The Illusion of Progress

I’ve had a busy July – lots activity in my portfolio, travel, and interesting stuff to deal with.  Most of the companies in my portfolio had solid Q2’s (recession?  what recession?), I’ve watched the TechStars teams in both Boulder and Boston grow up quickly, and the tech M&A market has woken up nicely.

At the same time, I watch the mainstream press report on the same old nonsense, our government struggle with “big issues” that seem to polarize everyone, and I listen to chatter in trains, planes, and automobiles about all the problems that exist.

This weekend I went on my annual “Feld Men’s Trip”.  This year we went to Chicago, ate at Mortons and Follia, went to a Cubs game, and had chocolate ice cream (twice) at Ghirardelli’s.


I was exhausted from the week so I slept a lot.  But, I did notice an amazing amount of activity in downtown Chicago and on Michigan Avenue on Friday and Saturday night.  Chicago was buzzing, everyone was enjoying the warm weather, and the mood was very positive. 

There’s dissonance between the broad sentiment echoed by the mainstream media that seems to hang over everything and the energy and attitude “on the street.” I can’t decide if it’s me and my innate optimism, if there’s an illusion of progress, or if there’s a massive disconnect between reality and what mainstream media reports.

I’m going to be in Seattle, LA, and San Francisco this week; my antenna is going to be tuned to the tone of the cities.

  • i was at saturday's game! glad the weather worked out for you… it's been awhile since we had a perfect weekend like that one… probably why the human buzz was so great… it was new for us!

  • Looking forward to your comparison of a great Midwest city (where I'm living) and a great West Coast city (where I'm from).

  • Ryan Hunter

    I was in NYC two weeks ago and had the same observation. Manhattan and Chicago are definitely cultures that make the most of good weather, but busier restaurants and sunnier dispositions are comforting recovery indicators to me.

  • Brad, its nice to be Brad! Come down to South Florida. Check out the amount of empty homes in middle to upscale neighborhoods, houses at 50% of their value of 3 to 4 years ago when many people bought them. Also the restaurants are empty, the hotels are offering give away pricing and unemployment is way over 10%. I am afraid that what you see is people making the best of it, getting on with their lives, but don't doubt for a minute that there are lots of people who have been very hurt by this mess.

    • Oh, I don’t doubt for a minute that there have been a ton of people hurt by this.  I’m not talking about “what has happened”; rather, I’m focused on what is happening now.

    • i was there this weekend in south beach and Naples (parents) – i stayed at a 5 star hotel for $136 in south beach – it is absolutely empty. There was also no one at the gold club (pelican bay) the housing and job market has been crushed, and as you say – commercial businesses are living on fumes. Anyone that thinks that what the media are saying is wrong is living in a bubble.

      As far as going forward Brad – this was a chat over at Freds blog some time ago – the dessimation of 20th century industries has no obvious replacement. (see umair on this). technology is doing its disruption / disintermediation thing, however the result is what used to be 100 employees is now 5 (obviously before it goes on to 'create' jobs) – this transition if you will – is extremely concerning. an entire generation of people will have the 'bright years' of the earnings life negatively impacted.

      i do not therefore share you sentiments on high street america. I-street may be ticking along nicely – High street is sucking wind with no light at the end of the tunnel

      • The use of the word “bubble” in an interesting one.  Wasn’t South Beach and Naples in a massive bubble of their own creation as were other parts of the country?

        I agree completely with Fred’s sentiment about the decimation of the 20th century (and – er – many 19th century industries that came to prominence in the 20th century).  I’ve been investing in, using, and living with the disruptors for many years now.  In the late 1990’s when the Internet bubble expanded, there was great relief (and occasional joy and ridicule) among the 20th/19th century incumbents who said “see – never mind.”  We were just off by a decade.

        Disruption / disintermediation hurts – a lot.  And I’m not suggesting that it doesn’t.  But I am asserting that there’s real value in looking forward, accepting reality, and getting on with it.

        • Brad, I love the optimism, but just saying I am going to be a realist and just look forward accepting reality is flawed. First off it is just putting rose colored glasses or blinders on and ignoring what is out there, second those who don't learn lessons are destined to repeat them, third for those people who have been effected or even devastated by this I think you would seem to be very callous. If you had worked hard your entire working life and your retirement was wiped out you may be whistling a different tune.
          Also this is not just about disruption by technology. I think this represents the culmination of Reganomics working their way through our economy. The notion of "let the boys have at it", govt is bad and can't do anything efficiently, trickle down economics, deregulation all contribute to our current malaise. OK I will get down off my soap box now.

          • I strongly disagree that “looking forward and accepting reality” is flawed.  In fact, I think it’s the opposite.  You have to accept your current reality as you can’t go change the past, no matter what decisions you have made.  I also don’t think “looking forward and accepting reality” is disconnected in any way with “ignoring what is out there and learning lessons from them.”  That’s core to accepting reality! (at least in my book). 

            Re: “the culmination of Reganomics” – that’s a soap box I’m not going to argue with – it’s too slippery <g>.  I do, however, have a copy of Atlas Shrugged with your name on it if you’d like it.

          • "You have to accept your current reality as you can’t go change the past" – this phrase resonates very strongly with me. I've used it in both relationships and business for many years.

            On current reality, I always see better instrumentation / analytics as a way to actually find out what "current" reality is much sooner.

            Relatedly, I also find that in all of Canada, there is a much higher level of optimism, in part because a) we never flew quite so high in the first place and b) we haven't experienced quite the same real estate crush as parts of the US.

  • LDE

    Please do provide an update. This is a continuing conversation we're having at our shop. Just looking at raw data (for example – company earnings, valuation multiples, and personal debt levels) it is hard to fathom where the recovery is coming from? That said, the street activity is hard to ignore. On a personal level, Toyota has done such a job of managing inventory that I can't even take advantage of them to get a deal on a truck!!!

    • Will do.  It might just be that it’s summer after a long hard winter, but I think other things are at play here.

  • Brad, I too was in Chicago during the weekend. Went to cubs game friday (and am going tonight). Harry Carry's and Shaw's Crab House for dinner. Comic book store in downtown…nasty whiffle ball game in grant park…and a long bike ride along the lakefront. being from chicago, i am biased…but…chicago is in the running as the best city in the nation and beyond. (ignoring weather and traffic, of course)

  • Bubba

    Well, it sounds like you have a charmed life, and I'm happy for you. However, life continues to be very difficult for way too many families – unemployment, foreclosure and healthcare costs all continue to rise. We have a long way to go before "life is wonderful" for the mainstream. I think we can do our part by expressing our perspective and working for positive change. We've had too much "don't worry, be happy in the last few decades." Take a look at many of the urban charities and you'll see that they are desperately working to provide services for more people with fewer dollars.

    • As a big contributor to a bunch of the urban charities, I know the stresses they are feeling.  I’m also not of the “don’t worry be happy” mentality, but I’m definitely of the “take stock of current reality, make decisions, and drive forward”.

  • Mike Soucie

    Brad- Just curious to know whether your portfolio companies that had solid Q2’s is due to cost reduction strategies or from increased revenue and growth from spending? Cost savings hits the bottom line just as revenue does, but the question as it relates to an 'illusion' is whether folks are spending again.

    • Both.  The companies in my portfolio did their cost reductions (whether people or other) in Q408 and have been managing to a tighter cost structure the past two quarters.  Most of these companies saw quarter over quarter revenue growth from Q408 to Q109 and then again to Q209.

  • My uncle is president for a nice size bank in my hometown and they seem to be doing fairly well. He says that business is doing good and thinks all of the recession talk is just a hype. I dont know if I completely agree with him, but I dont think it is as bad as people think.

  • I was also in Chicago over the weekend – had taken Amtrak from Denver. (Take that airlines!) I was there for a massive blogging convention, BlogHer, so if you noticed an extra amount of opinionated women walking around Chicago, that might explain it.

    Also, to your point, there was more entrepreneurial spirit in this year's conversations – tons of new business ideas floating around amidst all the economic rubble. Ironically, the sponsors were noticeably bigger (Wal-Mart, Pepsico, H-P, McDonald's, etc.) and completely showered us with free products. Seems they've finally woken up to blogger power. I remember when the expo hall was just a few card tables and this year, it started to feel like CES – but with more cupcakes.

  • Pablo

    "No news is good news" and the other way around: "good news is no news", so mainstream media picks the bad ones. We are probably in a transition period were some industries disappear and some are formed. A critical period which make crisis seem much worst than they are.

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