The customers are gone, now what? Tent sale!

October 11, 2008 By

Google Tents at Where Camp

My brother’s bar has gone from $15,000 a week in sales to $9,000. Almost every business I’ve been talking to has seen drops. Some less, some more. But it’s like a new kind of bomb just hit our economy: one that didn’t do anything except remove customers from our streets.

So, what do you do? When I used to help run a store in the late 1980s in Silicon Valley I saw the same thing happen. What did we do? We held a tent sale. Sent out mail to all of our customers. Made handmade signs that we put up along Saratoga Ave. Put a big tent outside. Moved all of our inventory into the sidewalk. Lowered our prices. And sales went up that weekend quite a bit.

See, the customers are there, they just are hiding in the shadows preparing for the worst and trying to avoid getting killed too as this big storm moves across our economy.

It’s going to be tough to think “outside the box” the next couple of weeks. The shock of this economy and watching the stock market go down, down, down is too fresh and too nasty.

But coming soon are lots of conferences that are still doing well. I remember in 2000 when the bust started happening that we still had thousands of attendees at our conferences. It was the sponsors that disappeared first. That gives you an opportunity to hold a tent sale out in the street.

Yesterday I was talking with Gary Vaynerchuk of Wine Library TV. He’s already thinking along those lines for visits to CES and SXSW — doing something low cost that shakes out customers. He knows attendance is going to be down, people will be depressed, budgets are already getting slashed, etc. So, we’re all putting on our thinking cap about how to do something low cost that’s metaphorically like the tent sale that gets us through the tough times by encouraging customers to come out of their holes and visit our businesses.

Got any ideas?

Hey, I have two of those Google tents. Maybe we can meet on the beach by the Half Moon Bay Ritz on Tuesday night, setup two of these tents, share some cheap wine and cheeze, and brainstorm about how to get customers over the next couple of months? I’ll meet you at the Ritz Fire Ring at 6 p.m. (on the Ocean Side) on Tuesday night and we’ll do just that.

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The startup squeeze

October 11, 2008 By

Startups that don’t have revenues or a business model, like Seesmic or Twitter, are going to get squeezed big time in the next six months. Already we’ve seen how Seesmic responded to that coming squeeze yesterday. It got skinnier to make the squeeze easier to take. They will be joined over the next month by tons of other startups who will get skinny to prepare for 2009.

But what at the other end of the scale? What about small companies that have millions in revenues and are very successful? I’m hearing they are getting squeezed too. I can’t reveal the names yet, but I’ve been talking with companies who have millions in monthly revenues who can’t get credit or funding to expand and they are seeing customers disappearing from the marketplace at the same time, so they are getting squeezed. What do they do? They are turning away from capital markets and turning toward bigger companies who have the cash to buy them.

Expect to see a bunch of mergers and acquisitions over the next three months (you’ll see some in the next few weeks, again, I have several sources in big companies who’ve told me what they are seeing — there are bidding wars breaking out inside big companies to gobble up some of these smaller companies that will bring needed revenues to big companies’ bottom lines. Those revenues will be how the bigger companies pull their stocks out of the discount bins over the next few quarters).

CEOs: I’d love to hear about what kinds of pressures you’re under right now, even if you’re successful with millions in sales every month, and how you are responding to those pressures.

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The Well Funded Layoff

October 10, 2008 By

Today Seesmic laid off seven staff members, after laying off three other members a couple of weeks ago.

They have millions of dollars in the bank and are well funded. Why would they do that?

Well, I went over and hung out with the remaining staff and CEO Loic Le Meur this afternoon to learn more and to try to discern the advice that Le Meur got and how many other startups are about to do the same thing. Here’s what I learned.

First, Le Meur has a really deep set of advisors. People like Pierre Omidyar , the founder of eBay and Martin Varsavsky founder of Fon.

They are telling him that the downturn will be deep and will be multi quarter. They told him it was a good idea to conserve cash and bunker down.

Translation: Le Meur isn’t the only one getting this advice. Sequoia Capital told its companies the same thing.

The thing is Le Meur is better connected around the world than most of us. He’s been seeing this downturn coming for months and has been tracking it, so he’s one of the first who is mentally ready to move. He told me that he predicts other CEOs will do the same thing over the next couple of weeks. Those who don’t, he told me, will be told by their boards over the next few months to take the same actions if the CEOs don’t make the hard decisions to do this today.

“But what if the economy turns back up in the next month?”

Well, Le Meur told me he just cut jobs that aren’t core to the mission of Seesmic. Designers. Marketers. PR. He told me all those functions are outsourceable and aren’t core to what they do. The folks sitting around the table were developers, people who kept servers running, who were directly responsible for keeping customers happy.

This is a smart strategy. First, it keeps people who are core to the mission happy because they know the CEO took steps to protect their jobs even if the world goes to hell. CEOs who wait until their hand is forced won’t see the same morale saving effect that Le Meur will see here. Second, it saves capital for potential acquisitions after other companies run out of cash and are forced to beg to be purchased the way my old company was (PodTech sold for a few hundred thousand dollars after having millions in capital pumped into it). Third, it saves capital for later when the storm clears and they will want to expand. Fourth, it gives them more time to find a business model since advertising is going to be a tough sell for a company like Seesmic right now.

But, Le Meur didn’t come to this decision easily. He literally teared up with me today. Being a leader and making really tough choices isn’t easy and this market isn’t easy to navigate for anyone.

My thoughts are with the workers who are laid off. How can we help you find jobs? Let’s have some innovative thinking about that too.

Who is next?

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Pageonce: economic downturn winner?

October 10, 2008 By

Pageonce‘s CEO Guy Goldstein was on my WorkFastTV show this morning (the recording will be up on Monday, but I did a separate video with him afterward on Kyte.tv so you can get a sense of what his app does) and while we were talking he was reporting that he’s seeing a ton of usage BECAUSE of the downturn.

What does his app do? It’s an iPhone app (next week they are shipping on Blackberry too) that lets you watch all sorts of personal information. I call it a personal information dashboard.

Stocks. Bank accounts. Travel info. Restaurant info. And more.

You can see when your bills are due, what your account balances are, and more. All from your iPhone (it’s one of the top 10 productivity iPhone applications).

This is a three-month-old startup that shipped on the iPhone and already has 200,000+ users.

Seems to me this app, along with others from Mint and Billpay could be major winners as we pay closer attention to our finances.

What are other examples of apps that you are seeing winning in this economy?

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The best marketer of 2008 reads us the ROI act

October 9, 2008 By

You think the best marketer of the year is Tom Peters? Guy Kawasaki? Seth Godin? Sorry guys.

It’s Gary Vaynerchuk. He owns a sizeable wine store in New Jersey. Sells $50 million a year. And he reads all other marketers the riot act.

Er, the ROI act.

Why do I say he’s the best marketer? He’s taking his local brand, which is quite profitable, and turning it into a global brand. It’s impressive what he’s doing, but he’s also matching what I’m seeing happen in the media world. Advertising ad buyers are telling me they are looking at online and will be increasing their buys (after they get over being freaked out by the economic downturn).

I find it fascinating that my friends on FriendFeed are saying to buy Apple. I think buying Google makes more sense. Apple has exposure to a fearful market because we’re not going to buy new gadgets while we are in hoarding mode. Google will get hit down (already has been) and will have a couple of quarters of bad numbers, but will remain stronger than Apple through the storm.

Plus, long term, who is better positioned to take off after the economic downturn ends? I think Google is. Why? ROI baby. ROI. (You have to watch Gary’s video to get the ROI story).

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Economic Idiocy

September 30, 2008 By

Louis Gray nailed it last night when he wrote that there are no experts in this financial crisis.

In the past 18 hours I’ve read literally thousands of posts and have done almost nothing but hang out on FriendFeed. I’ve seen a LOT of idiocy. And these are supposedly from the smarter, more educated people around. People who I’ve had a beer or two with and who I count as friends and fellow Americans.

I almost went through and cut and paste the worst of it from my FriendFeed stream, but it won’t help to make people feel bad or get into arguments now. The damage has been done by our idiocy (both in creating this crisis) and in deepening it by not fixing the credit crunch (also our idiocy).

Now, what happens when people stop buying things? Like it or not, our economy is based on credit. And the way banks work is if you save one dollar, they lend out a lot more than one dollar, which gives the banks scale. Also makes them go under if they make too many bad loans, like they did, or people take money out of the banks, like we are (billions were pulled out of Washington Mutual in the last few days before it failed).

What happens next? Economy goes into stall. Why? If people with good credit can’t get credit to buy cars and houses and expand their businesses, they stop doing those things (it’s made worse by the psychology that we’re in right now, which is to hoard, hoard, hoard and not buy things). When we stop buying, companies start showing losses. People get laid off. They file for unemployment. Ahh, so we’re going to pay anyway, only this payment will go on for years until we figure out how to get car manufacturers and real estate agents and so forth back to work.

It’s enough to make me scream.

The downside of this new media world is that you’ll hear a lot of opinions. Which one is right? I’m not always right. In fact, I’m often wrong. But I’ve counted on YOU, the audience, to help me correct that when I’m off in the deep end. Now, though, I’ve seen so much idiocy that I’m not even sure of my audience anymore. That’s how deep our loss of confidence in each other has come.

I find I’m becoming a lot more like Andrew Keen. That scares the shit out of me. Why? I find I’m looking to experts and elites more and more, because the crap I’m seeing out of all of our mouths is just so, um, wrong. As my history teacher back in the 1980s used to say “the masses are asses.” This is shaking my belief system pretty thoroughly, because I actually do believe that a decentralized system is stronger than one with one guy or gal in the middle controlling everything. But for a decentralized system to work we have to 1. be smart and 2. believe in each other. Those two things are proving to me to be pretty trying right now.

I liked what David Brooks had to say in the New York Times this morning. He said “I’ve spoken with several House Republicans over the past few days and most admirably believe in free-market principles. What’s sad is that they still think it’s 1984. They still think the biggest threat comes from socialism and Walter Mondale liberalism. They seem not to have noticed how global capital flows have transformed our political economy. We’re living in an age when a vast excess of capital sloshes around the world fueling cycles of bubble and bust. When the capital floods into a sector or economy, it washes away sober business practices, and habits of discipline and self-denial. Then the money managers panic and it sloshes out, punishing the just and unjust alike.”
We’re in wild economic times. What should be done now? I’d still do the bailout, although that will lead to inflation and a devaluation of our dollar. We have to choose between that, or really high unemployment, which will lead to devaluation of our dollar as people file for unemployment in a few months anyway.

One thing I’d love to see is more people joining in on FriendFeed to help pull out the high value bits and provide more sifting to find both the rotten strawberries in the marketplace of ideas, as well as find the really juicy apricots. I’m doing just that on my feed of “Likes” and “Comments” there, so you can see what I’m pulling out of the 3,400 people who are feeding stuff to me.

If you have a feed that you’d want me to listen to, please let me know.

More idiocy to come, I’m sure! Hopefully we’ll all survive. :-)

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