Sam Altman’s recently spotlighted comments about tech companies hiring “hot girls” to recruit engineering talent was “meant somewhat tongue in cheek, although it’s a real phenomenon,” he told Dice News. When asked about how often this takes place, he said, “I don’t think it’s super common.”
The venture capitalist and former Loopt CEO pointed to such signs as unsustainable high valuations for companies that have no traction, an increase in new investors in Silicon Valley, increasing rents and salaries and various other indicators.
The part-time Y Combinator partner is not the only one making this observation. In August, Bloomberg warned that “the last time gains in stocks outpaced profit expansion by this much was in 1999, when equity valuations surged 19 percent in a year to 30 times reported profit. That bull market ended the following year, with the S&P 500 tumbling 49 percent from March 2000 through October 2002 as the dot-com bubble burst.” In addition, Interpublic Group chairman emeritus David Bell warned about the unsustainability of ad tech back in May.
Despite the focus on that one indicator, Altman looked at multiple factors in his post. “I tried to give more substantial reasons for why we might be in one, such as salaries and other things that tend to correlate with a bubble, and even if we’re not, they’re always good things for startups to think about,” Altman explained.
The bottom line? “When times are really good in the tech world, it’s easy for companies to get distracted and spend money on a bunch of things, but the important thing to remember is that you have to actually build a real business. Companies should not lose sight of what’s important,” he said. Companies must stay disciplined and focused and not spend more than they need to, which is good advice regardless of the financial situation but even more important if Altman’s prediction is correct.
“All you can do is make your best judgment, and I think I was pretty clear in the post that I’m not sure that this is happening. I’m aware of the possibility, but there’s no way you can be sure,” he admits.