Something’s Amiss If Investors Ask Editors for Advice Commentary: From The Newsroom by Michael Hart Once again, we return to the questions we’ve been asking for almost a year now: Is business picking up? Is the economy ready to turn around? What difference does it make to me? In other business publications, these ruminations are accompanied by theories stating there never was a serious problem and once again asking what a recession really amounts to these days anyway. The chances are that if you’re reading this right now, and you come somewhere close to being the kind of person market researchers tell us buy this paper, the idea that we have experienced little more than a shallow dip in business is preposterous. But the key word, as it has been for the past year, is “mixed.” Yes, apparently residential real estate was one of two “tent poles” that kept the national economy from being worse than it could have been. Closer to home, the Southland Regional Association of Realtors says home prices in the San Fernando Valley are breaking records and sales are doing well too. However, talk to brokers on the commercial side of the business and you learn that deals are harder to make and it now takes 10 phone calls to accomplish what you could with one call a year or two ago. We hear that the consumer has never stopped buying, taking all of this hubbub in stride, that retail is that other tent pole. Yet we know that Kmart, for instance, is in dreadful trouble and department store chains are rethinking the way they do business, probably forever. Locally, however, stores are as crowded as ever, a major retail complex that opened just last year, Burbank’s Empire Center, is hard to get into on the average weekend afternoon and a number of retailers are moving ahead with their own plans to open new stores. In the tech world which has borne the brunt of the bad news and been at the heart of most of our speculation since mid-2000 we have local companies like Digital Insight recording its first profitable quarter and planning a stock offering in which it hopes to raise $100 million. And Nomadix, which provides software that enables Internet access to the mobile user, just closed a $9 million round of new financing. But you also have companies with strong balance sheets (Ixia, a telecom in Calabasas might be a good example) that have sizable market share and plenty of cash on hand with conservative business plans who haven’t laid anybody off but are still saying, “Wait until next year.” Then you’ve got data storage companies, like Simi Valley’s QualStar Corp., that figured to be the latest sensation in the IT management world after the events of Sept. 11 still feeling the pain. In the last issue, senior reporter Shelly Garcia reported that QualStar’s revenues for the quarter ending Dec. 31 of $10 million were $5 million less than for the same quarter a year earlier. “Things aren’t like they were a year ago,” said QualStar CEO Bill Gervais. Moving back into the world of things-are-looking-up signs, I experienced a personal first last week: A partner in a venture capital firm actually asked me, a newspaper editor, if I knew of any promising start-ups worth investing in. In order to save him from all your brilliant ideas, this venture capitalist with so much money to burn he’s asking me for advice will remain nameless. Nevertheless, the point I wish to make is this: If investors are running around acting like journalists, scratching in every dark, dead-end corner they can think of for information, something in the economy is changing. I learned in talking to him that our jobs are pretty similar. As a reporter and editor, I have spent a lifetime calling up people who didn’t want to talk to me, going to meetings I hadn’t been invited to and listening in on conversations I wasn’t supposed to hear all in the name of finding out something our readers didn’t know about and somebody didn’t want them to learn. It turns out investors do the same thing. Also just like me, of course, they get plenty of unsolicited pitches, most of which by virtue of the fact they’re unsolicited are not very promising. Often, when somebody really works hard to make sure you don’t want to find out something, you know it’s probably valuable. And when you think you might be on the edge of something promising with a competitive story, you talk to everybody you can think of. News, just like business, comes in cycles: heavy in the spring and fall, light in the summer and drop-dead quiet in December. So, is the recession over in the San Fernando Valley? Is business picking up? Can you breathe a sigh of relief? Where are we in the cycle? We’ve all got our own very personal, very idiosyncratic ways of figuring out the answers to those questions. I guess the fact that somebody wants to pump a newspaper editor for information on how to invest his money is mine. Michael Hart is editor of the San Fernando Valley Business Journal. He can be reached at [email protected].