No one can avoid all the noise these days regarding partial, full or potential bank nationalizations (depending upon what country you're in), CDO swaps, the recent edict of venture capitalists in their Menlo towers to their start up investments: drastically reduce burn rates & batten down the hatches, as well as the general pessimistic view that the sky is falling in all segments across all economies. Which is constantly perpetuated by the cable media to sound the alarm--any alarm--to capture audience.
Somewhat ironic for me personally since in my past career as a legislative policy pusher, I was once responsible for the George Herbert Walker Bush administration's legislative docket for the now infamous Fannie Mae & Freddie Mac. [Note: Don't believe that this is a problem of the last eight or sixteen years, it has been a systemic threat for the last 30 years. But I digress from why you visited MOBILE Point View today, not FINANCIAL Mess Point today.]
As the crises has continued to build I've started thinking about "slumping tech" caused by ripple effects of the impending 'uber recession'. Yet, in more contemplative moments I've asked myself,and others repeatedly, whether anyone thinks this cataclysm is going to hit mobile as hard as it hits everything else? The collective opinion by more than a few 'wireless influencers' is: NO.
Last week I spent a morning with a group of Angel investors in Washington DC reviewing potential companies--two which had mobile components to their value proposition. At the breakfast before there was some grousing that individually the attending angels had experienced some "contraction" but as a group they were not running to liquidate all holdings and defending cash positions, which we should not forget is where fledgling companies get their funding from. As a group--extremely experienced as both technologists and investors--they were still looking for investments to make, especially now with time to build out companies which can rebound higher later. No angels were running for the exits.
The same day in the afternoon, I was talking to a senior IT exec at a public company. On mobile his perspective was straightforward: "All this talk from the financial pundacracy that tech is going to contract so radically is BS. Bottom line is guys like me already have 90% of our budget mandated, required, by core functionality. If we cut back on that, we cut back on core services. That isn't likely to happen. It is the 10% variance which we play with that may get affected. But even there, where do you capture efficiencies best? Automation and mobilization." There's that mobile component that can't be ignored. "Depending upon how highly leveraged a tech company is, the bottom line is we are not falling back into a pre-industrialized economy," he said smartly.
The following day I reached out to a few VCs and asked them about their proclivity to invest now. As one put it, "I've been successfully raising money for my next fund for over year. I'm not going to pull back on making the investments, let alone the pressure from my LPs will not subside to get the money to work." Um, guess the focus continues to be on the future. Not surprising given that VCs examine risk and opportunity all the time, at least the good ones do. Those that were pushing the alarm last week, one has to ask how many of these guys have ever really had to make payroll? That's a post for the future. Net net, full speed ahead, just look out for some adjacent storms.
Last point. Just look at the continuing trend of mobile penetration around the world, especially in developing countries. There may be lesser growth rates in the mature markets of Europe and the US, but where mobile is being fueled in China, India, Africa and South America, consumers will substitute or do without in order to get a mobile phone and benefit from it's conveniences. ARPU is already low in many of these regions, but operators there are capturing value even in these bottom of the pyramid plays--don't believe me?
Did you know that when Reliance was looking to acquire MTN in South Africa, they were willing to pay more than Microsoft had priced Yahoo? Really. If three data points constitute a trend, don't bet against mobile. Tomorrow I'm in New York city for three interesting days there.
Alternatively during these turbulent times, consider the following....
In 1923, some of the most successful and richest men consisted of:
president of largest steel company in the US
president of largest gas company in the US
president of the NYSE
greatest wheat speculator in the US
president of the bank of international settlement
Carol Schwabb, of the largest steel company, died as a pauper
Edward Hobson, of the largest gas company, went insane
Richard Whitney, president of the NYSE, eventually released from prison and died at home
Arthur Cougar, the wheat speculator, died abroad--penniless
C.B. Livermore, lion of wall street, committed suicide.
Yet that same year, 1923, Gene Sarazen, a professional golfer, won both the US Open and the PGA Championship. He died in 1999 at 95 years old. Played golf until he was 92, and was solvent at the time of his death.
Conclusion: Stop worrying about business and spend more time playing golf!