Economic downturn = good cover for your derriere
From digitalsignage.com/blog:
Late last week we received the sad news that Olympia, WA based digital signage firm LocalVision had closed its doors. The energetic digital signage team apparently was feeling the effects of the economic downturn. We received the disheartening news from Morgan Runyon, LocalVision’s network admin.
Jim, Sandy, Morgan and the gang at LocalVision worked on some pilot testing/proof of concept for SMS mobile marketing solutions and digital signage earlier this year. So, it was sad news to us that they’ve had to close up shop. LocalVision has done some great work running its own network as well as partnering with digital signage networks across the country.
I haven’t heard of LocalVision before; I know nothing about them other than a quick scan of their home page. So this post doesn’t necessarily apply to them although it may. My comment on their home page is it looks like they do everything. And that I’ve yet to figure out how someone makes money on “SMS mobile marketing,” although LocaModa seems to be doing fine.
Having worked in a tech company (Transmeta) in Silicon Valley in 2000, immediately before the dot-com bubble burst and at a startup company (M-CAM) in the next two years during the recovery, I do have some first hand experience in different methods of doing startups, much of it observational, of course (I was the equivalent of a tech grunt…I did deliver Linus Torvalds a new PC at Transmeta once…so I guess I was a grunt with aspirations due to nearby fame?).
A lot of dot-com companies died from 2000-2002, some of them very well funded (remember the Super Bowl in 2000? Over 17 dot-com companies paid over $2m a commercial for 30 second spots). The downturn became a nice way to cover *ss, in that, “it’s not our fault we failed, it’s the economy’s.”
Please.
The economy is tough. It effects us all. I had a potential customer email me yesterday that there was no way he was investing in digital signage at this point, due to the market. I’m not sure if he was actually going to spend any money anyways. I/digital signage certainly hadn’t convinced him so far.
Ok, quiet please, here’s a little secret: companies who don’t have a viable business model won’t make money whether it be a downturn or an upturn.
Digital signage is a young industry that’s barely started up its growth curve, so far sticking to the high premiums paid by customers on Michigan Ave., Times Square, sports stadiums, etc. Beyond that, there is no proven business model. Lots and lots of of ideas, lots of blogs, multiple annual expos, tons of online/offline workshops, several magazines and industry pubs, even our own association…but no proven business model beyond the top 20% of the market.
The bottom 80% of the market is much much bigger — 4x bigger, in fact.
So here’s the kicker (and then I’m off my soap box, I promise): if digital signage is truly viable, it should offer even more value during a downturn in the form of increased revenue. Digital signage sales should be doing better in a downturn, not worse.
UPDATE: The real inspiration for this post was LocalVision + a post on Fred Wilson’s blog called Startup Depression based on a post by Jason Calacanis of the same title. From Fred’s post:
The tools and services that are made in the web technology business are only going to increase in demand over the next five years. But we are going to have to service that growing demand with leaner and more focused businesses and it’s time to start thinking more about profitability and how you are going to get there.
From Jason’s post:
Doesn’t mean I’m not hyper focused, I am…. I’m just not panicking. Great entrepreneurs build value and market-share in down markets. They go to work seven days a week and the breakout when other folks check out.
Amen. Downturn = focus on value = opportunity.
