The Age of Austerity: Getting Lean & Mean
I read a very interesting article by Eric Newcomer on Silicon Valley bad boy Chamath Palihapitiya.
“Forbes doesn’t seem to have called him a billionaire since the SPAC frenzy in 2021. It seems highly unlikely that he is one. (To be sure, Palihapitiya is almost still certainly very wealthy by any normal standard. And his challenges may mostly amount to liquidity problems given that much of his wealth is tied up in private investments.)
Palihapitiya has openly discussed his belt-tightening on the All-In Podcast.
In January 2023, he talked about looking at his household spending. “I haven’t really looked at my household budget in 2 or 3 years — didn’t even bother. Then when I looked at it, I was like wow this is really inflated to a level I didn’t even expect. It makes a lot of sense to live in a more heads down, austere way.”
In June, he said on the podcast that he “flew public” by taking Southwest Airlines.
I’ve learned that last year Palihapitiya quietly sold his expensive private jet.
His public letter to investors last year called this an “age of austerity.” (Source: https://www.newcomer.co/p/the-dictator-chamath-palihapitiyas)
Why?
In his latest investor letter published this week, Palihapitiya wrote, “While 2023 was full of challenges, we are near the end of the hard reset from zero interest rates. After a decade of low rates and rising valuations, many of the tailwinds that benefited us as technologists are now gone. Instead, disruptive change via advancements in AI and reshoring of critical industries are reshaping how companies are built.”
The net net: the world has completely changed. In technology, geopolitically, economically. ZIRP is over and cheap money is gone for a while at least.
But we all got fat and lazy during the decade of 2012-2022. What a nutty time. Maybe not as nutty in tech as the dotcom bubble in the 90s, but nutty in every sector to the point that historians will call it the “everything bubble.” Add in the chaos from the Liberation Day tariffs implementations, it’s hard to predict where the world or economy is going. Now it’s payback time for regular folks like you and me, the billionaire class, cities, states and even countries who got used to fat tax income and big budgets.
We are entering an age of austerity. We need to be cutting back budgets and reprioritizing everything we are doing. At all levels of the government, at companies and businesses and in our own lives.
I’ve done this myself. Starting to classify what is critical and what is a luxury and thus unnecessary. Cutting back on unnecessary travel in 2025, like to Europe for example, cutting out conferences that I normally would have gone to. I’m using the hard filter of ROI, if it’s not paid or fully covered, nor in a strategic mission that is core to my business, it's out. If it’s not part of my personal goals and contributes to my health or wellness, it’s eliminated from my schedule. Only travel kept is for Canada, Taiwan and Japan because these are strategic or deeply personal due to family stuff. Otherwise, I am completely focused on the core. Anything Non-essential is gone.
I fully expect that we will be entering tough times financially, physically and mentally, so these actions will be a big part in shepherding my resources to weather the storm. And so I can come out the other side stronger. Kind of like a UFC fighter going into quarantine, training hard for an important fight that is coming up soon. Word to the wise.