Eric Litman is a venture capitalist and serial entrepreneur who has built some of the world’s most successful tech companies, such as Proxicom, Viaduct, and MediaLets, in times of stock market volatility. Now the founder and CEO of a new wellness robotics startup, aescape, he offers his take on how individual investors and entrepreneurs should approach a wildly volatile market.
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Q&A with Wall Street Investor, Eric Litman
Has Coronoavirus destroyed capitalism as we know it?
This is a question on all of our minds. Undoubtedly capitalism will survive – it’s just going to take a bit of a beating for a while. We’re still at the frontend of this crisis and it’s anyone’s guess how long recovery will take, but we will recover and things will get better.
Lots of people are saying just hide your money in a mattress, so to speak. What can an investor in their 20s or 30s do now to ensure that they are still building wealth despite volatility?
If your money is already in your mattress and you won’t need it for the next 12-18 months, consider investing in bellwether companies that have taken a hit in the past couple of weeks: Amazon, Apple, Google. If you could use some inspiration, take a look at Public and follow trades from others as they buy and sell.
You’re an entrepreneur who has weathered all kinds of markets successfully. What is your advice for entrepreneurs who are already in this market or are contemplating taking advantage of the new SEC rulings on crowdfunding?
Financial downturns act as forcing functions for entrepreneurs: you either learn quickly how to be resourceful and tenacious each and every day, or your business dies. Take stock of what’s really important to your business and be merciless as quickly as possible in cutting back on anything you can live without to give yourself as much runway as possible. Make sure you have complete buy-in from your co-founder(s) and a team that you plan to run lean to survive and gravitate toward people who innately get that concept.
Investors still have capital available to invest, and the smart ones know that entrepreneurs that are capable of operating through tough times are the ones to back. So whether you’re pitching VCs or getting buy-in via crowdfunding, highlight your ability to weather the storm, and sell the prospect that by being born in hard times, you’ll come out far better equipped to compete and win than companies that come from abundance.
Can you give us your thoughts on industries that you believe still have a bright future post-Coronavirus?
We’re in the 4th industrial revolution and are seeing massive transformation across most major industries. Agriculture is sexy again with advances in urban cultivation and farm automation. Tesla and Waymo have brought new life to automotive. Everything about the environment still needs to be solved. Health and wellness have never been more important to people. My advice is to find something about which you’re passionate and dive deep into solving real problems.
On a personal level, what steps would you take if you were a new graduate with your first job trying to achieve financial stability?
You have two major levers in your financial life: how much you make, and how you choose to spend. On spending, my advice is easier said than done: spend less than you make and avoid using credit cards to finance the basics of life. When it comes to earning, more than anything, you should choose to work on something you can passionately believe in and support. You’re more likely to stick with that job–or at least that industry/problem space–for a longer period of time, and that time spent becomes comparative economic advantage you’ll be able to leverage into higher pay, a bigger personal network, and career longevity.
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