Hot: Virtual goods, Egypt; Not: The Economy
BY Max Chafkin
A roundup of today's entrepreneurial headlines:
Only the beginning. Stocks may be responding well to the news of a possible auto industry bailout this morning, but the New York Times reports that all other signs point to a long recession. How long? "This recession, which officially began in December 2007, now appears virtually certain to be the longest downturn — and possibly most severe — since the end of World War II." Meanwhile, online consumers are cutting back. The average value of purchases made after Cyber Monday was down 12 percent from last year. But—good news!—sales of virtual goods, like clothes for avatars, are still strong.
Egypt is the new India? At the BusinssPundit blog, there's a quick discussion of the benefits of outsourcing to Egypt, which was named the 2008 Outsourcing Destination of the Year by the National Outsourcing Association.
The "end" of venture capital. Bold words from Erik Schonfeld at Techcrunch, who connects Paul Graham's essay on startups saying no to venture capital and this post on TheFunded about VCs and their investors. Investors are increasingly unable to meet VC's capital calls and are unloading their investments at "deep discounts," raising the prospect of the shutdown of weaker venture firms. This, Schonfeld says, could hasten a "decoupling" of the venture industry from entrepreneurial tech companies.
The Deep Throat of the banking world? Even regular bank loans may drying up. On Joe Nocera's blog, a reader known only as "Anonymous Banker" has an interesting treatise on why small companies with great credit can't get loans right now. The banker's discussion is fairly technical, but he reports that an entrepreneur of a very credit-worthy medium-sized company—with a credit score of 750, no less—had his line of credit slashed almost overnight.
Website calls out companies that employ illegal immigrants. Perhaps drawing inspiration from the success of DontDateHimGirl.com, a website WeHireAliens.com, allows anonymous posters to expose companies that they believe are violating immigration laws. The Dallas Morning News reports that the accused companies, which contend that their labor practices are sound, are up in arms. But like the alleged Lotharios on the dating website, these companies can't do much to counter the accusations.
The next boom market? One word: infrastructure. Bloomberg reports that the Obama administration plans between $500 billion in infrastructure projects. Look for a boom in state and federal contracting. There's certain to be controversy over small business set-asides in this process.