Great Post By John Borthwick

Alley Insider has posted a memo that John Borthwick, co-founder of NYC-based investor/incubator Betaworks sent to his portfolio companies. There are many gems in it so I suggest you all click on that link and read it. But here are some of my favorites:

It's counterintuitive, but during an up cycle people accept conventional wisdom, and during a down cycle people challenge it. That's good. Very good. And the cycle will winnow competition.

And if you need to make cuts, make them now. Don't cut 10% now and then another 10% early next year -- make the change in one fell swoop. Piecemealing your way through change kills momentum, hurts culture and the team and is a chickenshit way to run a business.

There will be a flight to quality; this always happens. But this time I think it's going to be more than that.    For TV and print this has been an unusual year: The shift to online has been stemmed first by the Olympics and second by the election. But year-over-year  growth in ad spend has been down across the board (see slide 32 of the sequoia deck, linked below). Expect the next year to be ugly and different. I think spend will move online, very fast, and print may right downhill.  And people will look for ROI -- real measurable results. Monetizing social media is hard. Much to do here, much money/share to make/take.

Openness
I think this cycle is going to drive another significant shift in how open and interconnected the Web is. This is good news for you, and this is bad news for the Facebooks of the world, who tried to replicate the walled garden strategy of Web 1.0.

Think about what happened through the last cycle. Start with AWS. In the 1990s, Internet companies had to own everything top to tail. Today you can use Amazon and other services to pop up a new box for hundreds of dollars, if that. Thats a huge shift, and it's also a shift towards interdependency.

We are all now dependent on the Amazon's of the world for parts of our infrastructure. I think this turn of the cycle is going to drive a lot more openness.  This in turn ties to the market figuring out how to rapidly establish bottoms-up standards. This is about working with others and figuring out how to do things without having to do all the work. 

Thanks to John and Alley Insider for sharing this.