The economy is now fully addicted to bubbles, and the start-up ecosystem is particularly affected. Withdrawal from this bubble-drug is going to be painful.
A couple of anecdotes about the last big tech bubble of 2000. At that time, there were 300+ optical networking companies in silicon valley. We had sold our network management software to about 150 of them. By 2003, only 2 were left standing. We survived because we had saved up some money for that eventuality, and we reinvented ourselves using those savings.
One painful bubble memory I have is the real estate lease that we had no option but to sign in 2000. We moved from San Jose to Pleasanton to escape the worst of the bubble-rents but even in Pleasanton, while the rent wasn't ruinous (about $20 per square foot per year), the landlord forced a 7 year lease on us. Still, the rents fell to about $10 per square foot per year by 2002, but we were stuck with the higher rent for 5 more years. Fortunately, the company was financially strong enough to withstand it but the episode taught us a lesson in bubble-planning and bubble-survival.
I am shocked that people are signing $50-100 a square foot per year leases for 10 year terms these days.
Our goal right now is to survive the present bubble, bigger in some ways than even the one in 2000. I tell our people that there is going to be a serious bust and we should aim to survive it first.