Source | LinkedIn : By Betty Liu
Chet Kanojia is used to taking on the big guys.
A few years ago, he found himself embroiled in a Supreme Court fight to shake up the broadcast television world through his startup, Aereo. He lost that fight against media giants like CBS and Comcast; but like any true-blooded entrepreneur, he’s back with a new company called Starry.
That persistence could be traced back to his early days starting a company at the worst possible time: during the dot com crash. Kanojia founded Navic Networks right when the bubble was thinning in 1999; despite lots of scars and bruises, he eventually sold it to Microsoft for a tidy sum.
Anyone even thinking of starting a business now would do well to listen to Kanojia’s battle-tested advice. Here’s an excerpt from our conversation on an episode of the Radiate podcast.
Q: Does this stock market turmoil remind you of what happened in 2007 and also in 2000 when the tech bubble burst?
It’s hard to make an apples-to-apples comparison. The 2000 bubble was a strange one, as you could almost see it coming, like a car accident about to happen. Consider that you had these online companies with little to no revenue, let alone profits, pouring massive amounts of marketing money into offline media. It just didn’t jibe.
Honestly, I think 2007 caught most people flatfooted, except maybe for folks in the finance industry. The massive contraction in the economy was felt deeply across all industries—which was much different from 2000.
I know everyone wants to talk about an impending “tech bubble”—but I’m not sure that you can draw any real comparisons to 2000 or 2007.
I’ll admit, it feels a little alarming when large institutional investors are investing in startups like Jet and others, but you have to look at the reasons why and what’s driving that investment strategy.
Sarbanes-Oxley and other rules have made it challenging and onerous for companies to go public. That means good private companies choose to stay private longer. And, as a result, institutional investors can only build substantial positions in these companies by investing in them while they’re still private and at later stage. It’s an unintended consequence of the regulatory environment and consolidation in the institutional investor space. Does that mean it’s a recipe for disaster? I’m not convinced that that’s the case. Public markets do have a way of holding companies’ feet to the fire, but remember it’s not always a surefire way to determine the health of a company. Let’s not forget that Enron and MCI were all public companies before their demise.