I’m writing this blog post at about 25,000 ft in a half empty plane heading to Dallas for a company party. With a ticket I bought yesterday, with a hotel and car rental for well under $500. Last year I would have paid that much for the flight alone. My biggest concern this year? Where to take my growing team in Orlando for the Xmas party.
I’m reading the latest BusinessWeek article (p. 64) titled: “The recession: What Top CEOs Are Thinking” and much like the rest of the magazine, it’s full of doom and gloom. One of the interesting questions is “What will it take to get the economy going again?” Here is what Dennis Dammerman, Former GE Vice Chairman has to say:
We’ve got to get consumers and business spending again. I think we’ve proved over the years that investment tax credits and faster depreciation increase equipment spending. For consumers, confidence is key. And while I don’t agree with much of what Barack Obama wants to do, I think that for a great chunk of our consuming public, he has improved that confidence. I hope this enthusiasm doesn’t die.
<randombs>This is one of the arguments I frequently have with my business friends when it comes to the chicken-egg conundrum. Does business investment in technology and solutions create jobs which increase employment, salaries and discretionary spending of the employees improve the economy? Or does the tax refund and economic incentive program put the money in the hands of consumers around which businesses spring up to collect the money and churn? Most business owners prefer to serve the demand for products and services because it’s far easier than creativity and funds that are required to generate the sense of need for the product! There is a huge difference between the two and it’s important to realize it because it drastically changes the type of a business you run and how you sort your priorities. Does most of your money go into advertising or R&D?</randombs>
For over a year now, many of my close friends and I had this long running argument about the economic downturn which has become a recession which is now heading for a depression. Those who chose to ignore it or not play a part in it are now suffering or have long shut their doors. Let me be clear on one thing: You don’t have the benefit of ignoring the markets. You can choose to believe that the economy is doing fine and pursue your direction of building a quality business that deserves a premium rate and can effectively market the benefits of your company over another. You can also choose to believe that economy is doing poorly and you focus on building a cost competitive business that can generate volume over slimmer profit margins.
What you cannot afford to do is to do nothing. Your ability to serve your market is contingent on that markets existence. Turn on the TV and you will see specific industries bitching and moaning about their prospects because their market virtually vanished due to the circumstances out of their control. Those who saw the signs and responded are now thriving and will emerge much stronger when and if the economic outlook becomes more positive.
What am I doing?
Around the middle of this year we had no choice but to discontinue several of the high margin products because our data center providers were running at capacity and the space utilization and power cost continued to skyrocket. With space and power at a premium there is no way to build cost-effective solutions, so you focus on being the best.
What a difference a few months make. The other day I was offered a 3 year contract from a major bandwidth provider for bandwidth at $5.80/Mbit. Data centers which previously housed companies that embraced riffraff are now gone and there is suddenly a deal to be made. Quality hardware is cheaper than ever and the companies that specialize in equipment salvage and off-lease gear have warehouses nearly packed. Not to mention that the last thing Dell wants is to spend more on shipping the off-lease equipment that’s about to be sent to them – Can we make a deal?
Now only if I had some expertise designing large-scale IT infrastructure… Wait a minute!!! I did see a tweetie bird!
My point is..
That entrepreneurial jackasses do not see up and down economic cycles, they see the opportunity to create a business model that serves new found demand. The reason OWN has continued to skyrocket is because our solutions are built with the things people really want but don’t necessarily want to pay for it and build on their own.
I see 2009 developing a new market, the hagglers market. No middle man, no compromise, no bundles and no contracts. Just hit my card and let me get back to my business. Our business plan for 2009 was finalized last week and we are aiming to launch 4 new products in 2009 (one per quarter) that fill the demand on the extremely price conscious segment of the midmarket. The midmarket is ripe for services and we’ve shaken that tree all year long enough to notice that there is a polarization of sorts – high service and utilization vs. low cost self-service model.
Until now, we haven’t had a good answer for the bargain hunters and hagglers. Now we will. What about SMB? Frankly, we expect that to continue going downhill as there are less fish in the pond but also less, savvy fishers.
Every day I field calls from people who have a ton of demand and are just trying to fill it. My job is to come up with the solutions that answer that demand, and in 2009 I will have another company that is a damn near opposite of the one I have today. I do not believe one will erode the other as the markets self-identify the solutions built for them. Whatever they choose, it will lead to more money for me and more leads for my partners. And an MBA for my monkeys. And a Corvette ZR1 in every color 😉
If you have any ideas given the above, you know where to find me and how to work with US.
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