Crisis, Tiny Bubbles, and Opportunity

In a recent Panic with Friends podcast, Howard discussed some things investors should be looking out for, and looking forward to, with Jeff Richards, Managing Partner, GGV Capital. Their last chat took place at the start of the pandemic in March of 2020.

Jeff believes March of 2020 is really a low point for investing, or even the bottom. Having lived through 9/11, and the financial crisis of 2008/2009, he’d witnessed things go down and down and down. You’d buy the dip, and it’d go down another 10 percent. But we ended up with an incredible ten to eleven year bull market run.

Jeff had seen the movie before when the pandemic reared its head, so he still believed in the underlying trends, and knew things were going to get better. At the time, he couldn’t say if it’d take 90 days or three years, but with his firm’s global perspective, he’d seen things improving in China, Japan, and Singapore as early as the April, May, June timeframe of last year. He says back then you could have thrown a dart at anything on the wall in cloud, digital payments and ecommerce; and you’d have done fairly well.

There’s been a recent pullback in high-growth tech over the last 90 days or so. Nothing seems cheap right now. SAAS multiples, on high-growth, are at a crazy 44x sales. Mid-growth is at 10x, and looking at the historic mid-growth averages of all software right, now it’s 10.9x forward revenue. The average post 2014 multiple is 6.7x, and the average multiple pre 2014 is 3.2x; leaving us with what are still historic…