The Giant Pool of Money
http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-mon...
Back in 2008, Alex Bloomberg (This American Life, Planet Money, Startup, Gimlet Media) did a story titled The Giant Pool of Money. In it, he explores the 2008 financial crisis, looking for the root cause of the meltdown. He discovers one major problem: extremely rich people have a lot of money. Unfathomable sums of money. And they are looking for places to put it. You can only put so much money in the bank. You can only buy so many rental properties. You can only invest in so much stock. At some point, if you are super-duper rich, you have to find other places to stick your money. That's why these days whole apartment buildings of ballizon-dollar NYC apartments sell out and sit empty. They aren't places for people to live. They are places for money to live.
What does this have to do with the web? Well, the tech industry has become hot in recent years. Everyone now knows, the tech industry is where all the jobs are. Where all the economic growth is. Where all the get rich quick schemes are. The tech industry has become a place for this giant pool of money to find a home.
I think we still think of VC money as the small pools of money from a few of our successful friends. A tech millionaire here and there wanting to give back. Small-time millionaires who want to help people with a few good ideas. But I keep thinking of this Giant Pool of Money roaming the earth, looking for a place to land. And I believe it's been landing all over the web for a while.
Turns out, pursuing VC money can be a bad idea. Of course not all VCs are the same — not by a long shot. And sometimes carefully-considered Venture Capitalist funding is a good choice. But we still talk about closing a round of VC money like it's winning the lottery. We act like everything in our industry should be funded by big money and rush headlong towards an exit.
Let's instead be more careful. Let's not be naive about the kind of destruction the Giant Pool of Money can cause. Listen to this story from 7 years ago, and think about what the Giant Pool of Money might be up to today.
February 18, 2015 - 8:59pm