Tuesday, February 10, 2009

Survival 2010 Tips

Interview with Reena Jadhav, CEO nuResume, where we discuss impact of the current economic crisis on venture backed companies. Bottom line: this is a crisis you can take advantage of and an opportunity to grab huge markets!


1 comment:

oliver said...

From Tim’s interview which was the subject of the post:

So what does Tim think will pull us out of this economic downturn?

He believes that the new Obama administration will focus on a few specific areas of healthcare, clean tech and unions. So entrepreneurs in these areas will certainly have an advantage.

Well healthcare as an engine of economic growth? I’m not sure that over the longer term that without significant changes that the first blush thinking here will prove accurate.

The current baby boom generation has a much longer life expectancy than their parents and grandparents. They also reportedly have a significant under savings for their life expectancy, and I am quite certain that the current economic situation has not improved their savings vs. life expectancy analysis. Some of these older workers are the beneficiaries of older style retirement plans, which have been the focal point of much discussion of the auto makers competitive disadvantage.

Many do not have such plans which of course is also problematic, in either case no one wants to see older people not able to have respectable comfortable retirements.

During the testimony by the “former” leaders of the mortgage industry one of the things mentioned as a common problem causing delinquency was health issues. A serious illness can impact the wage earning potential of a person. So too can taking care of a father, mother or other family member. Even if the person recovers the impact to the affected persons savings and career can be profound.

The workplace is not kind to older workers, reentering workers, or workers with some limitations. A mid-level to senior level worker with a hiatus from the work place is pretty much forced to start over in a different field. Younger managers on the rise will typically not hire such a person as being too senior or a threat, or at least worry that they are unmanageable. Returning to a senior level position is difficult, because a few years off creates rust that just isn’t tolerated in a Mid to Sr. level person without a little time to polish it off in the workplace.

Improved health care that is affordable to all is, of course, a laudable goal. These secondary issues of economic viability of the beneficiaries, might if solved, fade to non-existence, but solving them is a rather large cultural issue.

Every time moving out the mandatory retirement age is discussed in congress, it has traditionally been a huge debate. One of the underlying issues seems to be some of the people are much better positioned health wise and/or financially to retire than others. Some are not healthy enough or able to continue their physically demanding jobs and their life expectancy is shorter than others.

It is at first blush a statistical oddity, but I’m told that for a while, when you are in your sixties and seventies the longer you live the longer your life expectancy becomes.

Without the ability to extend peoples productive opportunities and work life, the welcoming and understanding that people may need to leave and reenter the work force for various reasons, there will be some serious longer term financial issues for these people. Quite frankly some of these people may not, as the song goes, “be as good as they once was, but they are as good once as they ever were” or perhaps they are like the old athlete, not as good as they once were but still more than good enough to play and contribute in their chosen fields.

To the extent these individual cases are repeated among many people, it can have a serious financial impact on a company or an economy as a whole. The auto industry is one case in point, they have experienced healthcare improvements helping their workers live longer lives, but the cost of the health care has risen and these workers are no longer contributing to the company bottom line.

The economy doesn’t need a large number of people who are living longer but require on-going health care and perhaps even help with ordinary living expenses, but can’t productively contribute. It also doesn’t need a large number of people who are not able to contribute, not because they aren’t capable of contributing, but because they can’t find a niche from which to do so.

A very high employment rate may help business hire these types of workers, but most economists believe that very strong economies that might be able to create demand enough for such workers run a high risk of wage price inflation and they call for dampening the economy for fear of the risks of such full employment and the associated spirals. We’ve had such economies and indeed they are highly problematic. The economy of too few workers working or underutilized compared to the number working has not been fully explored, but it doesn’t seem likely to produce good results for all.

Oregon faced some of these issues in their insurance plans. Health care priority and provisioning has long been a moral and ethical philosophical debate and the subject of many “entertainment” plots in television and movies. The future is here and without solutions to the secondary problems, venture businesses may make wonderfully successful businesses in healthcare or other fields. However, if the overall economic ship is like the Titanic, sinking under the weight of lots of people under utilized and living longer, these otherwise successful people and businesses will be like those on the Titanic, they will be running around rearranging the deck chairs while the ship sinks around them and drowns them.