Here's the context: giants in the travel investment world, Joel Cutler and Priceline Group's Glenn Fogel, are on a panel discussing everything from unicorns, elevator pitches, exits and much in between.
Cutler, who is managing director of General Catalyst Partners and Fogel, Priceline Group head of worldwide strategy & planning and executive vice president, corporate development, are asked about the $1 billion+ valuations.
While Cutler makes a valid point about seeing beyond the hype and building good companies which there will always be a market for, it is Fogel that deals out a bit of reality check.
He reminds the audience that many of today's young entrepreneurs have not been through the cycle and seen the bad times, as well as the good.
"Money is easy for them now and they have not lived through when it was not - in 2008/2009, when the bubble burst. The issue is that there is going to be a time when you can't raise money. It's very important that you are not wasting money given to you.
"You see the money people are spending, I'm amazed. It's a great conveyor from limited partner to VC to startup to consumer and it all comes with a discount and that cannot be sustained. It is only sustained as long as there is more money coming in at the top."
Sobering words indeed and ones that should probably be taken on board when you think of all the deals in the past couple of years Fogel is likely to have had a hand in.
In March 2014, Priceline acquired Qlika, then around June of the same year, it swooped on restaurant booking service OpenTable, property management system Hotel Ninjas and marketing specialist Buteeq, and in May this year, it acquired revenue management specialist PriceMatch.
And, let's not forget Kayak for the princely sum of $1.8 billion back in November 2012.
Cutler advised startups to treat investment as if it was the last they were going to raise.
General Catalyst, in turn, has invested in Kayak, ITA Software and Room 77, to name just a few, so, it's fair to say these guys know a bit about travel investment.
Fogel goes on to say that one of the issues is the dichotomy between public and private companies with much less scrutiny on the bottomline with the former versus the accountability to shareholders of the latter.
The focus of the discussion, which took place at last week's Phocuswright conference in Miami, then moves to who is being unrealistic over valuations - the entrepreneurs or investors.
This sparks the "consensual hallucination" comment from Cutler who describes travel investment now as a "a good moment in time with capital fairly available."
Fogel points out how the current environment with big investments makes it hard and having to fend off questions around why Priceline isn't "spending up."
"We just don't believe that valuation is right. It's not easy because there is this social confirmation. If all the smart money is buying at that level, you should be too. That's why you don't see a lot of analysts on Wall St coming far out from what the crowd is saying."
Further gems thrown out during the discussion included:
- Don't go to investors armed with an exit plan just because you think it's what they want to hear
Fogel says: "If they come already telling me they want to leave, I want to leave."
- Elevator pitches are not a great way to make a pitch, spend a bit more time thinking it through
Cutler says: "Our job is to listen, we get paid to listen, so try to do a good job in the first couple of minutes. If you're good we will spend hours with you, we'll spend the rest of the day with you."
- More money is better if you're battling with the under-capitalised v delusional dilemma
Fogel says: "Bad things happen, things you never thought of. Get the money when you don't need the money."
NB: Funding image via Shutterstock.