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Jason Calacanis has another email on startups and the economic environment.  He starts out:

[81-word quote deleted because of copyright protest filed by Calacanis with my blog host.  Whatever.  You can read the full email here.]

He goes on to describe a "Death Spiral."  As an aerospace engineer and pilot I enjoyed Jason's aeronautical metaphor (a pilots physical senses are of no use in a death spiral and the only way out is to believe your instruments).  He goes on to describe an economic death spiral in which companies cut costs and lay off employees who in turn belt tighten and so on.  This emotional reaction will over-correct until even the wealthy are cutting back and that will be reinforced by the media.

How does it stop?  Jason writes about how slowly some individuals will start to see opportunity after competition has been eliminated and they'll start to make some cautious moves.  Eventually others will see this opportunity.  The key?  When your dentist starts investing again.

Jason writes about some bits of good news:

  1. Experiences over expenses.  People are going to be spending a lot more time online to escape the bad news and because they're taking "stay-cations."  Companies that provide experiences to attract these folks will do relatively better.
  2. Advertising boom.  Online advertising that is measurable will capture ad dollars from other less measurable sources.
  3. No competition.  Competition is going to get thinned out.  Those that survive will be able to charge higher prices and get by with lower costs.
  4. Zero cost startup.  The cost of starting an online company is an order of magnitude lower than just a few years ago.  It will be easier to start/keep a company going.

Jason concludes that the best investor today is yourself.  I wholeheartedly agree.  Why depend on others if you can fund yourself.