Monday, November 24, 2008

Bailout Trauma

All of a sudden, America turned into a bailout nation. It's good to hear that the government is taking the steps to save the whole economic turmoil stemming from the financial sectors. I just can't stop thinking that the whole bailout situation is scary.

Consider these two familiar situations.

Situation A: You are a college student and parents gave you $200 and said, "kid, be frugal. Spend the money where you need to. If you run into financial crisis, let us know. You need to be studying and get good grades, not thinking about the financial situation".

Situation B: You are a college student and parents don't give you $200 and said, "kid, be frugal. Spend the money where you need to. If you run into financial crisis, it's your fault. Earn the money right away while studying and getting good grades in school".

Maybe these cases ring a bell. The government is treating the troubled companies with attitude similar to Situation A, not exactly, but quite similar. For the interest of constructive feedback to startups of the world, let's focus on Situation B.

Why do startups go through tremendous growth with limited resources at hand? It's probably because most of the decisions at hand have to do with survival without very few backdrop plans. It's a question of life or death.

Last time we were in great recessionary period, so called The Great Depression, the FDR administration treated the free market economy similar to what the new U.S. government is trying to do. Whether FDR's lifeline injection was effective or not, I'll leave it up to the historians to mull over. What's clear is that it wasn't the governmental actions that eventually saved the U.S. economy, it was WW II.

Fastforward to today... I'm not saying we should enter wars. I'm pointing to the whole attitudes of business managers to treat the whole situation as life or death situation. Focuse on cash reserves, reprioritize strategic decisions on a daily basis, win customers, depend on lean operation, consider there's no government to save you butt when things go sour, etc. The most notable example that makes me scratch my head till my head gets bald is Tesla Motors. Hey, it's a so-called venture-backed startup asking for a piece of auto bailout. C'mon. It reallly should've been hungrier than the hungriest startup if they ever remotely realized that bailout was never an option for them.

Companies (big and small), please be hungry. Operate like you would do in a free market. Please!
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