As I get ready to head off to San Francisco International Airport on the eve of July 4th, I’m concerned about recent warnings of possible terrorist attacks the likes of which we haven’t seen since 9/11.
Those alerts have brought back personal memories of the most devastating attack on American soil since Pearl Harbor – in terms of lives lost and the affect it had on both the U.S. and the global economy.
Now, I realize that many of you were too young to experience the event while others may have forgotten. Not me. In 2002, I chose a commemorative California license plate emblazoned with the American flag and the words “We Will Never Forget.” Let me explain why I will never forget – and why it’s so important that none of us do.
The morning of September 11, 2001, was not a typical one. As CEO of a Silicon Valley startup that was burning through cash too fast, I had a board meeting scheduled for later that day to discuss the status of our efforts to raise a Series B round of funding. Following the dot-com crash that was challenging, to say the least.
But that meeting would never take place.
Within seconds of my alarm clock going off, a frenzied radio DJ announced that two planes had crashed into the World Trade Center. Without thinking I turned on the TV to see smoke billowing out of both towers. Just as a reporter was saying this had to be an attack of some kind, I watched in horror as the south tower collapsed.
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At this point, I should probably tell you that I grew up in New York City, had worked as a teenager in the Deutsche Bank Building (formerly Bankers Trust Plaza) adjacent to the Twin Towers, and lived the first seven years of my life about a mile from the site of the horrific scene unfolding in front of my eyes.
Not to mention that I had travelled millions of air miles on the two airlines whose planes, crew, and passengers had been used as offensive weapons in what we now knew was a terrorist attack. At that point, I felt helpless and angry – a combination I’d rarely felt in adult life.
Perhaps to ward off those feelings, I started making calls. I made sure my wife – who’d gone into work earlier – was safe and aware of what was going on. And since one of the VCs who would be calling into our board meeting had recently relocated his offices to lower Manhattan and communications were out, I cancelled the meeting.
The terrifying events of that morning took a terrible toll on the U.S. economy. The Nasdaq Composite, which had already lost two-thirds of its value since the Internet bubble burst, plunged another 15 percent in the days following the attacks. It would take another full year to finally bottom out and stabilize.
The resultant economic volatility had a chilling effect on capital liquidity. If it had been hard to raise venture funds before, it became almost impossible after 9/11. Unable to stay afloat, my company shut its doors about three months later. More than 40 people were laid off.
All told, the impact of the attacks on the U.S. economy is generally accepted to be somewhere in the $2 to $3 trillion range. But from a purely anecdotal, and I suppose emotional, perspective, I can tell you that the climate of fear and uncertainty was so pronounced it was almost palpable.
Fast forward almost 14 years. Today we find ourselves in the midst of another bubble. And while this one is more a function of flawed monetary policy and sky-high private valuations than broadly overvalue public markets, the stock market is nevertheless near all-time highs.
Meanwhile, the financial crisis and Great Recession of 2008 spawned an unusually tepid recovery. Global economic growth remains sluggish. In other words, this bull market is not supported by solid fiscal policy. And what happens here affects markets everywhere. It doesn’t matter what part of the world you’re in, another 9/11-style event will dramatically affect you and your business. It’s the last thing any of us need.
The point is this. While the cost of fighting terrorism may seem high, the cost of not fighting it or fighting and losing is far higher. It’s important for all of us to remember that … and to never forget.
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