How The U.S. Failed The Middle Class; How It Will Influence Online Advertising

by , Mar 27, 2013, 2:49 PM
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Google-Glasses-AScott Kupor, managing partner at Andreessen Horowitz, explains how "we" are holding back the middle class in America, and points to the U.S. government's mistake to "systematically cut the middle class out of the most important wealth creation opportunity for the next 50 years."

Kupor's rant plants his viewpoint firmly with investors detailing why we should care if the world has fewer billionaire founders and CEOs of publicly traded companies, but the changes also impact the online advertising industry by stifling growth and innovation. He says if the United States had not seen initial public offering (IPO) volumes fall "off of a cliff" in the last decade, the Kaufman Foundation estimates the U.S. would have created an estimated 1.9 million new jobs.

Pointing to examples of two companies founded by Harvard dropouts -- Microsoft and Facebook -- Kupor tells us that until a decade ago about 300 startups went public annually, with the average age about five years. In the most recent decade, fewer than 100 companies each year have gone public, with less than one-third of those being small IPOs, and the average age roughly doubling to 9.4 years.

Regulatory changes have reduced the frequency of stocks in high-growth companies that are offered to the public during dramatic growth phases, he writes, which leads to the economy's decline. I don't necessarily think it's important for a company in the online advertising industry to go public. I do believe they must spend the money to innovate or die.

Some might view my thinking as a dotted line from one concept to another, but companies are going to great lengths to find the best talent, ensure that products resonate with consumers, and reduce operating costs rather than rely on money from investors. Google ran a promotion that gives people a chance to become a test wearer for Google Glass(es), which in turn will educate its engineers on what they need to do to improve the product before it hits the shelf next year. The "explorers" will pay $1,500 for the glasses, as well as attend a launch event in person.

It will be interesting to see whether analysts crunch the numbers on the amount of money this testing will save Google in operating costs. How much would it cost the search giant to hire the people needed to test the product? Not only are they getting free testers, but people are paying $1,500 to do it. Call it the ultimate marketing tactic, but will it become the future -- especially for startups that need the finanical backing, an alternative to going public?

3 comments on "How The U.S. Failed The Middle Class; How It Will Influence Online Advertising".

  1. Zachary Cochran from CPXi
    commented on: March 27, 2013 at 3:23 p.m.
    Hey Laurie—it's Google Glass, not Google Glasses. :) And no, I haven't won though I'm watching all of the responses of people who have right now.
  2. Laurie Sullivan from lauriesullivan
    commented on: March 27, 2013 at 3:36 p.m.
    Regardless of the name, Zachary, you're watching the responses of those who have won. Can you put a price tag on that marketing?
  3. Tom Pick from KC Associates
    commented on: March 27, 2013 at 5:17 p.m.
    Scott's rant nails it, with one exception: he fails to mention the effect of Sarbanes-Oxley on the IPO volume. By dramatically increasing the cost of going public for startups, and making it much more attractive for them to instead seek private equity funding (from accredited investors), this law--ostensibly designed to "protect" retail investors from fraud--has had the perverse effect of making the already wealthy much wealthier, while closing off opportunities for investment wealth generation among middle class, retail investors.

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