Al Berkeley was president of the Nasdaq stock market through boom and bust, from 1996 until two months ago. As he confessed to the audience of a Tampa Bay Technology Forum breakfast last week, even he was confounded by skyrocketing stock prices in the late 1990s.
"I said, "I'm president of Nasdaq and I don't understand how this works,' " he said. "Stocks were up but there were no earnings."
Game theorists explained the phenomenon: The market was attracting not only people playing a game of long-term strategy, but also those engaged in speculation and gambling. But everybody called themselves investors, Berkeley said, "because talk about speculating and gambling was socially unacceptable."
Now, Berkeley said, we're in a six- to 10-year phase during which the "agony of memory" will keep equity investors from risking money on tech startups. His advice to Tampa entrepreneurs: Establish a program like one in Atlanta in which big companies agree to give a limited number of local startups an opportunity to pitch their products for possible procurement. At best, the newcomers win customers; at worst, they learn what's wrong with their products.
"What startups need more than equity is revenues," Berkeley said. "That says it's real."
