It's the Economy, Stupid

Wow, so two weeks ago I wanted to write about technology and business. And I still do (and will). However, there comes a time when an adjustment needs to be made, and for me that time is now.

The economy is in the tank with no end in site. Asian markets dropped 9% overnight and the European markets took a battering until the coordinated move of central banks moved to adjust interest rates around 4am this morning.

New York City at Night

Banks are closing left and right and the government is bailing not only the banks out, but also commercial entities. In the last few days, no fewer than three people I know have lost their jobs.

People are scared, and rightly so. This is the darkest hour in recent history, rivaled only by 9/11.

Last night on FriendFeed, my friend and colleague Robert Scoble was fretting about the downward spiral. Scoble, to his credit, was trying to work the fear out of his system. Some people felt he should step up and be a leader and inspire confidence, while others felt his pain and lamented with him.

For my purposes, I’m scared as hell, but I’ve chosen to be confident. This is not a false confidence. This is a confidence based in reality and historical context.

Look, folks. Things are going to get worse before they get better. I like Jason Calacanis’ point in in one of his most recent newsletters entitles (The) Startup Depression:

Depending on your DNA, getting your ass kicked is either complete
torture or deviantly rewarding. Truth be told, I like getting my ass
kicked because it makes me angry, motivated and focused. If I look
back on the couple of moments of success I’ve been lucky enough to
have in my life, they all seem to come after a good ass-kicking.

The darkest hour is”“in fact”“right before the dawn.

I’ll also never claim to be an economist, but I read and listen to smart economists and money-people. I look at evidence they provide and I run it through my bullshit filter and what comes out the other side gets stashed in my collective. I reconcile conflicting data and try to understand those conflicts.

Here’s what I (think) I know.

Human nature is all about patterns. When a pattern changes abruptly, it takes us out of comfort zones and can sometimes induce panic. It happens when you lose a job. It happens when you meet your girlfriends parents for the first time. It happens when you transfer into a new school. And it happened when the market started selling off at 500 points a pop.

In the case of the market, 500 points looks big – and it is – and the ramifications for someone like me or you who are not traders and don’t understand the nuances of the market are psychologically intimidating.

Fear breeds a lack of confidence. A lack of confidence breeds fear.

Because humans are a people of patterns, after a few weeks of major drops on the market, a pattern and a cognitive comfort level sets in. Investors begin to see opportunities instead of challenges. Bargain buyers go thrift shopping and a rebound begins.

In my investment armchair, I see the end in sight. We are not there. We are going to see lots more before it turns up. But, my instinct tells me we are nearing a bottom. That doesn’t mean things turn around overnight.

In fact, I expect a lot more people to lose their jobs. The web sector has been largely immune, but will probably get walloped hard too. I spoke yesterday of staying in a self-employment situation if you can and staying in a stable 9-5 if that’s where you are now.

Which brings me full circle. We need leaders. We need people who are going to step up and instill confidence. Fred Wilson did this yesterday and I want to see more from a fiscally minded individual like him (he’s a VC). Scoble is still trying to process it all, and that’s expected, but I hope he will come to grips and start inspiring people at some point.

All of the proverbial A-listers need to step up their games right now and be leaders. In the days to come, I’m likely to write a series of posts on leadership. In the months to come, I’ll also take a much bigger look at the economy in the web space and outside. In World War II, homemaking women went to work in the factories to support the men in battle. It’s our responsibility to take the positions we have and do good in the economy and for our space.

So, though I’ll continue to write about the web, business, technology etc – I’m also going to be talking economics. I don’t know everything, but what I learn I hope to pass back. We will get through this because we have to.

Not Everything is Quite as Important as You're Making it Out to Be

If our lives only involved this world of technology, then life would be a much better place. If life was as simple as simply going to Google and clicking “I feel lucky”, then we might not have the heartache that is in the world and the social media space could just get along by whispering sweet nothings to each other in 140 characters or less.

Let me say I’m really proud of Robert Scoble lately. He is the only one in the group formerly known as the Techmeme crowd who is demonstrating how much he “gets it”. The other day he broke from his normally socially interactive groove to talk about politics and he made a strong case for the abandonment from Palin-focus and instead pleading people to write about issues that are important to them.

Ironic because only days before, my friend Erin and I were talking over IM and discussing how the momentum of the race flows unequivocally toward the McCain campaign as long as the focus, positive or negative, stays on Sarah Palin. I didn’t blog it because… you know… it’s not what I write about.

But there’s a greater story here, and one that everyone needs to get. You all need to hear this loud and clear. This is September 2008. It is the boiling point of the Presidential election. Debates are a week away and we will know who our next president is in 45 days or so.

What are the political discussions on the blogosphere today?

Let’s not forget the flap last week about lipstick.

Backdrop all this by Bloody Monday on Wall Street where stocks crashed 500 points, or 4.4% on YAFIF, or Yet Another Financial Institution Failure. Actually, two YAFIFs today. Lehman Brothers filed for bankruptcy and Merrill Lynch was absorbed into Bank of America as the parade of failed high level financial institutions continue behind Freddie Mac, Fannie Mae, Countrywide, Bear Stearns and others.

As a practical sidenote, the Great depression began as a series of double digit percentage drops on the market and the Black Monday crash of 1987 was a 22.5% decline by itself. The downturn of today may be large, but is a far cry from the entire volume of the market. Also, every system goes through a self-cleansing period where junk is cleaned out to make room for new and solid product. The market is just self-correcting at the moment and historically shows remarkable resiliance.

But my point is this: quit worrying about everyone else and worry about yourself. Take care of your families, jobs and responsibilities. Go and vote on issues, not personalities. Remember, we have to live with whoever we vote into office in November. There are much bigger things to be concerned with during this very difficult time than lipstick and moosehunting.

Twitter, the Coup in Social Media that Is Past Due

In all the buzz over new media, social media, Web 2.0 (fill in the buzz words), there is something that has been really lacking. Sure the various social services out there make a valid attempt at addressing real-time interaction, but the strength of IM has remained the strength of IM – instantaneous.

Recently, the most simplistic, yet so powerful service, Twitter emerged on the scene with one purpose. It’s not to make business connections. It’s not to find like minded companions or to reconnect friends of interest. No, the service is designed with one goal in mind and that is to tell the world “what I’m doing right now”.

If you’re like me, you thought, nifty but useless. Like 43things. Nifty. Totally useless. Especially for business.

However, I’ve been paying attention to Scoble as he has been using Twitter for some time now. He has posted some very entertaining things about it, but in the end my verdict has always been: Nifty, yet useless.

Then someone posted yesterday, I thought it was Scoble, and commented that he uses Twitter because it gives him an eye inside the mind of early adopters. Now that is useful. So I set up my account and to be honest, it’s addicting.

Yes, on the surface it is posting about what I’m doing right now. However, Twitter has provided a number of useful public-facing methods that allow Twitter’rs to engage in the service using Instant Message (AIM, Gtalk, .Mac, Livejournal or the open Jabber protocol) as well as via text messaging from your phone. And with an open API, I’m even able to engage the system using any number of tools such as TwitterPost.

Now suddenly, the social networking paradigm has become instantaneous in a way that other services haven’t.

Already this morning, a number of the people I have chosen to follow (they may not even know – the service is that passive and non-invasive) are carrying on a variety of conversations on a level I’ve not seen in simple IM, nor on social networking sites.

And of course, there is a whole Twitter Optimization (like Search Engine Optimization) that can be used to drive traffic and promote stories. I expect sooner or later, we’ll start seeing spam.

Twitter me This, Twitter me that. Do you Twitter? If you do, feel free to add me as a friend, and I’ll return the favor.