Clarity in times of Confusion

17 Nov
2008

The recession (and possibly depression) we are barreling into has me both very optimistic and slightly concerned.

To get it out of the way – my concern is more broad than just ‘we are heading into a depression.’ The amount of corruption and cronyism everywhere is mind-boggling – as more and more details come out on how the bailout money is being used (a personal piggy bank) I can only imagine what price we will have to pay in the future.

At the saime time, I do think that a little belt-tightening is good for the soul (personal, business, country, etc). We’ve never gotten a dime of investment money, and as I’ve grown this from a hobby 11 years ago when I was just in high-school, I’ve learned to make sense of every dime spent. It isn’t about direct revenue to me. It isn’t about ‘measurables’ and wonderful P&L statements. It’s about “does spending a dime here instead of there” make sense in the context of where we want to be?

Seeing all these companies running around firing their workforce, tightening their benefits, and so forth boggles my mind. For example, recently Google has come out tightening the benefits it was lavishing on its employees. This is a company that makes billions of dollars in profits every year

. The recession will hurt them for sure – but they will still be making billions of dollars in profits.

I read this wonderful little article on why Toyota beats the pants off of GM, and the essence is the same – in the context of growing their company, in making better products, and retaining their skilled employees (I’ve only ever had one employee quit in almost 6 years), they are spending their dimes in a way that makes sense. Sure they lose a large chunk of money ($50-100 million according to this), but since they are still making a good solid profit, there was no reason to be reactionary.

Beyond the troubling broader issues, I am actually looking forward to the next few years. While others are running around screaming and trying to squeeze every single dollar they can out of their visitors, we continue to stay the course and iterate the hell out of our product (we had a 9 month standstill as we re-worked the entire system, but that is now done, and we are moving fast fast fast). Bad times causing companies to suddenly cut large chunks of staff smells like bad management.

5 Responses to Clarity in times of Confusion

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David Mihm

November 17th, 2008 at 3:12 pm

Amen to that, Ahmed!

It is all doom-and-gloom these days, but in my view, smart companies are always going to succeed, even in a down economy. Dumb ones, like GM, couldn’t succeed during a GREAT economy and there is no reason to keep them afloat.

Now, whether we all have to work a little harder or a little longer because of the halving of our 401 K’s is a different matter. Those about to retire are responsible for electing the Reagans, Clintons, and Bushes, under whose watch the disastrous economic policies our national debt has ballooned to $10Tn. Time for them to sacrifice a little for those mistakes. As you say, a little belt-tightening is good for the soul.

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Ahmed

November 17th, 2008 at 4:10 pm

Aye aye David – people spending beyond their means isn’t a Democrat nor a Republican thing.

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Mike @ WannaDevelop.com

November 17th, 2008 at 5:23 pm

Should be better than before ;)

Mike
http://www.wannadevelop.com/

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Dave

November 18th, 2008 at 11:50 am

The really sickening thing is this- how many of those companies running around slashing employees and benefits are doing much trimming of executive salaries or benefits? And just as bad- get huge golden parachutes when they’re kicked out of the companies after driving them into the ground. Sure, their stock options may be worthless, but that’s just a part of their “bonus” package.

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Hany

November 21st, 2008 at 12:49 pm

Keep in mind that the last really bad recession, sometime in the 70s, was the same time great companies like Apple & Microsoft were created.

Just as it is extraordinary how many companies are doomed in times like these, it’s also equally surprising how many great long-lasting companies are created.

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