Thriving on Chaos

Jim Kollegger moderates a panel - Genesys Partners. Panelists: Dan'l Lewin, Microsoft; Neal Nipschutz, Dow Jones; Steve Lohr, NY Times; Jon Miller, former CEO of AOL and now founder of Velocity Interactive Group.

Dan'l gives us a finger wave.

Economy, Obama, technology diaspora, what does it all mean to business models?

To Steve: "How do you look at the economic mess and what do you see?" Steve: "Most of the stimulus package will go to the states for 'shovel ready' or 'keyboard ready' projects. One area to watch is that Christine Varney is the head of antitrust - there'll be a step back; anything that can be described as stabilizing will be fine."

To Dan'l: "Steve Ballmer said that our model is not for a quick turnaround." Dan'l: "Our operating system business is impacted as people migrate to handhelds - as businesses scale back their headcount, our business is affected. In the long run, we're optimistic."

Neal: "I don't think you go back to anything resembling what we had before during boom times. Part of it will be that areas like financial services will be risk-averse for a while."

Jon: "If you think about the traditional media industry, they typically trade at 10/12 times EBITDA, but now CBS is trading at 4 times EBITDA, and that feels very depressed. If you talk about reset - where does it go? I suspect it resets at a lower level and these companies will trade at a different level. It's good for digital media because it's a less expensive kind of consumption" - more consumers will be consuming.

Dan'l: "There's a huge long-term opportunity because IT is a huge component of this - as developing countries modernize with IT infrastructure, they're going to reach much further - there's opportunity on the other side of this."

Neal: "It's true - America's going to be less strong over the next decade."

Steve: "Isn't it surprising, though, how the world fell off a cliff on September 15th?"

Neal: "Yes, one of the side effects of globalization." 

Jim: "What does 'the digital dime' mean to journalism?"

Steve: "It means to double down on digital. We're selling off the building, physical assets."

Neal: "You would hope and think that in a democracy serious news would be supported but that's not necessarily so. Media may have to revert to a subscription business."

Steve: "You really think the genie can be put back into the bottle?"

Jon: "The issue is not the news...paper but the news. News consumption has probably never been higher than it is today. But the business model isn't supporting that right now. I don't think the genie goes back."

Jim: The new political administration - going from an XBox to an Atari. Any insights?

Steve: "It's pretty obvious, isn't it?" He adds that this administration is "much more technocratic."

Jim: "The tools of the teenager have come into the White House - the president puts out an address on YouTube."

Neal: "You can use the greater knowledge of technology to be more closed and secret - you can bypass the media entirely."

Steve: "They're very good at getting onto message and communicating - and they stuck with the message - they never did 'the polling thing', and in that sense it's very elitist. It wasn't the wisdom of crowds. They had a vision and stuck to it."

Jim: "You have two things going on - practical application of technology, and $37 billion of information stimulus coming."

Neal: "We've never seen this before, this kind of spending on technology. There's no real recent experience in the 'get it out fast' kind of spending we're talking about."

Steve: "And there's a workforce bottleneck - do we have the people with the skills to implement this?"

Jim: "What other technology trends do you see being driven or affected by this?"

Neal: "There'll be new media that we don't even think about now that'll be disruptive in teh next 18-24 months, I'd imagine that there'll be some cities that don't have a major newspaper in print; all these trends accelerate and if the downturn in time is longer than the consensus view, it'll just accelerate."

Dan'l: "There's a lot of infrastructure stuff going on; there are big shifts that will change the economics. Where will compute cycles come from, where will the storage be, where will the backup facilities be?"

Neal: "If you can provide content, the technological delivery mechanisms may change radically, more targeted types of information and news will still have a place." 

Jon: "Every four years there's a pretty big reset - the most recent one has been the impact of video and social networking; before that there was Google; before that, Yahoo/AOL/Ebay. Things do change and continue to evolve, but the stuff that really rises to the top is these kind of larger movements. The industry will continue to recreate itself over time - not the thousand little things, but these really large things."

Jim brings up the fact that you don't know what you don't know.

Dan'l: "Where you are is a vital thing - GPS affects what comes to you. Those services will surface soon. Also the notion of the mesh - this location in the cloud that's yours, that synchronizes all the relevant information to your devices" - he says Microsoft is the first to do this, but Apple has MobileMe, so I don't think he's right.

Jon: "Something happened at the end of 2008 - consumer usage of the internet passed enterprise usage. That's one of those things that never goes the other way. The consumers are driving much of the use and development on the web that works its way back to business."

Steve: "Jon, where would you invest in 2009?"

Jon: "Following consumers. You see video consumption taking off, makes perfect sense because of high speed connections to the home, and storage devices for both information and entertainment. There are two trends: we're starting to see deconsolidation in traditional media - separating content and distribution. On the internet side we'll start to see consolidation."

Jim: "If you're a company in this marketplace, what do you keep your eyes on?"

Dan'l: "We're paying attention to lots of stuff; my particular area of interest is to look at entrepreneurial activity around the world and where their energy goes and money flows to support them. I have a pretty good bead on that side of global innovation - how does that fit into things that we care about, and it does lead to buying companies; we're pretty acquisitive. You'll see more of the same from us."

Jon: "My firm is most focused on digital media - what are people doing in these new mobile environments? What are the usage contours? If you look at things like the iPhone apps, smartphone applications - I think we haven't yet understood what that behavior's going to look like."

Steve: "Regarding the iPhone, why could Apple do this and not Microsoft?" Dan'l: "We should've. And we'll play catch-up."

Question: "Who should 25-year-olds look up to?"

Neal: "The general advice is find something you're passionate about and do it. Having grown up with those skills, the business world is full of opportunities."

Steve: "The great irony is that journalism schools are booming." Neal: "And all the newspaper editors are losing their jobs and going back to teach."

Dan'l: "LIfe sciences and information around life sciences. I think there will be an implication on the economy when you can understand your genome and make life choices based on it. Technology is an essential enabler, but it's just another language. Learn Chinese, too."

Question: "How many of you talk to your own peers who use new technologies all the time and understand them possibly more and use them more effectively than young people?"

Dan'l: "That's exactly what I do. My group is a bunch of 30-year-olds - how do THEY use Facebook? It never hurts to insert a rookie into that, a college kid who'll call them on it." Steve: "People who are 35-and-older are more suited to multitasking because they have more focus."