On the day the first world war started, Du Pont – the US-based
principle supplier of munitions to Great Britain – doubled the price of
gunpowder. By 1916, DuPont were making profits of $82m / year (some
$2bn in today’s money), up from $5m from before the war. Similarly, the
profits of British farmers more than trebled in the four years that the
war lasted.
In the great depression of the 1930s, Bechtel, Kaiser and the other of
the ‘Six Companies’ flourished as they built the infrastructure of the
American West. Building the Hoover dam alone netted them profits of
around $15m ($200m in today’s money).
Whether recent financial events are a short-term correction, or herald
the start of a recession or even a depression, two things are certain.
Firstly, there will be losers. The web 2.0 froth will evaporate
with its funding, and vendors of big-ticket, enterprise software will
struggle as purchases of big-ticket items are postponed.
Secondly, and less obviously, there will be some winners. Some
individual companies will do well, but so will entire sectors. In the
high street, cobblers’ profits are up as people repair their shoes
rather than replacing them; low-budget supermarkets such as Lidl and
Aldi in the UK are doing well at the expense of the more upmarket Marks
and Spencer; sales of lipstick and ties will go up as people look for
cheap ways to feel good.
So where is the silver lining for software businesses in the current crisis? Post here.
Back in April, Dan Nunan wrote a guest post on my blog entitled "What the recession means for the software business: five things to think about". It’s well worth reading, now more than ever.
On the forums, Keith Maurino asks "How much free support is too much?".
On the one hand, giving free support is a powerful sales tool. On the
other, it can be a burdensome drain on resources. Where to draw the
line? If you’ve got an opinion then post here.
If you want something to take your mind off the gloomy financial news
then I recommend pizza and beer. If you want to eat, drink and discuss
building long-term, profitable and sustainable businesses then there
are groups meeting up in San Francisco and London.
Interested in building long-term, profitable, sustainable software businesses? Join the BoS social network.