L.A.'s Top Tech Guru Is Preparing for the Bubble to Burst
For more than two years, Suster has been warning that companies have become overhyped and overvalued. He believes a correction is coming. On his blog, he wrote that "outsiders" — hedge funds, mutual funds, crowdsourcing — have poured too much money into the industry. He declared a period of "mourning for the days of rational behavior."
More recently, his premonitions have become more dire. With the stock market dropping and troubling news out of China, Suster went on Facebook in early January and predicted a "bloodbath" for angels — the amateur investors who put $25,000 or $50,000 into a startup company.
He's not alone. More and more people in the industry are sensing a shift in the landscape. The era may be ending when any Caltech grad who could put together a PowerPoint deck could get a $1 million seed round.
Suster doesn't know how bad things will get. It could be a mild correction or it could be something worse, like the dot-com crash of 2000 or the financial crisis of 2008. He's still optimistic about technology over the long run — that's why he's still investing — but in the near term, he sees a powerful storm brewing.
In an interview, he says he has surveyed venture capitalists, and they are all pulling back.
"I'm telling you what my intuition is from the conversations I've had," he says. "I want to say to entrepreneurs, 'If you knew the meetings I was in, you would be cutting costs right now.'"
(LAWeekly.com)
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