Most conversations I have this year revolve around the global recession, growing layoffs across so many verticals, the high interest rates (and everything else you see on the news).
Percentage-wise, the numbers make sense. Hundreds of thousands of people have been laid off lately, with job opportunities being slower or more demanding, and markets playing in different forms.
But chances are, you’re following the news and having similar conversations yourself.
Why?
Because “you’re the average of the 5 people you spend the most time with.”
And following this newsletter, based on surveys, odds are, you’re in one of the following categories:
- Running a small to mid-sized business (executive)
- Startup solopreneur
- Manager/tech lead in mid-sized to large corporation (white collar jobs)
- Consultant
- Individual investor
And if you follow the morbid data, you see tech layoffs happening where? In high tech.
Japan and the UK also announced recessions this week. China has been struggling and the US has been on the verge.
Let’s look into smaller countries that don’t necessarily provide IT services or B2B SaaS:
- Macao (686,000 people) – GDP growth rate of 74% last year, growth from entertainment and tourism. Some capital for higher income individuals gets deployed into other areas and lesser popular destinations.
- Guyana (804,567 people) – GDP up 38.40%, and South America’s second-wealthiest country. More than 11 billion barrels of oil resources found on site.
- Libiya (6,735,000 people) – 12.50% bump in GDP. Petroleum revenue is 60% of all GDP within the country.
There are dozens of other examples such as Fiji, Mozambique, Armenia, Congo, Tajikistan, India, Georgia, Côte d’Ivoire growing in different sectors, from oil to entertainment, travel, hospitality, hunting.
But the key here is this:
Most of these economy generate a small fraction of the US GDP per capita – which currently stands at 70,248.63.
The largest economy worldwide shrinking has a massive net impact on net dollar value.
For comparison, the GDP per capita for Mozambigue is $647, Congo is $675, Tajikistan is $1,810, India $2,610, Côte d’Ivoire $2,730, Rwanda $1,030.
The Western world has used to operating with Western world income and salaries, which also reflects on local costs – mortgages, rental, communal expenses, oil prices, food, entertainment.
Recessions decrease GDP – but they also normalize the difference between emerging economies and the leading ones.
Narrowing down the gap means fair opportunities to make less but spend less as well. Which is why recessions are not all bad.
Are leading economies distressed now? Yes.
Is capital generation limited in most white collar categories (payroll, investments, ROI)? Usually yes.
But don’t forget the number of categories still growing and locales still emerging and providing opportunities internationally.
Leveraging global talent and vendors can hedge this difference soon enough.
Yours,
Mario
My Take
How to Survive a Recession and Thrive – Join the eCommerce Coffee Break podcast, as we discuss how to survive a recession and a build more resilient business over time. Tune in to hear how can businesses prepare for a recession and make the most of it.
5+ Real Ways AI Can Benefit Your Content and Marketing Today – Have a look at how AI can boost your organic positioning, and how to combine it with human content. See how you can pull SEO data from free services rather than just relying on paid ones.
Newsletter Recommendations
Stacked Marketer – One of my go-to newsletters and a business that we’ve worked with a while ago on the DevriX front. It is loved by marketers who get hands-on with campaigns, who need to stay up-to-date with frequently changing platforms., who need to get an edge, and who need to achieve outsized results with limited resources, aka performance-focused marketers.
Boldpush – А special newsletter for those interested in marketing intelligence and strategy to the most ambitious brands. Props to Julius Solaris for creating one of my top newsletter reads for GTM strategies and actionable content.
Morning Brew – Аn absolute classic, the Morning Brew delivers top news from a business-minded angle, and deliver it in a short, easy-to-read, actionable, and entertaining way.
Business Strategy
Walmart Acquires VIZIO Holding – Walmart is buying TV maker Vizio for $2.3 billion in cash. The move is a bid to boost the big-box retailer’s high-margin ad business. Walmart has long been a major seller of Vizio’s TVs.
Google and SEO Recovery Time – it still can take several months to recover from the helpful content update and truth is, there’s not a seen a case yet of a site hit by the September 2023 helpful content update recover yet. Some say they have but I have yet to see a real case of this -let me know if I am wrong.
OpenAI Lets Employees Sell Shares at $86 Billion Valuation – OpenAI has completed a deal allowing employees to sell stakes in the company, according to a person familiar with the matter. The tender offer values the artificial intelligence startup at $86 billion, a price that makes OpenAI one of the most valuable startups in the world. Bloomberg previously reported the value and that Thrive Capital, the venture capital firm led by Josh Kushner, would lead the deal.
Israel Economy Shrinks by nearly 20% – Gross domestic product (GDP) – a key measure of a country’s economic health – fell by 19% on an annualised basis in the fourth quarter of 2023. That is the equivalent of a fall of 5% between October and December. GDP was “directly affected” by the outbreak of the conflict on 7 October, the Central Bureau of Statistics said.
Meta and OpenAI Sign Pledge to Fight Election Deepfakes – At the Munich Security Conference, vendors including Microsoft, Meta, Google, Amazon, Adobe and IBM signed an accord signaling their intention to adopt a common framework for responding to AI-generated deepfakes intended to mislead voters. Thirteen other companies, including AI startups OpenAI, Anthropic, Inflection AI, ElevenLabs and Stability AI and social media platforms X (formerly Twitter), TikTok and Snap, joined in signing the accord, along with chipmaker Arm and security firms McAfee and TrendMicro.
Business Strategy
The profits of the entire stock market cannot increase at double the rate of the economy’s growth. This leads us to believe that industry analysts tend to be overly optimistic about the future earnings potential of the companies they cover. Rarely do they opt to analyze companies that exhibit below-average earnings growth or are at risk of failing.
- S&P 500: $4,975(-0.61%)
National mortgage rates moved higher for all loan terms compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans moved higher.
- 30-year mortgage rate: 7.29%(+0.15)
- 15-year mortgage rate: 6.62%(+0.10)
The U.S. Federal Reserve will cut the federal funds rate in June, according to a slim majority of economists polled by Reuters, who also said the greater risk was the first rate cut would come later than forecast rather than earlier. Reuters surveys since September have consistently predicted the first rate cut would come around the middle of this year. Markets, however, have gone from March to May, and now are priced for June as the most likely time for the first rate reduction.
This week we saw the end of a historic trial and the end of an oppositionist.
- Judge fines former President Trump more than $300 million in civil fraud trial and bars him from running businesses in New York for three years.
- Russian opposition leader Alexey Navalny’s body will not be returned to his family for at least 14 days
- Ukrainian Armed Forces have announced a withdrawal from the key town of Avdiivka in the Donetsk region of Ukraine.
Business Strategy
- Sessions – backed by Earlybird, UiPath’s early supporter, Stride and LAUNCHub, aims to challenge the global video conferencing market.
- Atmos UAV – raising €800,000 to scale its land surveying drone solution.
- CONTENTS – the marketing content generator, is extending its €16M Series B after Thomson Reuters Ventures and Alkemia Capital joined the round.
Note: Got a round going that you want to feature – your own business or a portfolio company? Get in touch.
Now let’s have a look at the latest top Flippa offers, including their newest feature – being able to buy and sell Newsletters!
Oral Care Ecommerce Brand – This business sells five oral care SKUs related to teeth whitening.
- Monthly profit: $48.7K
- Monthly page views: 241K
- Business age: 7 years
Shopify Business Building Service – This business sells assets to help Shopify site owners build and grow their stores and businesses.
- Monthly profit: $10.5K
- Email subscribers: 40K+
- Annual revenue: $839K
Sustainable Home & Electronics Equipment – This South-African based ecommerce business sells sustainable electronics and home equipment.
- Monthly profit: $27.9K
- Average order value: $242
- Business age: 5 years
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Looking to start a US company? Check out doola and their “Business in a Box” model. Suitable for both foreigners and US citizens and both for residents and non-residents.
Have you tried buying and selling digital property? Have a look at Flippa’s marketplace. They offer a vast variety of online businesses for any buyer’s interests. Or if you’re ready for an exit, Flippa provides you with the necessary tools to list your business and close the deal.
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