To investors,

There is a trend online where individuals try to name “zero interest rate phenomenon.” Some of the popular answers include the Island Boys popularity, frustration with an inability to purchase a mansion, working more than one remote technology job, starting a podcast, or NFTs and meme stocks. These examples were all ridiculous and unsustainable in hindsight. They don’t get at the root cause of the problem though.

Zero interest rates created a mind virus that infiltrated the brains of an entire generation and made them soft.

That may sound like an exaggeration, but let me explain. Lower interest rates turned life on “easy mode” for a lot of people. There was extra money sloshing around the system. People felt like they were getting richer and richer every day.

The government was handing out stimulus checks to tens of millions of Americans. Student loan payments were paused. PPP loans were being forgiven with almost no diligence. Every media company was highlighting the stories of kids in their basement short-squeezing Wall Street hedge funds.

Investors were handing out investment dollars to anyone with an idea and a powerpoint deck. These venture dollars were empowering founders to pay employees whatever it took to grow. Grow. Grow. Grow. No matter the cost — you must grow.

This tricked employees into thinking that “easy mode” was the default.

If you are in your mid-20s or younger, you think money falls from the sky. Customers are banging down your door to buy whatever product you create. Investors have money dropping out of the pockets as they walk down the street. Easy mode is….easy.

Of course, this was only a dream though.

For three years, the world was operating in easy mode, but now we are back to reality. The dial is being turned back to “hard mode.” The easy money is gone. The companies have the upper hand in employment relationships. Meme stocks are down a gazillion percent. The government is broke and begging the American people to let it take on more debt.

Venture investors are sitting on their hands. The media is taking victory laps of “we told you this was unsustainable!” It is mass chaos for the people who thought easy mode was the default. And the people who thrive in hard times are salivating.

This is a story as old as time.

Markets are fun on the way up, yet they punish people on the way down. Tourists show up to “build companies and change the world” during the former and the real entrepreneurs stick around to eat glass when everything becomes unsexy.

How do I know this?

Because I am watching it happen all over the market. Young founders are giving up and quitting. Literally just walking away from companies and teams. Numerous micro-VC funds have quietly shut down. Employees are confused why their companies are getting rid of certain benefits and perks. Layoffs are ripping through various industries.

Hard mode has arrived.

The good news is that hard mode is a great filter. It shows who are the pretenders and who are the real players. It exposes who has true persistence, rather than cute slogans and posters on the wall. Hard mode punches you in the face over and over again. It takes a breath, and then punches you again and again. It wants to punish you. It wants you to quit.

It wants to make you dream of wasting the rest of your life away as a middle manager in a cubicle in the middle of nowhere at a corporation that your parents could be proud of. The allure of the “easy life” inside a big company is too powerful for many to resist.

But don’t be soft. Don’t let the zero interest rate mind virus infect you. Resist the easy path.

Building companies, investing money, and creating things people use is hard work. There would be no value to it if it wasn’t hard. You have to be resilient.

You will watch friends and colleagues succumb to the pressure. The more people around you are affected, the more resistant you must become. Hard mode is trying to chew you up and spit you out. Don’t let it.

Don’t become a statistic. Don’t be soft.

The things most worth doing will be the hardest. We are in the depths of hard mode. If you can survive for a few more months, things will get better. The Fed will eventually have to pivot. They will return to loose monetary policy.

And when they do, we’ll see who had the strength to stick around. Make sure it is you.

-Pomp

Announcement: I am hosting a conference at the Miami Beach Convention Center on March 4, 2023. Anyone can attend for free. The goal is to bring together people from different walks of life to debate important ideas that impact our society on a daily basis. The speakers are many of the most popular guests from the podcast over the last few years, along with a few surprises. If you’re interested in attending, you can read about the event details here:

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