Growing Pains

As stocks fall, temperatures rise and the temptation is to toss the so-called “new economy” out with other old failures.

Admittedly, the current condition is volatile. Nasdaq has hit a modern-day (24-month) low. Speculative in vestors are jumping off the bandwagon because they have made their easy money.

Dot-com is bad. Technology is bad. Content, community, commerce is bad. Internet is bad. Brand spending is bad.

But the “next” economy can draw on lessons from the old “new” economy, the chief of which is keep the baby while disposing of the bathwater. Let’s see which is which.

—Dot-com is bad

While over 250 dot-coms and 40,000 jobs are gone, over 1,700 companies are alive and relatively well and some 2.5 million jobs remain.

Baby = companies with business models that create efficiency in convenience and fulfillment online, and can be profitable in a reasonable time period from a cost-driven perspective.

Bathwater = companies that never had a solid business model for profitability, particularly at the pace startups have historically been expected to achieve it.

—Technology is bad

Baby = a sustainable value that gets you a fair share of the market over time and facilitates convenience and productivity—under a business model that helps achieve profitability in a reasonable period of time.

Bathwater = speed to market.

—Content, community, commerce is bad

Baby = natural affinities established before the Internet that the Web helps enhance. Again, the foundation is a business model that achieves profitability in a reasonable amount of time.

Bathwater = affinities built with heavy marketing expenditures that only buy a share of voice and take years to pay back.

—Internet is bad

Baby = a communication and distribution channel that makes connecting with customers quicker and facilitates a stronger, longer-lasting relationship. Built on, yes, a business model that achieves profitability in a reasonable period of time.

Bathwater = speculative ventures that use the medium as the be-all and end-all solution to success.

—Brand spending is bad

Baby = consistent measurable investments that build brand value and link logically and emotionally with the customer in a way that enhances shareholder value. (About 90 percent of Intel’s market capitalization is attributed to brand value. It didn’t happen overnight!) The foundation is—all together now—a business model that achieves profit ability in a reasonable period of time.

Bathwater = unmeasured, exorbitant expenditures that buy a share of voice in the name of branding but are neither linked nor remembered.

Don’t throw the next-economy baby out with the bathwater. Pursue business models that do what a contrived, man-made structure is meant to do: build a profitable business that provides a great return for its shareholders. We don’t call it B2B, B2B2C, B2C, or B2-whatever. It’s just plain old B2P: business to profitability.