Its not all doom and gloom

Below is the old intro… looks like I blew it in a huge way LOL, good thing I am out of it 🙂

Todays will likely be a wild ride for the stock market. I told my wife to expect the Dow to drop 840 at some point, albeit it is likely there will be a bounce along the way. For some odd reason, probably just luck, I seem to be predicting the market really well… too bad I dont have money in it, but thats another story entirely. 

For those of us in manufacturing, and or physical hardware, the short term in all honesty doesnt look good. Manufacturing is very much dependent upon lines of credit, as no one pays their tab in 30 days. with many pushing the limits to the point of only paying in order to get off credit hold only for the most mission critical order. Hardware design at least on the contract side of things is quite similar. Even MSC, a key provider of MRO equipment for manufacturing plants had a ton of bad news in their conference call a couple weeks back.

Anyhow, its pretty easy to look at things from a doom and gloom pov, but we have a ton of positives that most folks in history could only dream of. The cost of entry into an internet business has never been lower, and with the ways things are going, it may well be that highly skilled US talent will be available at a fraction of the cost, to say nothing of big decreases in the offerings of offshore firms. I dont know that the tech sector will see massive layoffs, but it is exceedingly likely as prices go up, budget moonlighting will as well.

As people cut back, they tend to spend more and more time online… its interesting to note eBay is reporting significant success with the addition of banner ads, skype, and non-core business, plus the total number of listings is truely amazing for the month of October. Granted, such doesnt sell goods. but it does seem to indicate a significant increase in online advertising. despite the down turn. My guess is, as companies pair down their marketing budgets, they are looking for lower and lower costs, and online is a fraction of the cost of traditional media.

In addition, with the advent of cloud computing, albeit not without some rough starts, the problem of buildig a massiver server farm to anticipate demand has been reduced significantly.

The end result, and this is just in one narrow arena, its likely never been a better time to bootstrap an internet startup. The key of course is to get revenue positive from the get go, or at least as close to it as possible. I’ve seen it done, actually just a couple months ago. I passed off an idea to a friend, she ran with it, and sure enough, its cash flowing (and not just $5/month over expenses), so the oppurtunities are there. I almost wish I had run with it LOL. On the other hand, she has done a lot of free coding for me, so unless she becomes a multimillionaire off of it, and doesnt toss some my way 🙂  I’m happy for her.

There are a multitude of other arenas with potential, the Iphone and Gphone stuff I’ve blogged about is one of many. Even the creative folks over at Etsy seem to be on a roll. There is a lot of great oppurtunity for those with ideas, even if they lack some in cash flow to get rolling. I expect a lot of midnight oil will be burned by a ton of folks as we dig our way out of this mess.

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  1. Excellent commentary Ron. I’m glad I’m not the only one seeing some light past the end of this tunnel, despite impending layoffs and obvious economic problems nearly everywhere. :-/ Here are some things I’m optimistic about:

    Millions of Americans were “earning” money by sitting on or selling real estate because for a time it was far more profitable than using their God given talents. Those people will begin to contribute in other ways.

    Billions of dollars were being thrown into bubbles and causing a classic “misallocation of resources,” again because investing in CDS’s or bubbly real estate was much more profitable and _perceived_ as less risky than investing in a small business or invention. If/when the Fed stops trying to reinflate those counterproductive asset bubbles, money will begin to flow to other parts of the economy where it can do some good and turn a profit.

    The high cost of commercial and private real estate made it extremely difficult for American workers to compete with counterparts elsewhere. Imagine how competitive we could be if the price of a mortgage in San Jose were the same as that in Prague, Beijing or Mumbai.

    The Japan carry trade and China’s debt/currency intervention has made electronic products from other parts of the world so unbelievably cheap that not only is it very difficult for Americans to compete in this space, it is also inefficient to repair something that can be rebuilt for the equivalent of a few seconds of your labor by someone who lives on a different currency scale. If current trends continue, cars might eventually also be treated as disposable. Houses might be constructed in China and shipped across the pacific (using amazing amounts of oil but still beating the cost of construction labor when paid in U.S. dollars) This is ecologically inefficient and would be economically inefficient if there weren’t so much intervention in the real economy.

    NASDAQ has spend years below its multi-generational mean trendline but somehow I don’t think we’ve reached the end of what technology or the internet can provide.

  2. Sorry, by CDs I didn’t mean Certificate Deposits, I meant Credit Default Swaps. Did I ever tell you the story of a loved one who wasn’t able to get a good position in an Irish bank because her resume said she was an Individual Retirement Account specialist? Acronym namespace conflicts can be very detrimental.

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