Category Archives: The Economy

The history of US debt from 1790 to 2011 by Richie King & Matt Phillips

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A long look back, especially over history or economics (or both) is always useful in placing our hopes and dreads into a stronger context.  I recommend Matt Phillip’s post in the link below, with thanks to Richie King for the chart (and to Kevin Kelley for sending it to me).

debt-and-gdp-main6 (1)

 

“This chart, by Quartz reporter Ritchie King in a post by Matt Phillips, is my favorite because it contextualizes the US economy to show that we’re not quite in the financial apocalypse that seems to be upon us. The debt load during World War II was far worse—and it was followed by one of America’s periods of greatest prosperity.” —Lauren Brown

For all of Atlantic Media’s/ Quartz’s 2012 favorite charts:  http://qz.com/36149/our-favorite-charts-of-2012/

PC & chip sales decline in U.S. for first time in 10 years as mobile spreads

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from Marketplace….

“We have one desktop and everything else is pretty small and mobile,” John said. <who owns a family business>.

He adds that his family is online a lot, but his wife surfs the web on an iPad. And his kids?

“The kids, they don’t have their own computers but they’ve inherited our old iPhones and they work fine in terms of getting onto the Internet,” he said.

The shift to mobile computing on tablets and smartphones is hitting the sales of computers and chips in the U.S., with the first significant decline in both since 2002. The worldwide economic conditions do not help.  HP, Acer, Dell, Intel and AMD have suffered.  These companies must focus now on developing markets in international territories, where there is market share to gain.

For the full report ~

http://www.marketplace.org/topics/tech/market-desktops-decline

The State of the Internet: 2012 (Business Intelligence’s report)

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There are times we are really grateful for the hard work of the market intelligence folks, and this is one of them.  Thanks to Henry Blodget, CEO of Business Insider, for this comprehensive overview (138 slides!) on “The State of the Internet: 2012.”  Compelling.

http://www.businessinsider.com/state-of-internet-slides-2012-10#-1

How writing a novel is like starting a company, by Megan Lisa Jones

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Lucky or unlucky, I’m an action oriented person. Always happy to jump into new challenges I must hold myself back…recognizing that time is a limited commodity and doing a thorough analysis before undertaking a major commitment is essential (otherwise lots of unfinished projects!).

Currently, I’m buried deep in revising draft one of a sequel to Captive (at over 400 pages) and nursing a business plan. How to allocate my time and give each their proper attention and chance at success? Well luckily the two projects aren’t as diverse as they may sound and the skills required are very similar in many ways. But first I want to draw a distinction between writing a novel and writing non-fiction: in my opinion, non-fiction is much more predictable and structured, though not necessarily less creative.

So how is writing a novel like starting a company?

1. Creativity is an absolute must. One could argue that all stories have been told and indeed the best ones are variations of the classic story lines. Likewise, many new companies are only reinventing what has already come before or tweaking a new reality. Thus in both cases, seeing the possibilities in the marketplace or on the page differently is key to success.

2. Start with an outline or business plan but be prepared to deviate as necessary. Characters and marketplaces take on a life of their own and evolve seemingly beyond our control. When that happens, react (not over react) appropriately to meet the new realities and create a better end product.

3. Life changes: adapt. Selling and marketing a novel is so different from the standard paths of even last year with digital and bookstore realities evolving as we watch. Creativity and adaptability are now required off the page as well as on the page. When starting a company change also has a big impact on the original idea’s long term prospects. Markets, competitors, regulations, consumer choices, and the like all evolve and any new (or old) company needs to be reactive to these changes.

4. The idea is only the beginning; more important is the execution. Stephen King wasn’t the first to write a Kennedy book but his may sell the most when all is said and done. Neither Facebook nor Google was the first company in their industry sector.

5. Steal ideas if you want to succeed; just tweak them in a new way. Different from point one in that you can do better by learning from others and shouldn’t be ashamed to try. This point in is response to a shared post I saw earlier today mocking “piracy” and “plagiarism”. Don’t steal if doing so is illegal (such as with piracy or proprietary and protected technology) and don’t plagiarize. But do model the best and steal freely their ways.

6. Discipline and complete absorption into the new world you’re creating is essential. Starting something is easy; finishing and succeeding at building something great is very difficult. Successful people always work hard.

7. If you don’t market, what you create is just a hobby.

8. You will face a lot of naysayers. While I’d like to say that most are just jealous or too scared to do the same sometimes they are just more able to see that the risks of success are small. So be it. Not everyone wants to change the world.

9. You can change the world through your efforts! Not all novels or companies will do so but by innovating and creating something new and different you at least have a shot.

10. You will doubt yourself, your abilities and your judgment at some point. Get over it or you won’t succeed. No fully sane person ever sits down to write a novel or start a company (the risks are too high); find the inner resources to keep going.

11. Once done you will have created something new and (hopefully) different. You are an innovator and driver not spectator. What could be cooler than that?

I’m sure I could keep adding to the list but would only cloud my point. With the costs of self publishing or starting certain types of businesses plummeting and the traditional career paths not working as well, right now is a great time to try something new. The basic requirements are few but essential. Dare to dream?

Now, back to writing a long piece and not a blog….

My close colleague Megan Lisa Jones is an investment banker who works primarily with companies in the digital media, technology, gaming and other emerging industries (formerly with Lazard Freres, Needham & Company and Merrill Lynch). Her investment banking blog is at www.ibla.us and check out her first novel, Captive, at www.meganlisajones.com.

Crowdfunding – an introduction

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I made my first contribution to an off-Broadway stage play in development recently, on Kickstarter.  It was fun to support my colleague in his efforts, and in fact, he raised his goal within his time limit, which was even more exciting.

Crowdfunding is a means of raising capital via Internet outreach from many people (friends, family, fans and strangers) in various amounts, to reach a stated goal that those people would like to support.  The various crowdfunding platforms (The Economist reports more than 450 worldwide at this time) employ different models — some offer rewards like preview tickets or other promotional gifts, some offer inclusion in their community, while others offer a profit motive.

Crowdfunding has been around in various forms (1997 for a British music group, 2001 for an American music website — see Wikipedia on this), gaining steam beginning in 2008 and well-implemented now in 2012 using varying business models.

Crowdfunding funds artists, musicians, filmmakers, theater projects, journalists & bloggers, intellectual property of all sorts, startup companies (particularly tech), charitable organizations, and micro-financing ventures, among other examples.  Contributions and investments range from small amounts to thousands of dollars.

In April of this year (2012), President Obama signed the JOBS Act into law (“Jumpstart our Business Startup Act”), with bi-partisan support.  The Act is now under consideration by the Securities & Exchange Commission (SEC) on details of its implementation.  Supporters applaud its flexibility and its reach in supporting new ventures, while detractors worry about how to protect the unsophisticated (“unaccredited”) investor, and, more telling, how the Act will disrupt the regulations now in place for certain audit and reporting requirements when taking a company public.  See Wikipedia for an overview; see the Library of Congress for the text of the Act.

In this first introduction, I just want to share some resources for your exploration:

Of course this just the beginning of a new approach to funding. It will engender debate and regulation and both good and bad effects.  But we are experimenting with whole countries and worldwide populations to see what we can create with our new tools.

The excitement comes from watching the emergence of the new models of business, collaboration and life-choices enabled by our newest technologies, which change the world and our lives in new ways we never dreamed of before.  Here’s one more, one close to my heart.

The current technology & funding innovation: chaos of opportunity & optimism

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There has been much talk these past few years in the venture capital markets, about what works and does not work in early stage funding and exits of technology companies, which seems like a great deal of conflicting noise.

Consider what we see and hear:

  • We are told that the venture-funding model is “broken.”
  • Venture companies complain that ROIs are low.
  • We are in the midst of a flourishing boom of new companies built in garages.
  • There is a huge range of newly developed early-stage funding sources (Incubators, Accelerators, Angels, Super Angels, and crowd funding).
  • We see new secondary markets.
  • There are strategic sales with extreme multiples.
  • And we see the return of IPOs.
  • We hear we may be in a “bubble” again.

So, what’s going on?  Can all this be so, all at the same time?

Well, yes:  this is the picture of disruption, not only in technology, but in the marketplace itself.   And the disruption is the result of the last 30 years of technology development coming to fruition.  It is what we’ve been working towards, this chaos of opportunity and the optimism it brings.

Since the release of the first PCs in 1981, through the release of the “new media” in 1991, to the opening of the worldwide Web in 1993, to the beginning of standardization of pricing and distribution channels with the iTunes Store (2003) and the App Store (2008), we have been on our long journey to now.

This last decade has been difficult economically:  a tech downturn in 2000 (the crash of the dot.com bubble), a national economic downturn in 2001 and a global economic downturn in 2008.

And through it all, with good years and bad, the American engine of innovation keeps chuffing along, building new tools and toys and technology that we distribute to the world.

And not only does this engine build technology, it re-creates what it needs to keep moving forward: new funding approaches, new ways to lower or share the risk, new models to support the boom of new companies now exploding.

The tech boom is exploding because we have, after 30 years, solidified our infrastructure, standardized our technology platforms, built the off-the-shelf tools to build new products quick and lean, and stabilized our distribution channels and pricing.

So, is the funding model broken?  The old model is, but the new models are already in play.  And the investors still standing from earlier days are wiser now, and the new investors tend to have created their wealth from the success of building their own companies.

Are the exits too good to be true?  No:  the IPOs are mostly companies with 8-10 years in the marketplace.  And some over-zealous acquisitions seem to have a strategic thought behind them.  And to some degree, this doesn’t matter, as long as there is an exit path open to spur on the initial capitalization of all these new companies.

Are we in a “bubble”?  I doubt it… we are in the moment of bursting expansion that arrives when we have done our homework over decades, when the spirit of the entrepreneur is alive and well (because of and in spite of the current economic and job markets), and when we let loose our new generation, born with a mouse in their hands, to build what they think the world needs to give consumers and companies the magic of the chip only promised up until now.

I am excited.  I think, after all these years working on each new edge of new technology, that we have arrived at the beginning of our promise to change the world.

 

Is Ageism Real? by Amy Hirsh Robinson

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The recession swept through America, leaving scores of unemployed Baby Boomers in its wake. Millions have been unable to find work since. It’s now gotten so bad for the unemployed over 50, that President Obama is proposing legislation to make discrimination against the unemployed illegal.

So is ageism in the workplace real? You bet it is. But the situation is complicated by these competing truths:

Many older workers do not have the skills and competencies that employers need to compete in the new economy.

  • Some younger managers are afraid to hire older workers because they don’t know how to manage them.
  • Sometimes older workers cost more to employ. Sometimes they cost less.
  • Productivity can decline with age, but younger workers are not always more productive, nor more reliable.

To be over 50 and unemployed carries a terrible status in our country, and we are ALL complicit. My challenge to hiring managers is to check your assumptions when screening candidates and look for the competencies most critical for the role. My challenge to Baby Boomers is to prove your relevancy to the new economy, adapting your skills and offerings to meet these changes in the market.

It is in everyone’s best interest for organizations to attract and retain top talent. What are you doing, as a hiring manager or potential employee, to help or hinder that goal?

My colleague, Amy Hirsh Robinson, MBA, is a leading expert on the impact of generational differences in the for-profit and not-for-profit workplace. She consults to C-level leaders on strategies to reduce attrition costs, increase profitability and create agile workforces able to adapt to ongoing change. See www.interchange-group.com.

Offshoring, the new economics and the American middle class – a detailed look at Apple & Asia in the New York Times

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Earlier this week, on Monday, I was out to dinner with friends at one of our local Santa Monica hang-outs, a rather funky neighborhood place with good food and lots of room, and quiet.

At 7:30, in an orderly assembly, 45 Asian teenagers arrived and filled the big booths with 6 kids each, both boys and girls.  Half the large restaurant was filled with these charming kids, about 14 years old.  Their leader was a dapper Asian gentleman around 50, who quietly (nearly silently) directed them to arrange themselves in their booths, and then left them to join 3 other adults at a separate table.  The kids ordered, ate, talked among themselves.  The adults had their dinner and did not interfere with them even once.

And the restaurant was as quiet as if they were not there.  The kids had a good time and enjoyed their food.  This was clearly a celebratory outing for them all.  I realized it was the Chinese New Year (Monday, January 23rd, 2012), the first evening of the year of the dragon, and that was the celebration.

And they in no way disturbed any of the other folks in the restaurant.  No acting out, no food fights, no discipline of any kind was required.  Upon our finishing our meal and leaving, my husband approached the leader, bowed slightly and complimented him on the exemplary behavior of his young charges.  The man was delighted, came over to the other 3 of us, bowed and shook our hands, beaming and saying thank you.

Now, I tell you this story because that morning I had read, online at the New York Times, about the economics of off-shoring manufacturing and logistics in Asia, by Apple and most other consumer electronics companies.  This article seems, at first, to be an indictment against Apple and others, but in fact quite clearly explains the cost/benefit realities of the Asian vs. the American workforce — the flexibility, the speed, the low cost, and the results achieved by off-shoring, when it is well-managed by Apple or others… and the lack of appropriate skilled workers at the required levels and the lack of training for such jobs within the U.S. workforce.

I have built a company in China, so I have some experience about both its changing economy and the working life of the Chinese, as well as the challenges its government faces in feeding 1.3 billion citizens.  I have been an entrepreneur in the U.S. for 25 years, so I know something about building businesses here too.

This article filled me with both excitement about the global marketplace, and with some dread for the U.S. workforce (at least in the short term).  My optimism about our resilience and flexibility, and the opportunities seen at other end of this period of major change, remains undaunted.

It is a long article, and worth reading every word.  The world has indeed flattened, and the realities of that change begin with this information.

 

A microcosm of recovery going into 2012?

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I continue to listen to the media coverage of our up & down economic condition, the movement of the housing market, the corruption of bankers, the worry of European debt, and the general insecurity felt by large business, small business and the person-on-the-street.  Three years now.

“Yes, but look at how long it took the country to recover from the Great Depression in the 1930′s,” a colleague said yesterday.

I understand that recovery is a large, long movement, which now involves the entire world.

What I notice, however, is that my very small business, often the last to enter and last to exit these economic downturns, has been thriving for more than the past year, and so have all my clients.

My clients include early stage technology companies, and consultants who service all sizes of business, from small to mid-cap to Fortune 50.  My clients are thriving (one is receiving $50,000 in revenue in December alone, and one just received several million dollars from a stock sale). And this is not just from my advice.  All my expertise focused on driving up their revenue and profitability cannot help them in an economy that is not hiring them for their expertise, or not valuing their early-stage stock.

So, in this tiny segment of the economy, we are not seeing downturn this past year.

I believe what I study about the world economy, and I think real economic world health will take some years to be restored, and this health may look very different from previous years.  But I have begun to wonder how much influence on our thinking and behavior is a result of the media continuously telling us the drama of the times.

Hottest Tactics to Beat Your Competitors by Terry Corbell

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There’s nothing quite like a recession to prompt businesses to resort to closer monitoring of their marketing, pricing, and costs. Without hesitation, many mistakenly cut costs in marketing and human resources.

One of the first questions businesspeople ask me: “How do I affordably find out what my competitors’ prices are?”

My typical answer: “Use your salespeople to talk with your former customers, present customers, and the people who buy from your competitors.”

Not to be gauche as a business-performance consultant, my best-practice answer is to hire a competent outside-participant to learn customers’ attitudes.

A hot topic: Since early 2009, it seems all we have heard about is social media and connecting with customers.

Hence, the increasing popularity of social-media measurement, but it is still challenging to leverage social media for business success. It takes a savvy staff or outside experts to listen and engage prospective customers in the marketplace.

That’s why big companies have become astute in social-media strategies and they invest in competitive intelligence. But they do not divulge what they learn. As a result, competitive intelligence is still a relatively unknown best-practice in business, especially for small to medium-size companies.

Not to criticize, but that’s partly true because a lot of practitioners in competitive intelligence are great at what they do, but they don’t adequately explain their services.

Many small to medium size businesses owners assume competitive intelligence is simply the art of understanding business adversaries. Not true.

To use an analogy, designing speedy tactics to beat business competitors is a lot like sports, especially track. The surest way for runners to lose in a competitive race is to look over their shoulder.

Yes, many businesspeople tend to look over their proverbial shoulder. They are too worried about a competitor instead of running their best race.

A leading competitive intelligence consultant, Seena Sharp, agrees.  She wrote the book on competitive intelligence: “Competitive Intelligence Advantage: How to Minimize Risk, Avoid Surprises, and Grow Your Business in a Changing World.”

She says focusing on competitors is a misguided approach.

“A far better strategy is to monitor and deeply understand the martplace which is constantly changing,” says Ms. Sharp. “Competitors are just one piece of the puzzle and you need all the pieces.”

She points out success does not result from outsmarting competitors.

“Success is a direct result of giving the customer what they want,” adds the author. “You don’t need competitors for that.”

Her examples:

“If so, then why would another restaurant open? Do we really need another place to get hamburgers or pizza or coffee?  Business is not a zero-sum game, so beating competitors still may not bring you the results you seek.”

Ms. Sharp contends competitors may not be direct competitors from your industry.

“They may specialize in a different industry but still offer what some customers want,” she explains. “The most important thing to learn from competitors (direct, indirect, new and substitute) is why are they attracting customers, customers who could be yours?”

Her advice: Learn how to respond to marketplace changes.

“Those changes today are likely to be unexpected, surprising, weird – and therefore, most likely to be ignored or underestimated,” says the author. “Take some time – a few weeks – to recognize more evidence of these changes and to consider what these changes mean.”

Finally, Ms. Sharp theorizes how companies unknowingly give away their power.

“Not necessarily a point for a brief article, but the highly reputed ‘Blue Ocean Strategy’ stresses the importance of not being a me-too company, of not being a direct competitor,” she concludes. “I call it the anti-competitor strategy in my book.”

Of course, “Blue Ocean Strategy” is an award-winning, best-selling book by W. Chan Kim and Renée Mauborgne.

Disclosure: I highly respect Ms. Sharp and have watched her for several years and I believe you can take anything she says to the bank. We are both members of a group of veteran consultants that meet regularly in Los Angeles, www.consultantswest.com.

From the Coach’s Corner, for more on competitive intelligence, visit Ms. Sharp’s Web site: www.sharpmarket.com. Be sure to read her “SharpInsights.” 

For more on “Blue Ocean Strategy,” visit: www.blueoceanstrategy.com.

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Terry Corbell, my close colleague and friend, is Seattle’s “Biz Coach.”   I wanted to share his article with you, and refer you to his site, where you will find hundreds of interviews and articles (http://www.bizcoachinfo.com).

Seena Sharp of Sharp Market Intelligence is my long-time colleague who identifies your competitive edge by uncovering opportunities, threats and growth segments. Visit Seena at www.sharpmarket.com, and Download the free chapter in Seena Sharp’s new book, Competitive Intelligence Advantage: How to Minimize Risk, Avoid Surprises, and Grow Your Business in a Changing World (Wiley)http://bit.ly/8XLKmj. And read the great Amazon reviews.