Switching back to the event I attended this past Thursday evening, the RAIN Makers Conference, I wanted to pass along some of the insightful remarks made in the dinner keynote by my friend 
Rich Karlgaard of Forbes. [Or as Guy Kawasaki, another friend and business partner, calls him, “Brother Rich.”]
“Since 2001, the global economy has added the equivalent of the whole U.S. economy,” Rich said, as he opened his talk with reference to macro trends. But, though the fundamentals are good, experts don’t agree that it’s a good economy, he said. And, when experts differ so much, something is up. “That something is we’re living in the greatest period of business model change — ever! Companies can come out of nowhere and knock out big players,” Karlgaard said. He referred to what McKinsey & Company calls the “topple rate” of established industry leaders, which tripled over a 20-year period according to their research. 
One industry where this is happening is newspapers, with the stock of the New York Times, for example, at half what it was in 2002. Why is the industry in trouble? “Craig’s List is one reason,” he said, “a company with 23 employees.” He noted that McKinsey said the topple rate will triple again, and he gave some reasons why this volatility will stay with us. “The backside of Moore’s Law is the part that’s important. As performance increases, prices drop 30% a year. Suddenly, hundreds of millions more people can afford technology every year.” He also cited the example of Google bootstrapping its way early on, with the founders not taking equity investment but instead maxing out their credit cards.
Another reason is that the Internet is an amazing price arbitrage system. “Today, what two students can do on the ‘Net is more than what 10 analysts could do ten years ago. Now, anybody can determine what your margins are and come in well under your prices — maybe even 10% of them. Anyone can pick up your skirt.” Karlgaard gave an example of a 17-year-old kid he wrote about in his column recently who did such a thing and grossed $400,000 over three months, just by putting together a virtual team. He talked to his worldwide team members by phone only twice, doing everything else by email or IM. “Just another example,” Rich said, “of the Cheap Revolution at work.”
A final reason he said we’ll continue to see volatility is the amount of capital available. “Forbes even took capital recently — from Elevation Partners, where Bono is a partner!” 
Read more about that in this Reuters story. [Another Elevation partner is Roger MacNamee, who has a rock band of his own: The Flying Other Brothers. Hey, I got the t-shirt! Right from Roger a few years ago…] Just how much money is out there? Rich laid it out: “About $1.5 trillion in risk capital is sloshing around looking to cause havoc. And about a half trillion of that is in the U.S. We’ll have volatility up the kazoo — get used to it.”
“What does all this have to do with you?” he asked the primarily Midwest audience of angels and business owners. “Well, cost becomes important.” He gave the example of companies such as Intel and HP that are lucky enough to have sales of $700,000 per employee — which may sound impressive, but it’s still not enough for these employees to really afford to live in Silicon Valley. “Now, Google, at $1.4 million in revenues per employee — they can!” His point: “The cost gap between the Valley and rural America is bigger than ever. But the knowledge gap isn’t.” Media access is not a problem anywhere, either, he pointed out — citing how it was much, much different when he grew up in Bismarck, ND. “All this portends well for a heartland revival,” Karlgaard said. “It’s a great time to be a nimble, small private company in a small or midsized town.” The macro trends favor disruption, he said. And the role of the U.S. in the global economy is “systems integrator to the world.”
How the Internet Is Affecting Forbes
Karlgaard also related some very interesting numbers about his employer, in addition to the recent equity investment by Elevation Partners. The surprising stats to many will be the growth metrics of Forbes.com. 
“It’s growing at 70% year-over-year, and will have more ad revenue than the magazine by the end of 2007.” He said that’s what got Elevation Partners interested. “In the media business, as revenues double, valuation triples.” Forbes has very definitely become a global franchise. It’s seeing most of its growth on the Internet, and most of that growth is non-U.S. “But we’ll never give up on the magazine,” he said.
Tags: Forbes, Rich Karlgaard, Bono, Elevation Partners
I just wish theyda told me the hotel had two towers, and that if you were unlucky enough to make your reservations a bit too late, you’d get stuck in the West Tower and have to hoof it three-quarters of a mile to where the event was held, in and around the East Tower. For the prices, there has to be a better venue in the San Diego area.
It was reminiscent of the pre-crash conference scene for sure — and I wondered how many of these people were experiencing this “high” for the first time. My guess would be a large percentage, because there were many, many young faces in the crowd. 
The press policy is a very democratic one, I learned: it allows only one reporter from any one media outlet, even including the WSJ, NY Times, USA Today. But let me apologize now for not covering all 67 presenting companies. Nothing against any of you that I didn’t — just not enough time. It’s flatly impossible to do, with any depth, anyway. [I did manage to blog some 37 of them, though!]
Another of my shots shows the two presenters from 
That’s two Demo conferences in a row where companies I’ve run into early and blogged about became Demo God winners. [Just lucky, I guess…]
I was so hoping to win that nice stick (donated by sponsor Qualcomm). But, alas, the guy in front of me did — and he didn’t even seem excited about it. Dude?
But could the guy conjur up something better to wear than the most god-awful pair of jeans I’ve even seen? I look better than that when I’ve done lumberjack work for three hours in the woods behind my house, for kee-rist sakes. In his defense, he was just one of several presenters who were dressed shabbily. And, sorry, anything including jeans fits that category for me. Please, Chris, can we have a dress code for presenters? It’s the least they can do for us. Hey, if Steve Jobs is coming on stage — fine, he wears what he wants. But these guys, they ain’t no Steve Jobs — okay? 🙂 Certainly not yet… And having them pretend like they are is just too hard to stomach.
It provides an overview of the event — the tone, the tenor, the themes. Check it out 
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