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As The World Turns..Inside Out
John Battelle of SearchBlog | October 1st, 2008 - 04:14 AM
(28) found this useful. Do you? 
Every so often it’s worth the risk to break the fourth wall and talk about why we’re all here. Thanks to American Express Open, folks like me, and Anita, and Guy, and many others, get a chance to step outside our everyday lives and think out loud about business. For Guy and Anita, this is somewhat second nature. For me, however, it’s not - I’ve been part of starting nearly a dozen businesses, but until American Express asked me to think (and write) about it, I was pretty much focused on my own world - presently, that means running Federated Media, itself a small business, by pretty much every definition but my own.
Today marked another shift in the way I think. The folks behind this site asked me to weigh in on the ongoing financial crisis, what it meant for small business, and what advice or thoughts I might have. I’ll admit, I’m captivated by the events unfolding in Washington and across the world - but what might *I* have to say about it? Turns out, I have a lot to say, and I bet you do too. So consider this post an invitation - I’ll tell you what’s on my mind, but in return, I’d really like to hear what’s on yours. Then we’ll fold that input into this site, and see where it takes us. I think we’re living in pretty remarkable times, and … wait for it … remarkable times are when people like you and me can make a real difference.
So back to my thoughts. As CEO of FM, I don’t just run a small business - we have 80 or so employees - we run a small business that creates opportunities for about 175 other small businesses. FM is a media company that represents independent website owners, each of whom run their own businesses. We provide them revenue, largely in the form of marketing. And when the world starts to fall apart, well, I start to worry. A terrible economy means marketers pull back on their advertising spend. And that affects not just FM, but the 175 or so businesses we represent. In short, I don’t just have one dog in this fight. I have nearly 200.
So what do I see? So far, FM is managing to continue to grow in this terrible economy. I think this is because we’re well positioned - we are in the online media space, where innovative brand marketers are still investing. And the sites we represent have passionate, engaged communities, communities that are important to those marketers.
But that doesn’t mean I don’t wake up in the middle of the night, worried about what might be coming next. Many of us in the Internet industry are veterans of the last big bust - 2000-2002 - and we can still feel the pain of losing it all (as I did with the Industry Standard), or at the very least, having to cut back to the bone and wait it out. And this time, something feels different. This crisis is not limited to an overinvestment in telecom and Internet, this time our entire financial system has been brought to its knees. How can you not be worried when Congress is in an extended session to determine the best way to spend nearly a trillion dollars, money that, in fact, we don’t actually have (we’ll be borrowing it, given our national debt)?
It’s a well worn saw that as goes small business, so goes the economy. If all of us start laying off employees and cutting back expenses by a third, our economy will go into a deep funk. If, on the other hand, we all declare faith in the future and start acting accordingly, our businesses will become the engine of economic recovery.
So what do we all need to move away from fear, uncertainty, and doubt, and toward faith and optimism in the future? I’m really eager to hear your thoughts and stories. What are you doing to deal with the current economic situation? Given your business and industry, what actions do you want government to take? What stories do you have to tell about how today’s environment is changing your business outlook? Perhaps if we start to talk about this, and share our knowledge, we can start to effect change - one story at a time. Please, login, comment on this post, and keep coming back to this space, we’ll be focusing on this story diligently in the coming days and weeks.
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Shafqat | October 1st, 2008 at 8:46 am
Great post! You hit the nail on the head though - your position is unique given the fact that you have so many dogs in the race. Good luck fighting through the adversity.
The way I see it, it’s not a bad time to start a business. Some of the best businesses out there today were started during the troubled aftermath of the post-dot-com era. It’s tight to be fiscally responsible as small business owners, to be smart and cheap, and use creativity instead of dollars. In fact, entrepreneurship is all about making the most efficient use and maximizing scarce resources. This is the time to prove one’s mettle. Easier said than done, but I’m excited about the challenges ahead.
Shafqat
CEO NewsCred
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World Inside Out | October 1st, 2008 at 9:52 am
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World Inside Out | Write a Blog Site | October 1st, 2008 at 10:01 am
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Ray Rose | October 1st, 2008 at 10:08 am
Well said. Just look back at those days of Wired starting up there on 2nd Street (before the office turned into a hipster clothing depot). I worked for MIGHT magazine in those offices and remember the air of the times circa early 1990’s.
Back then, it seemed, people worked for a living; tried to save money. There were no bidding wars on real estate; there were no stock options or overnight millionaires; there were no negative amortization mortgages or 0% credit cards.
Since then the federal reserve has helped bloat our consumer driven economy with a flood of cheap capital. We have seen the economy oftentimes stop and demand that someone pay the bill for this free ride. We have not paid the bill.
We need to pay the bill.
We need to destroy our credit cards.
We need to live within our means.
We need to let the reckless financial s fail.
We need to follow the lead of Adam Smith and let the invisible hand be invisible.
It will take 20 years to pay for all of this partying and it will be a brutal grind. But if we don’t start paying for it now our bloat will pop; and all that will be remaining is a Brazilian economy wrapped up in an American flag.
Ray Rose
CEO
Sports Fluid, Inc.
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Norbert Mayer-Wittmann | October 1st, 2008 at 10:11 am
Hi John,
I guess you know about the story of the wild swings in Google’s share price on the NASDAQ at around 4 pm yesterday (see also http://www.mercurynews.com/ci_10601746 ). That is, of course, very worrying and “remarkable” (and especially because this apparent error remains, to date, unexplained).
To move away from fear and towards optimism, I feel that it is of utmost importance to reduce the perception of risk in the market/economy.
I feel that the greatest risk for big business and small businesses alike is to become too dependent on one single provider of information services (such as marketing / advertising). One example was recently documented by Joe Nocera at the New York Times ( http://www.nytimes.com/2008/09/13/technology/13nocera.html ; see also the remarks/conversation at Mr. Nocera’s blog http://executivesuite.blogs.nytimes.com/2008/09/12/is-it-time-to-break-up-google and/or Mr. Savage’s statement on YouTube.COM http://www.youtube.com/watch?v=-KTiiTnvTpU ). Mr. Nocera’s article portrayed how Google, by some measures the largest provider of information services (such as marketing / advertising), used its dominant position in the information industry to raise the price of its services exorbitantly to one particular user of Google services (SourceTool.COM) — possibly even, as Dan Savage (owner of SourceTool.COM) argues, to destroy the company.
One example of how to become more independent from such monopolistic exploitation is to use what I refer to as the “Wisdom of the Language” (see http://gaggle.info/miscellaneous/articles/wisdom-of-the-language ). I did this, for example, yesterday: My mother was visiting me and asked how we might be able to find a “Gebaeckzange” (a utensil for serving pastries), so I suggested to use the search engine I have developed at http://browse.name in order to find web sites that are about “Gebaeckzangen”. We were thereby able to find very good offers for Gebaeckzangen (at http://Gebaeckzangen.DE ) and plan to order one there before she returns to the States.
I would also recommend you to take a look at Paul Krugman’s blog ( http://krugman.blogs.nytimes.com ) — just yesterday ( http://krugman.blogs.nytimes.com/2008/09/30/bubble-memories ) he noted Google’s role in skewing the political discourse related to the current financial crisis away from recommendations he made over three years ago — recommendations that might have prevented such dire consequences as we are experiencing today.
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Asha {Parent Hacks} | October 1st, 2008 at 10:16 am
As one of the small businesses connected to your small business, I appreciate your candor. I admit I’m tempted to stick my head in the sand when I read the newspapers. It’s hard to scale this crisis down to the individual level.
I have to believe that the community network that has grown (and continues to grow) around blogs will be a part of how people cope with this economy. A minor part, perhaps, but significant nonetheless. As our faith in government and corporate structures erodes, we can find comfort and power in direct connections with others like us.
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Ben Saren | October 1st, 2008 at 11:28 am
John,
Another great piece, worded so well. At CitySquares, we’re putting a hold to unnecessary spending, tightening the belt, and because we, like you, serve the SMB market, we’re having to lower our prices to make sure we’re giving small businesses a chance. In a downturn, if you want to even call this a downturn, there are great opportunities. As the competition pulls back on spending and advertising etc, it opens a door for others. It’s our job to find those opportunities for our customers and get them to recognize them. And we need to provide even more value to our advertisers, our customers, our life-blood, more customer service, work out flexible payment terms, and do what we’d ask of our vendors too.
And I agree, John, that we need to keep a cool a head and be strong. To panic means you don’t have a plan. Have a plan but have a plan B as well. This, too, we shall survive!
I blogged about this just the other day actually, it’s very relevant to this topic (and it’s not a self promotion or promotion for my business). See it at http://yoursuspect.com/2008/09/28/the-economy-an-opportunity/.
Keep up the great blogging and tweets.
Ben Saren
Founder & CEO
CitySquares.com
http://www.citysquares.com
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John Battelle of SearchBlog | October 1st, 2008 at 11:43 am
@ben thanks for the thoughtful comments. Love the optimistic view. @asha yes that’s exactly the point, direct connections!
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John Battelle of SearchBlog | October 1st, 2008 at 11:48 am
@ray thanks for the memories, might was a great magazine. I like the idea of paying the bill - that’s kind of the idea behind Amex, no?!
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culley harrelson | October 1st, 2008 at 12:26 pm
I am the sole employee of my company, writing the code for my website, answering support email, managing the servers, etc. I, like you, have managed to grow my business in these otherwise tough times and I also attribute this to being well positioned. It is difficult to watch my friends and family struggle while I enjoy the most prosperity I have ever experienced.
The severity of the economic crisis concerns me daily. What particularly concerns me is that this crisis is happening on the back of an energy crisis. The infrastructure in our country, including the internet, was developed in an energy-rich environment. Without cheap abundant energy how are we to deal with these economic problems if our goal is to maintain the general goals of continual growth? When people are honest with themselves, most everyone agrees that the American way of life is not sustainable. I believe that what we are seeing is a tangible sign of this unsustainablility. From my government I would like to see a realistic approach to scaling down. People do not want to talk about changing the status quo, but I believe that is what we need. We need to lower our standards, lower our consumption. I believe you are setting yourself up for failure if by “faith and optimism in the future” you mean faith and optimism in maintaining our current way of life.
That said, it will be interesting to see at what point the economic problems effect on-line businesses such as mine. I suspect that my business model is as secure as the electricity grid itself. As long as people are on-line my business will survive and probably prosper.
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Brooks Jordan | October 1st, 2008 at 1:39 pm
Thanks for posting on this topic, John.
It’s very disconcerting, what’s happening, no question about it. And it’s going to be uncomfortable for 18 months and maybe a few years.
But there is a very exciting aspect to it, beyond a single bubble bursting, one that I can’t shake, and that is it’s exposing the many ways in which we don’t create value.
You just look at what most companies produce for products and services, and how they produce it - what they stand for - and clearly we’re all guilty of the crisis we’re in, including consumers and citizens.
At the same time, there is so much that needs to be done, so much that people need to live good, prosperous, healthy lives.
James Speth in “The Bridge At the Edge of the World” (http://snipurl.com/3zzk7) gives his list . . . we can take our pick and more.
And it’s not just about challenges, obviously, it’s also about the huge burst of intelligence in culture and technology that’s happening. The Great Depression, whatever one can say is similar about it to what is happening today, didn’t have an “intelligent cloud.”
The point is that as we get pulled up short on this current path, there is a new one to start down and every reason to do so.
Many, of course, like Federated Media, already have. But if a new economy, one that marries the Internet and the physical world, and creates real value and sustainability, can emerge in the next decade, wow, think of how excited we’ll all be - and grateful for the current breakdown.
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brooksjordan » Blog Archive » New Economy Coming Up | October 1st, 2008 at 2:00 pm
[...] of Federated Media, a company I respect a lot for their unique approach to converstational media, posted on the financial [...]
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Dominic Son | October 1st, 2008 at 5:15 pm
A logical solution from Michael Moore: http://www.michaelmoore.com/words/message/index.php?id=237
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Jason Reed | October 1st, 2008 at 5:16 pm
I’m a web developer trying to bootstrap a startup and I’ve taken out a line of credit to help buffer month to month costs. My fear (however irrational this may be) is that the bank will for some reason have to call the line or decline to renew it, and then I’ll be stuck personally covering things, putting my family’s financial well-being at risk. Additionally, if that were to happen, I’d have to consider looking into outside funding of some sort, which really limits my ability to make decisions about what’s best for me and my company in the long run- not to mention the current financial situation has probably dried up a lot of the good angel investments out there.
While I could easily sit back and just take the freelance gigs that come my way, but that sort of defeats the purpose of working hard to achieve something beyond the normal 9 to 5.
The uncertainty is absolutely going to kill growth to some degree. How much? Who knows.
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John Battelle of SearchBlog | October 1st, 2008 at 8:37 pm
@Brooks - wow, I totally agree. So great to hear from you, thanks.
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noahcarter . com » Blog Archive » Bookmarks for October 1st | October 1st, 2008 at 10:01 pm
[...] As The World Turns..Inside Out - posted under Uncategorized, links var disqus_url = ‘http://www.noahcarter.com/?p=190 ‘; var disqus_title = ‘Bookmarks for October 1st’; var disqus_message = ‘These are my links for October 1st from 23:31 to 23:31: As The World Turns..Inside Out - ‘; View the entire comment thread. [...]
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Casey Jones | October 1st, 2008 at 10:23 pm
John,
As usual, I am intrigued by your words. And by your choice of subject. When John Battelle has an opinion, I tend to listen. I’m writing this as an observer and practitioner in the world of perception management. As a marketing exec. My question for you is this. Has the change in our information society helped precipitate this staggering swing in the economy? In short, we have become a world with a massive appetite for information and a new capacity for quantities of it our grandparents would not have believed possible. Instead of just a few media outlets, there are millions of voices. Pools, eddys and seas of opinion swirl in the public mind, driven by credible and incredible sources. Pressure on traditional news media to be more timely, more competetive with internet bloggers, more opinionated, in short, more sensational, seems to me to be driving and fueling economic concerns. Bad enough that Greenspan announces to the world that we are in a once in a century crisis. His prediction helps make it so. Worse still are the millions of reflective and ampliyfying voices that take up the chicken-little cry, cement this perception as reality and in so doing, call down the very hurricane of crisis they have predicted.
I believe it is possible that those who craft the stories, editors and journalists like you, do more to create the world we live in than they know. When the media opts to be optimistic, which is a choice they will make, then things will change. When we predict that we have reached the bottom and report on success, we create that success.
Love to hear your views on the subject. Either over a beverage or on this blog.
Warm regards, as always.
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Ken Dickens | October 2nd, 2008 at 10:31 am
It seems to me that us tech folks are a bit myopic about this situation as a whole. Silicon Valley is not like the rest of the US. Or the rest of the world for that matter.
To bring this home, consider a small independent retailer, say a clothing store. Buying for this store must take place at least 6 months in advance, so merchandise is already bought for Christmas. However, for the spring collection this retailer is in trouble, as she finances her inventory through loans that have now dried up. Is she out of business this spring? Are all small retailers? Yikes.
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John Battelle of SearchBlog | October 2nd, 2008 at 11:09 am
@Casey - Great to see you here. Yes, I think it’s inarguable that the interplay of media and message drive this story. I think it’s also true that as soon as the bill is passed, then this story will fade and become background noise “the recession” while the media chases whatever other shiny object holds its fancy - “Six year olds chasing a soccer ball” is how Jon Stewart puts it. That leads to a lack of understanding of the real issues businesses face - as @Ken below points out. It’s my hope that forums like this, built out into real media sites underwritten by far-seeing marketers like Amex (and Dell with sites like Idea Storm, Direct2Dell, ReGeneration, etc…), can address those needs unmet by soccer moms.
On a good note, there are as you point out millions of voices out there. We can see them coming through in this form. What they need is a curator and editor and amplifier. That’s what we do!
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Dick Davies | October 5th, 2008 at 12:00 pm
I have a terrible feeling that the bailout is a last ditch attempt to save an old banking system. We are living in a Web 2.0 world, and a part of that is for the people who were doing well previously to do anything possible to hold back what is coming next.
I don’t know where the new financial system is coming from, but it won’t be the people getting crushed trying to hold back the new birth.
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