The economy of the United States is in distress. Our experiences in 2020 have exposed significant problems, accelerated movements, and forced social changes about health, society, and our experience with all things digital.
We’re faced with a global recession and record unemployment.
At this inflection point, we have an opportunity to adapt to change and to build a better future.
This week, venture capital firm Ecliptic Capital released an extensive audit and assessment of our world, with a light at the end of the tunnel; the beacon we’ve all been discussing and seeking, that “Silver Lining.”
We can Build a Better Way.
This year, in just a matter of weeks, COVID-19 has taken hold of 4.6 million confirmed cases and taken the lives of over 312,000 people.
As is typical of what leads a recession, the world understandably turned to concern for our needs, and out of appropriate focus on our most primary of needs, such as safety, made the sound decision throughout the world to stay home and stay distant. As we consumed less, gathered necessities, and vacated office buildings, restaurants, and more, markets have crashed.
Did we need to crash as much as we have?
It’s a provocative question that Christy Cardenas, Managing Partner at Ecliptic Capital, explores in their research.
Was this a crash merely the result of a virus or have we collectively created a perfect storm in which coronavirus was a catalyst that sparked, and exposed, what we’re experiencing in our economy today?
That Perfect Storm?
- An Asset Bubble
- A Debt Bubble
- Easy Money
- Political Divisions
- Global Tensions
- A Commodity Glut
Those are the present circumstances of today’s world with exceptional stock market growth, record levels of corporate debt, incredibly low lending rates, clear political and economic rifts, global shifts, and increasing supply of low cost commodities, the virus didn’t cause our circumstances, it fueled faster a race to the result of such circumstances. Notably, for example, it’s hard to ignore that this most recent of bull markets is supported by the highest level of corporate debt in history.
Cardenas notes that circumstances now look incredibly like the circumstances of the Great Depression and we couldn’t help but observe that not only are those 6 considerations as true now as then, but that the implication in Media was as clear then as now:
- Then, during the Great Depression, the movie industry was highly efficient compared to today; it controlled its own distribution (the studios each owned hundreds of movie theaters). They owned their own publicity, as the studios owned and filled many of the magazines that made actors into movie stars/box office attractions. The Great Depression caused the average American to go to the movies much more (affordable entertainment and news) resulting in the breakup of that control.
- Today? Thanks to streaming media, independent film, and the fact that that average American is now watching movies daily, at home, this virus and economic impact is causing the average American to push even more for affordable film and television.
- Then, radio stations and ever more powerful radios with better speakers and amplifiers, and extensive antenna systems to broadcast around the world, caused Americans through and from the Great Depression to stay at home and tune in. Radio airplay of music grew the demand for records, players, and concert tickets enabling musicians to thrive by touring.
- Now? “Alexa, play Lizzo,” while we all podcast our own news and narratives from our homes.
- In the 20s, advertising agencies saw a boom with new national products to advertise, radio commercials and program creation, billboards, mass circulation new magazines like Life, Look, TIME, Fortune, new national chains of retail stores, the growth in cigarettes and soft drink consumption, rising use of cosmetics (which are mostly advertising driven), etc. so Lord & Thomas, Young & Rubicam, Leo Burnett, J. Walter Thompson, N. W. Ayer, and others thrived with the top ad man Albert Lasker earning $2 million a year (in 1930’s dollars.)
- Finally today? The digital transformation that those of us online have been expecting for decades, manifesting in that every advertisement had best be digital, optimizing, measured, and omnimedia.
- The Great Depression caused professional sports teams to flourish as entertainment; baseball in particular. Horse racing/gambling, football, basketball, golf, tennis, boxing, Olympics, and college sports were all growing, changing, and drawing steadily bigger audiences both live and for radio broadcast.
- Happening again? Yes. eSports thanks to the bigger audiences of streaming, online, and gaming.
By the way, the same trend is happening again in commerce
It was then that Sears stores and mail order catalog business boomed. What’s happening now? All of that reborn as Amazon and same day delivery.
Then emerged, supermarkets (the original Big Box Store), large multi-department grocery stores that replaced independent butchers, fruit stands, bakeries, dairy stores, drug stores, kitchen stores, florists, delicatessens, toy stores, gourmet shops, and wine and beer shops. Their size and parking needs spurned the idea of shopping malls.
Today, following even more aggregation in big box stores, Digital adoption and being At Home is pushing the entirety of commerce to be delivered and online from this point forward
What might that brighter future hold?
On what might it depend?
Ecliptic Capital notes that while it seems we’ve been accelerating and growing; in fact the growth of U.S. GPD compared to the rest of the world has been slowing for years as the United States is outpaced by other countries.
Why? Entrepreneurship isn’t climbing, despite the boom of incubators and accelerators in the United States, entrepreneurship, as a rate of our workforce, per capita, is falling.
The wealth gap is expanding and we can be certain that many of the jobs lost this year won’t return.
Not that brighter future I suggested, is it? The key is turning that back in the other direction.
“The entrepreneurial mind typically sucks at almost everything except for being visionary. We’re crummy at math, technology and all that stuff. What we need to do is be what we are, which is to be the one out in front. Be the one that’s chopping through the jungle and providing a path for smarter people to come behind you and develop the jungle into something useful to your market.”Aaron Scott Young with Dr. Steve Taubman, Mastering Adversity
New Businesses Create (almost) All New Jobs
In the previous recession, 50 of our internet era’s Unicorns of today were founded and incredible companies such as Disney, EA, Microsoft, and Whatsapp, were all born of such tough times. As Laughlin Associates‘ Aaron Young noted, it’s time more of us take the risk and lead the way to new jobs.
Turning that around is an effort not unfamiliar to many of us, a focus of our own in MediaTech Ventures, illuminating why we wanted to share Ecliptic Capital’s view of A Better Way
That concerted effort on those 4 things drives economic growth through new industries, new ventures, new jobs, and new founders. Our vision for the better way forward in media, applies to every industry and every sector of our economy.
And to accomplish that, together, challenges us to truly do this together, as that village that it takes to raise a child.
While we all have access to the village of government and corporate resources, service providers, schools, and expertise (particularly thanks to the connectivity of the internet), the venture capital consideration of that village remains focused on specific States driven by a local bias without merit.
With that resolved, with incredible firms such as Ecliptic Capital, the American Dream doesn’t actually change; rather, it’s finally realized, as a platform for innovation emerges to enable a nation of creators to finally flourish and thrive from throughout the country.
Take a look at their work, and let’s get the economy back on track to what it means for everyone to realize that dream of entrepreneurship and celebrated creativity.
- The Better Way Forward - May 25, 2020
- Digital Transformation to the Information Superhighway - May 11, 2020
- Investor Connect – Where You’re Raising Capital Matters - April 21, 2020