't have faith like i have faith this is the way that's how i feel about my morning routine where i'm like this is indispensable for me and if you if you don't have something like this you're just missing a piece of it so i don't really need that like sometimes i'll be like i don't know if this a good idea tweet at me and i'll that'll give me a signal if you want this i'm just gonna give it out i'm gonna put it out there so if you just search i don't know what we'll call it we'll call it nine minute morning routine right if you search the number nine minute morning routine after this i'm gonna record it and we're gonna put it up there and subscribe to it and try it out try it off for one morning let me know how it goes for you alright so yeah that's it from me anything any last one sentence to describe the week the year the decade going forward and he yes what would you leave them off with by one line would be be a realist about the problem and opt optimistic about the solution i like that alright sweet i guess we'll see you guys next episode yeah so you do that