Dana Blankenhorn

Bubbles Don’t Really Pop

History will record that the Trump Bubble burst on January 6, with a coup attempt organized by Donald Trump. (The picture is from Doc Searls' blog.)

I have seen many bubbles pop in my experience as a business reporter. The best-known was the dot-com bubble. It popped on January 10, 2000 when Time Warner announced it would “acquire” AOL.

The precise date of the popping is only remembered in retrospect. At the time, business went on. That spring I attended a trade show called ad:tech, on my employer’s dime. Even a year later I was able to take my wife on a trip to Hawaii because of an Internet commerce conference on the Big Island.

My most vivid memory of that ad:tech conference was on a bus, heading back to our hotel after a day spent on the water, sponsored by an Internet ad agency that eventually sank with the rest. A young entrepreneur was complaining that each new round of funding was requiring more equity from him and generating less cash. “It’s unfair,” he whined.

I’m a cruel man. I laughed until I cried. Later, at the event’s award show, a block “CNN” ad won awards for creativity. I laughed until I cried again. The people around me thought I’d gone crazy. It was just that I saw the handwriting on the wall.

The point is that even after a bubble pops, many people will remain unaware of it. They will continue to take the bubble as a real thing. They’ll go in even-deeper. They’ll consider falling prices an opportunity, telling folks to “buy the dip.”

Pay Per Day

There are days when I’m disgusted by my fellow journalists, and the whole journalism business.

This is one of those days.

While elite journalists bemoan the right-wing propaganda machine, seeing it as an existential threat to democracy and liberty, they’re defending an industry rapidly going behind paywalls. Nearly all daily newspapers are already there. Now the news services are doing. The latest is Reuters, which erected theirs this weekend.

The criticism is apt. The refusal to do anything about it is criminal.

There are things that can be done. I have been flogging the idea of “day passes” for some time.

Instead of demanding the commitment of a subscription, newspapers can offer day passes that let people behind the paywall for 24 hours or even less. When I tweeted this idea, however, a reporter for the Columbia Journalism Review specializing in digital journalism instantly dismissed it, calling it unworkable. (I felt like throttling the bastard.)

Amazon can make this work. Google can make this work. So could Microsoft or Apple. Heck, Facebook could make this work.

Free TV is an Invisible Scandal

When TV was made digital to free up spectrum  stations were given “extra” channels in the new bandwidth, to do with as they wanted.

Something similar happened in the 1940s, and it made many fortunes. Big radio stations in major markets were literally handed new TV stations. If they also owned newspapers the bonanza was doubled. This was the foundation of Cox Enterprises, originally a newspaper chain founded by failed 1920 Presidential candidate James M. Cox.

The current transition is making no billionaires. In fact, it’s a scandal. A scandal no one is talking about.

Before the transition there was lots of talk about TV stations creating multiple channels with their new spectrum rights – news channels, cultural channels, ethnic channels. Instead, these rights have been sold or rented to a host of ad-based garbage programmers. Most stations just took the money and ran.

In Atlanta, for instance, there are channels running 1950s re-runs, a bunch of home shopping channels, foreign language channels, religious channels, even foreign channels. These are the kinds of channels that are too worthless to make it onto cable. There are also a lot of empty channels, or channels running the equivalent of radio. If you only have access to “free” TV (through a special antenna and, perhaps, a set-top box) you’ve been ripped-off. It’s not worth what you paid for the antenna.

The frequency spectrum is not supposed to be property. It’s not supposed to be a private slum. It’s supposed to be a public good. That was the idea of the Radio Act of 1926, and the Federal Communications Act that followed it. But this concept has been lost in our time.

If you want to make some meaningful change, demand we go back to that.

Tech Needs People

On the surface the economic policies of Joe Biden, Ronald Reagan, and Franklin D. Roosevelt look very different.

They’re not. Each path has been designed toward the same aim, benefitting a dominant industry.

Today that industry is computer technology – chips, software, and the cloud. Look at the latest Forbes 400. That’s where the money is. Found a tech company and, if you’re lucky, you can become a billionaire. Jeff Bezos likes Bidenomics.

What do tech companies need? What is the gating factor to their growth? It’s people. To be specific, smart people. It doesn’t matter what color the skin, what the brains’ sex is or who they love. Can’t get out of your wheelchair? You could become Stephen Hawking.

Educated, motivated, empowered minds are what make technology happen. What do such minds need? Security, challenges, the ability to chase their dreams, unencumbered by other worries. It’s true they need the three-legged stool of capitalism, democracy, and personal liberty. But they also need time to focus on the task at hand, all the time they can get. If you’re worried about your kids or your parents, if you’re worried about your health, that’s mental energy that’s not going into the work. Tech needs all of that it can find to discover the next big thing.

Redistribution of Technology Wealth

The redistribution of technology’s wealth is indeed trickier than I thought. 

When I first began covering open source in 2005, Amazon.Com was worth $19.6 billion, Google had just passed $100 billion  and Facebook was a start-up.

The “incumbent” software companies of that time were IBM, which was worth $140 billion, Oracle at $63 billion, and Microsoft at $273 billion.

Open source was an underdog technology. Closed source or “proprietary” software was where the money was. You licensed software. The company that developed it accepted all the costs of growing and maintaining it. The cloud was barely a gleam in Larry Page’s eye, a headache made necessary by Google’s roaring success in search.

Redesign My City

The pandemic is both a tragedy and an opportunity.

A decade of business evolution was compressed into a single year, of necessity. Companies learned to deal with a remote workforce and found it good. So did the workers. Electronic commerce went from being a luxury to a necessity. New jobs were created in warehousing and delivery, while those in retailing and wholesaling disappeared.

Now that the pandemic is easing, we’re not going back. Companies that force people back into offices are going to find themselves at a disadvantage. The acceleration of cloud means many jobs are gone for good.

There are some who think this means we’ll all be living separate lives after this. I don’t think so. That’s not how things went after 1918. On the contrary, people became desperate for other people, for life, and for meaning. They didn’t call it the Roaring 20s for nothing.

Rampant SPAC-ulation

Over at InvestorPlace I have spent this week looking at Special Purpose Acquisition Companies (SPACs).

SPACs are the new hot way to go public. Instead of having to file nasty reports with the SEC, or answer hard questions from reporters and the common herd, you just hand the deal over to some hedge fund sponsor, sit back and wait for the money to rain down.

Some of the companies that have come out this way have been good for speculators. Draftkings (DKNG) has been huge. Some, like Virgin Galactic (SPCE) have had nice runs before falling to Earth. Others have been pure dogs. Can you believe WeWork is going public through a SPAC?

SPACs are a way to take money from bankers and put it into the hands of hedge fund sharpies who know how to go on TV and spin a story. The godfather of the movement, Chamath Palihapitiya, admits as much.

SPACs are also a way for hedge funds to dump their garbage. Profitable companies that used to go public now wait until all the juice is squeezed from them, taking bigger-and-bigger hunks of private equity cash. Now the garbage, the companies that aren’t making money, can go public through SPACs.

For the hedge fund guys, it’s a win-win. Get people to invest blind, sell them on your garbage, then on to the next one before “investors” see an earnings report.

Be Your Own Brand, Become your own business

This is the first piece of advice I give young journalists. It’s one I was taught in the 1970s was anathema.

Be your own brand.

When I was at Northwestern’s Medill School, in the late 1970s, I was told a journalist “is someone who works for someone who buys ink by the barrel.” This has since been changed to “bits by the gigabyte” but it remains true. Journalists are defined by who they work for. You are your job.

(This is a publicity picture taken at my first post-Medill job, with the Houston Business Journal.)

But it’s a one-way street. You can give your publisher all your loyalty and, should the needs of business demand it, you’ll still be on the street. (I've been there.) The only way to protect yourself is to define your beat, to specialize, and become “the leading expert” on it. Then (and this is the hard part) monetize it.

This is the part of the new job journalists hate. I feel for you. I hate it, too. But if you want to make a living at this, you must do it.

This starts with social media but doesn’t end there. If you’ve gained expertise advertise it and become a source. Start a side gig, a blog or e-mail newsletter. Incorporate, and treat yourself as a business. This means that you can consider stepping over lines your j-school taught you never to cross, but which your publisher-employers crossed as easily as you walk across the street.

It used to be that the only alternative to a newspaper or magazine job was to go into PR or ghost write. That’s not true anymore. You can solicit advertisers or take money from politicians if you like. You can go on TV and spout off if you’re asked. You can do podcasts, send out your own press releases. You can mine your market, in any way you can, if you’re willing to take the risks that every other businessperson takes.

Who Writes, Who Reads, Who Buys Your Story

If you don’t take responsibility for the medium you create someone else will. And they won’t have your interests at heart. 

This has been my “pinned tweet” at Twitter for a year and a half. But there’s a corollary, which I thought was obvious.

Taking responsibility is gonna cost ‘ya.

Print publishers have understood this for centuries. Credibility is the coin of their realm. But print publishers are paying for what they publish. The checks control the content. Publishers are also subject to business’ morality, not that of the journalists they hire. If ethical compromises must be made, they are empowered to make them, and take responsibility for the result.

There’s wiggle room here for everyone but the writers.

Whip Deflation Now

While most people my age remain scarred by the inflation of the 1970s, I’ve long known something they didn’t.

Deflation is the problem.

Technology is naturally deflationary. Moore’s Law, the idea that chips could get better and better faster and faster, also means more output of everything, for less money.

We’ve seen this with every recession of my career. In the 1980s, computing cut warehouse space and distribution jobs. After the dot-bomb of 2000, it came for middle management. After the Great Recession cab drivers, hoteliers and retailers were thrown on the fire.

The pandemic has squeezed 10 years of technology change into one, as business has been forced to adapt. A lot of these changes are permanent because they cut costs.

Most knowledge workers will never return to their offices. Schools and colleges are being forced to use online resources to increase efficiency. Malls may never re-open, replaced by online shops. Ghost kitchens cut the size of restaurants. Fintech is replacing banks and brokers with apps. Semi-autonomous cars don’t need drivers. Electric cars don’t need oil.

Efficiency piles on efficiency. Even credit card processing carries technology debt. Bank and brokerage settlements can be replaced by apps, value replaced by digital stablecoins, everything can be done on the cloud.