I just flew over America again.
I went to LA and was pitched in the Palisades Room at the Santa Monica Fairmont for two straight days and all I ever saw were VC’s, bankers and their cars rolling up to the front entryway. We didn’t see any Occupy groups, but they would have had a blast I’m sure. I took a break and saw my Choate roommate Michael Scott for dinner in West Hollywood and it was plenty more of the same with a few stars and starlets thrown in (not typical VC fare, that).
All good and all nice people. But I have this palpable sense that, slightly below the surface of the Brave Face of America (any in many towns between LAX and JFK), there is a shitstorm brewing among people who are tired and distraught. It’s probably about jobs, and the fact that we really don’t have enough of them to go around. That and the facts that, despite the 1,000 attendees at the Monty Conference, we are throttling the engine to create them. The coming world war will be an all-out global war for good jobs, says Gallup’s chairman Jim Clifton. I couldn’t agree more, and they won’t come from shovel ready Government civil works, nor from meaningless tax credits and incentives.
More proof of the disconnect irony comes from the Daily Beast’s Zach Karabel: The last time the markets were at their current levels—the tech-heavy NASDAQ index is also at its highest since the Internet bubble burst in 2001—sentiment was radically different. In May of 2008, Bear Stearns had nearly collapsed, only to be bought on the cheap by J.P. Morgan, and the bankruptcy of Lehman Brothers was a nightmare scenario that had barely been contemplated. The housing bubble in the U.S. was clearly deflating, but unemployment had not yet spiked. And while many believed a recession was looming, few forecast a financial crisis. Still, the outlook was cloudy at best, and a descent from 13,000 seemed likely. The strength in financial markets, and stocks especially, is not a proxy for real-world economies.
It’s been said before and needs to be said again: Wall Street isn’t Main Street. The Dow can be 13,000 or 14,000 and it won’t matter a whit to the millions of unemployed and underemployed. Few jobs are created by rising equity prices, and companies will not hire unless there is stronger demand, no matter how high their shares climb. They will sooner pay a dividend to shareholders, buy back stock, or acquire competitors than hire extra bodies that are not necessary for managing current business or creating new ventures.
And that’s the root issue: though America has a GDP of about 3x the nearest competitors (being japan, UK, France, Germany, Italy) its growth has been anemic compared to China, who still lags the top five. We spend too much, we don’t take in enough, and it’s becoming a bad running joke in world lending corridors (where are those)? As any creditcard will remind you, in 20-30 years, 10% growth compounded beats just about anything. But last time we heard footsteps, we hit the dot.com boom and pulled away with innovation and productivity gains never seen before.
That’s what is needed now. And I think Mobile, social and sharing will be three places where innovation will lead.