Sunday, November 30, 2008

The Grapes of Wrath

“The Grapes of Wrath” is the title of a book, by John Steinbeck, set during the great depression. It is the story of a poor family’s (the Joads) journey hit by the economic downturn, from Oklahoma to California, in search of a decent job, survival and dignity. I read the book, after listening to the Bruce Springsteen song “The Ghost of Tom Joad”, which has reference to the protagonist Tom Joad, from the book.

I choose this title for this blog, few days back, but after the Mumbai terror attack it addresses two issues. One is the current economic downturn, uncertainty, job-cuts and world looking down the barrel of a major recession. Here is one quote from the book:

“The Bank is something more than men, I tell you. It is the monster. Men made it, but they can’t control it.”

This is coming true in 2008, as well; the term added in this era is “complex derivatives”. Men made it, and they cannot control. Although some men like warren buffet, criticized it. The jobs are going, the companies are falling, the sales are down and the credit is tight. With some luck the internet advertising has survived In US, as it has proved to be more effective and ROI driven than any other medium. The Silicon Valley has survived the crash well, and still holding fort.

The second is the terrible Mumbai attack, which is the grape of the wrath, the anger, the hatred and the animosity built around the world. The human has dropped to a level, where the god given brain has stopped working. He is ready to kill anyone for someone’s revenge, and the killer didn’t know either “anyone” or “someone”. Here is one quote from the book:

“In the souls of the people, the grapes of wrath are filling and growing heavy, growing heavy for the vintage”

If you go to youtube there are stinging videos of wrath, against Hindus, against Muslims, against Jews, against India, against America and so on. Basically you can find a video against anyone, and the comments on those videos can easily explain the wrath, the hatred, people want to kill each other, not knowing who is on the other side. “Kill them”, “F..k them”, “Rape their women” are the common comments, please check, and I bet you already know this. We have lost it! The bright human has lost it!

Now with the top world economies going negative in GDP numbers, we at India were happy and hopeful that we will do at least 5 % economic growth, which will be among the best. Now that will be good enough to attract investment of leading investors across the world. Suddenly after Mumbai attacks I(and I bet many others) am thinking, about my safety in this country. In the aftermath, some articles have come out in the financial papers, about “Brand India” loosing its shine, and India’s corporate Image getting hurt. Although that is correct, but I think the top of the mind thought, with most of the Indians today is safety and security within the country, for which we await some strong actions from the government.

In any case, it looks like the economy is going to get hurt. Investments in a terrorism affected state will get tough, and tourism is going to suffer a great deal. Just like all media, the internet industry is also suffering with the falling advertisement spends. The aftermath of the attack will bring more issues to curtail the progress we were making. As the economic growth slows down further, we can look at PC penetration, and Internet penetration again growing at a slower level than anticipated. We were hoping for 100 million internet audience by the end of 2011, I think it is going to be delayed, until some major change happens.

The current issues of majority of Internet firms are negative operating leverage due to economic slowdown. And as per the sequoia presentation, the death spiral may get set in motion, in an effort to get the operating leverage positive by brute force of cutting costs. The investors are under immense pressure of raising credit, on the negative operating leverage. Now dotcom firms of Silicon Valley are also under similar pressure, but they were ready with the learning’s of the dotcom burst 8 years back. The firms are having lean manpower structures, automated models and thanks to cloud and grid computing, very reasonable server and infrastructure costs. Another great thing is the open source software resources, on which a lot of start-ups and even major sites are built, with minor coding and customized applications on top of them. The manpower planning is to have talented and senior people with very limited team strength, the visionaries and vertical/functional experts run the show, and donkey-work (manpower intensive, not dumb work) is outsourced to donkey-work experts.

This is not the case is India, and internet firms are still to learn from the crash. Majority of workforce is young and inexperienced, and are even new to their corporate career, let alone the Internet Industry. The other media like TV, radio and print has a training ground, and a process for education of new comers. But the Internet seems to be requiring zero training and practically anyone right out of college or from any other industry can take up major jobs. This is the key reason, why major brands do not spend, or pay very little for much higher value than any other medium, as the poorly trained manpower in Internet is not able to convince clients on the strengths of the medium. This is also adding to confusion and lack of foresight for taking on economic slowdown in reference to Internet businesses.

Here is another quote from the book to sum-up all situations:

“Man, unlike any other thing organic or inorganic in the universe, grows beyond his work, walks up the stairs of his concept, emerges ahead of his accomplishments”

Here is my take on the situation; we need the economic situation to improve across the world, with basics of hard work, savings and real income. We need hatred to come down and safety for everyone across the world. We need the Indian internet firms to surge ahead, and await the boom (like in US and China), with Internet population going beyond 100 million.

I salute the martyrs of Mumbai.