No News Is Good NewsSuccess stories can be found beyond the headlinesBy Joe CelkoI have been talking to user groups and at conferences as self-promotion now that I'm back to being an independent consultant - an IT term meaning "unemployed" - and I spend some of my time on the road looking for consulting work. The recession is real and people in the trade are getting pay cuts or pink slips. But how much of this is the tendency of the press to look for the downside of everything and how much is reality? It's not like a recession hasn't happened before - Southern California had Japanese investments and defense contracting dry up, Texas had an oil crisis, and so forth. If you are 50 years old, you have seen about a dozen of these things in your lifetime. It's very hard to take a long-term view when you have short-term problems, but you need to do just that. Headlines about things going along as normal don't sell newspapers, but there are statistics that show that things may not be as bad as they seem. It's all a matter of perspective. Time For a Little OptimismBack home, I was cleaning and even thinking about tackling the dreaded garage, since one of the many perks of being an independent consultant is having a lot of free time. While I was looking through a few boxes of loose papers, I found an article from Aug. 5, 2000 that looked at the dot-com burn-outs at that point in time ("You Call This a Bust?" The Economist). Although the numbers have changed since then, the article made some good points about business in general and how people treat bad news. The first important truth is that even in good times, 40 percent of all new businesses fail in the first five years of operation according to the Bureau of the Census. The second truth is that about twice as many businesses fail in any one year than are started. For example, in 1998, more than 70,000 businesses went under, and about half that number of businesses started. Finally, about 1 percent of the workforce becomes unemployed per year even in the best of times. The article then compared these facts to the actual dot-com figures. Dot-coms were golden compared to the brick-and-mortar guys! In 2000, venture capitalists financed at least 3,000 dot-com startups. Although I don't have an accurate list of what has since happened to those start-ups, The Industry Standard (which has since filed for Chapter 11 bankruptcy protection) reported 21 failures by July 18, 2000 and Dotcomfailures.com had a list of 20 flops in 2000. Success In Spite of DownturnThings should have gotten worse in the year since The Economist article was written because of regression to the mean - a statistical law that says things that happen randomly will tend to be average. We simply had a below average failure rate before and need to even that out - even though now we're catching up faster than I would like. I happen to know of a lot of dot-com "nonfailure" stories. These are the small "mom-and-pop" Web sites selling a specialized service or product, such as imitating eBay by running an antique business on the Web instead of out of their garage. No grotesquely overcapitalized operations, no grand designs for world conquest, and also no huge profits. In the 1800s and part of the 1900s, they would have been the small town businesses in America. Is anyone looking at all these little guys? If Gartner Inc. is right and more catalog orders will be placed via the Web than via snail mail by 2006, then these little guys are really hustling behind the headlines. Joe Celko [71062.1056@compuserve.com] is an independent consultant in Austin, Texas and the author of Joe Celko's SQL for Smarties: Advanced SQL Programming (Morgan Kaufmann Publishers, 1999). |
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