Category The Economy
The Internet Is Dead (As An Investment)
By James Altucher
I can live all day inside the Internet. I can talk to my friends, listen to music, watch TV, trade stocks, play games, do work – all on the Internet. From 6 a.m. until 10 p.m. every day I can spend on the Internet and it would be a day well spent.
But run for the hills when it comes to advising clients to invest in the Internet.
The days of infinite margins, 1,000% productivity gains, and growth of market throughout the universe are long over. Internet companies now should be treated, at best, like utility companies that get bought at about 10 times earnings and sold at 13 times earnings. Even then, I’m not sure I would give the Internet sector the same respect as the monopoly-protected utility sector.
Don’t just ask me. Ask the best. Nobody can figure out a business model.
Posted by Tom Polanski in The Economy on July 20th, 2009
eBrand Media Research Brief: How 8 behavioral types cope with the recession
By Tom Polanski, EVP, eBrand Media and eBrand Interactive
Richard Storey, chief strategy officer for M&C Saatchi, London, suggests that recession is discussed as if it were a singular phenomenon, and that consumers have taken for granted the notion that there is one single, inevitable and all enveloping global crisis. News headlines tend to report macro trends, making bleak reading: slowing economy, falling house prices, rising food and fuel costs, or decreased consumer spending.
The problem, he says, is macroeconomics that would have us believe that the recession is a macro phenomenon with a single, reasonably predictable outcome, but understanding the dynamics that lay beneath these conditions could identify more interesting and effective recession strategies for businesses.
M&C Saatchi‘s ‘Reacting to Recession’ study uncovers the attitudes and behavior adopted by different groups of consumers and finds eight consumer typologies with distinct approaches to spending and economizing. Understanding and adapting to each segment presents opportunities for businesses, says the report.
Through a program of qualitative and quantitative segmentation, the study separated different consumer typologies. Each has adopted a different predominant behavior or ‘strategy’ to cope financially with the downturn and it is this behavior that defines each grouping:
Crash Dieters… 26%
Scrimpers…13
Abstainers…15
Balancers… 9
Treaters … 12
Justifiers… 12
Ostriches… 9
Vultures… 4
Posted by Tom Polanski in The Economy, Trend Tracker on June 9th, 2009
Why isn’t Zillow dead?
Things are very good at Zillow,” Rich Barton, CEO of the online real estate company, was telling me. We’re in the thick of the worst economic crisis of a generation and a depressed real estate market, so this means that Barton is either a very clever CEO or an audacious liar. I was at first inclined to believe the latter, but left the interview convinced of the former. He’s a canny Web entrepreneur.
It hasn’t all been smooth sailing for Zillow. In October, Barton laid off about 25 percent of Zillow’s staff. He said he did it because he “couldn’t forecast” his business and had to assume the worst scenario. However, the trough following the 2008 bust ended up not being as bad as he thought it was going to be for Zillow, and the company is now back up to its October 2008 staffing level of about 130 people.
Zillow is currently growing, but in a different way than it was before. Page views and unique visitors are up. The site had 8.8 million unique visitors in March, which is a 70 percent year-over-year growth. Zillow has the twice the users at this point as Barton’s team originally projected. However, the revenue per unique user is down to a third of what he expected it would be.
Rich Barton builds cheap sites that focus on expensive audiences.
Posted by Tom Polanski in Social Media, The Economy on May 15th, 2009
Why banks (still) aren’t lending
By David Weidner, MarketWatch
Banks need to stop the charade, ignore the political and public pressure and admit they’re not lending.
It’s not because they don’t want to, but because it’s bad business.
Don’t think so? Take this pop quiz. Bank of America (BAC, news, msgs) posted smashing first-quarter profits and its chief executive, Ken Lewis, said the Charlotte, N.C., company is lending as if the good times never ended. So, in the bank’s conference call, which of the following statements did Lewis make?
A. “Credit is bad, and we believe credit is going to get worse before it will eventually stabilize and improve.”
B. “Even our internal economists are a little at odds as to the timing (of the recovery), with some seeing recovery earlier (than year’s-end).”
C. “We believe unemployment won’t peak until next year at somewhere in the high single digits.”
D. All of the above.
E. None of the above.
Posted by Tom Polanski in The Economy on April 23rd, 2009
What is Chapter 11 bankruptcy? Patterns and consequences of clients under protection
By Tom Polanski, EVP, eBrand Media and eBrand Interactive
Unfortunately there are an increasing number of companies seeking Chapter 11 protection. If your client is exhibiting some of the symptoms below, be very, very aware. If you think your client fully fits the paradigm below, in my opinion, try to extricate yourself from the relationship as quickly as possible, and don’t rationalize:
* Your client expanded rapidly in 2006-2007
* Payments are late
* The phone is never answered
* E-mail aren’t replied to
* Voice mail isn’t responded to
* Partial payments made
* Promises that the check will be sent next week
* Increased number of complaints lodged with BBB, on forums, and in social media
* Promises of an upcoming infusion of capital
Some of the above are obvious but its interesting how a few of my peers convinced themselves that all would be well…until their client filed for Chapter 11 protection. I think Jeff Harbaugh does an extraordinary job here in detailing what a Chapter 11 is, and the consequences thereof:
“A Chapter 11 is a “reorganization” bankruptcy. That is, it is filed with the assumption that the filer will use the protection of the court to reorganize its finances so that it can continue as a going concern. That doesn’t always happen, but it’s the intention going in.
There are a number of schedules you have to file with the court when the bankruptcy occurs. These included assets and liabilities, income and costs, a schedule of existing contracts and some others. Typically, the owner of the business becomes the “debtor in possession” and is responsible for the continued management of the business and control of the associated assets. He is in a position of fiduciary responsibility with the same powers and obligations as if a Trustee had been appointed to manage the business. He’s required to file the monthly reports, can hire attorneys, accountants, appraisers or other professionals to help with the case, and file tax returns.
Posted by Tom Polanski in Growing a Business, Marketing, The Economy on March 25th, 2009