Over the last 2 weeks I’ve had the privilege and opportunity to listen, talk with, and participate in a number of discussions with really smart people about the current economic crisis. Some of these discussions have been at formal events (CxO conference, and a Panel at CU’s business school) as well as informal chats with very smart and well-credentialed folks.
Maybe its me, and I certainly don’t want to come across as the optimistic Pollyanna, but haven’t we seen this movie before? In the early 80’s, in the early 90’s, in the early 00’s.. We live in a world of cycles. This time, really smart people that were motivated (paid) on stretching the boundaries, pushed the envelope too far. Now we’re paying the price. Note the “we” not “they” – but that’s a different story.
Where this starts to go sideways with me is the pervasive pessimism and fear that I keep hearing. I don’t deny that things are bad and very likely to get worse. Many of the problems are systemic and massive on any scale. That said, I don’t feel like every area of the economy is in the shitter. Financials, yes 100% agree, that sucks and if I were a structured finance guy I’d probably douse myself in gasoline and light a match.
I’ve witnessed CEOs of big companies say that every company that is venture-backed and not yet profitable should cut 25% of its staff now. That strikes me as irrational. Doesn’t it depend on what market you’re in? What problems you’re solving? Where you are in your company’s lifecycle? I also heard an equity trader at a $80B firm say that they were looking forward to a little socialism (?!) WTF? equity trader = capitalist in its purest form, right? On the flip side, I spoke with a good friend who happens to run one of the largest distressed debt funds in the world. He’s a nervous guy by nature (how the hell else do you do distressed debt?) and the distinct feeling I got was a really smart investor that saw huge opportunities in the current market turmoil.
Typically things decline faster than one ever imagines, and they take longer to recover than people predict. Is it a “V” or a “U” or a “W” recovery? No one wants (or should) try and catch the falling knife and try to time the market’s bottom. Most people invest high and sell low. Its done that way because we are infallibly human.
The view from where I sit..
The key to weathering this storm for any business is to create more value for your customers than their money is worth to them. Couple that with a fiscally conservative stance on your own spending. Keep your focus on execution to plan. Adjust as necessary to do the above.
We recently raised a good amount of money. We’re targeting a multi-billion dollar market that is still growing. We have plenty of money in the bank and yet we take a conservative stance on spending. Our focus is adding tremendous value to publishers and advertisers that want to reach people in a targeted and performance-driven way. I think that makes sense.