Will Washington’s Sequestration Sequester Our PR Budgets?

It’s time to add “sequester” to the list of words we could do without. In case you don’t already know, dictionary.com defines it as “to remove or withdraw into solitude or retirement; seclude?” You know, terms like, “fiscal cliff,” “kick the can down the road,” “move the needle,” and my election-year favorite, “47%.” I’m starting to think so.

Maybe it was because the mainstream media already began referring to Wednesday’s Mid-Atlantic snowstorm, which was supposed to “retire” DC for a day, as “Snowquester.” Then again, maybe I’m just wondering what communications wiz chose “sequester” as the clunky, if euphemistic, word describing $85 billion in mandatory government spending cuts that went into March 1.

Whether Uncle Sam calls it sequestration or the “Sh*% Hits the Fan Act,” make no mistake, these cuts, if implemented fully, are predicted to have far-ranging negative consequences. They range from an estimated 1%-1.5% drop in GDP, (resulting in nearly zero annual US economic growth) to reduced satellite coverage and lower resolution (read: accuracy) predicting the weather.

But a recent AdAge article brings up another good point that hits very close to our PR home. Government ad spending is one of the first expenses on the sequestering chopping block. The army, for instance, spent $47 million in the US in advertising in 2011. And government PR is essentially a DC cottage industry, ripe for additional reductions.

Sequestration sucks for PR in other ways too. As a profession that cares deeply about the implied messages of things, draconian communications spending cuts by Washington might send a powerful signal to private industry that they too, can do without in-house or outsourced public relations. The sequester might sequester spirits as much as it does budgets.

It’s what’s known as the proverbial “chilling effect.”

I truly hope this will not be the case. Yet with congressional gridlock at historic highs and approval ratings hovering near an all-time low of 15%, there’s growing fear that the full weight of the spending cuts will take hold across the entire advertising, PR and marketing sectors.

After that, the chilling effect gets downright cold. If government stumbles under its own bloated fiscal weight, you can be sure the private sector will follow as the two are inexorably linked. The fact that the Dow Jones achieved two days of record closes and February’s jobs report (which comes out Friday) is predicted to add a respectable 175,000 jobs might not be enough to offset DC’s disarray.

The irony is that, were such a scenario to unfold, each political party would be working overtime to spin the causes of these problems as the other party’s fault, requiring some fancy communication skills in the process. Our services would again be deemed “needed.” Unlike the sequester, now is not the time for the PR industry to “withdraw into solitude.”

Effective communications is essential in good times and bad. So what can we do as an industry to lobby Washington in reconsidering its actions? I guarantee 100% of Americans are in favor of that (not 47%) with no needle moving or can kicking required.

Does Miami have what it takes to make a thriving tech hub?

Are you worried about the state of Miami’s tech scene? I am.

ThinkInk recently became the PR agency of record for KULA Causes, a Boulder, Colorado-based provider whose online giving platform enables partner companies to connect their loyalty program members with millions of causes worldwide – while allowing those members to turn their unused reward miles and points into cash donations to causes they care about.

And while Boulder might not be a city one thinks of as a thriving tech hub, the Denver/Boulder region is actually one of this country’s top 10 techie havens, according to the National Venture Capital Association. MapQuest and Photobucket were born there and hundreds of millions in venture capital are invested in and around the Mile-High City.

ThinkInk also provides PR support for tech companies including OtherLevels which is based in the world’s tech mecca of San Francisco and Synchology which hails from another top-10 tech city – Chicago. As well as GuestLogix and iSIGN located in Canada’s tech capital of Toronto, ranked by Startup Genome as #4 among the world’s tech cities.

So, looking at Miami, my home since 2003, the home of ThinkInk’s North American headquarters and the craziest metropolitan area in the country’s weirdest state, I see a town ­­famous for its political shenanigans, wildly diverse demographic mix and off-the-wall stories.

But tech business? Not so much.

I got rather annoyed when I read a recent Fast Company article about Miami tech start-ups that focus on another of the city’s most storied industries: the high-end nightclub scene.

We’ve got an online repository of nightlife jobs, an app that allows friends at different venues to buy each other drinks and a platform that club managers can use to track patrons by promoter, seating area, alcohol consumption and overall spending.

There’s also a site  that allows average partiers who want to feel super-important freeze the price of a VIP club table (at, say, $1,000 – a whole paycheck for many) on the off-chance that a Kardashian or a Miami Heat player will stroll in the door and bump up the table’s temporary value by thousands of dollars.

And even then that’s far beyond what your average Miamian can afford to drop on a night out. But what bothered me most is how the Fast Company article perpetuates Miami’s image as a shallow clubbing town.

Yes, the local club scene does pull in revenue for venues’ host municipalities, but how far can this go in a large county with the nation’s second-highest income inequality? And while Miami has produced some inspiring success stories in the tech realm - including online language school Open English, with offices in large South American economic centers such as São Paulo, Caracas and Bogotá; and CareCloud, an electronic medical record storage system whose CEO, Alberto Santalo, will be a speaker at FIU’s upcoming Americas Venture Capital Conference - there doesn’t seem to be the kind of critical mass in the city to build a true tech hub. Unfortunately, the nightclub scene’s fickle nature – hot today, passé tomorrow – and fairly narrow target audience are unlikely to bring a lot of large-scale, long-term investment to the area.

It’s so frustrating to know that Miami has not been able to capitalize on the many perks that make it a prime market for both existing and new consumer technology companies to grow. With a booming Hispanic population (America’s fastest-growing demographic population) and a reputation for serving as a link to the business hubs of Latin America, Miami should be booming with technology ideas and products that cater to the unique needs of a group that will represent approximately $1.5 trillion of purchasing power by 2015.

There is plenty of talent here in Miami as well: both major universities in the area (Florida International University and University of Miami) have burgeoning information technology, computer engineering and business programs, with graduates just waiting for the next hot opportunity to get their hands dirty in creating great technology products. Instead, these new technology and business professionals are faced with the idea that there is not enough of an opportunity for them in this city. They flock off to Silicon Valley and other American tech meccas, helping contribute to the brain drain that has impacted South Florida for years.

There are some hardy souls trying to get a robust scene goi­­ng here, including FIU and the organizers of tech event SuperConf. But they’ve got some serious obstacles to overcome if they want to help Miami become any sort of recognized tech center.

The most popular programs and apps appeal to as wide a cross-section of consumers as possible. While lavish partying may be a way of life for some Miamians, most simply can’t afford a place in that fantasy. The success of Open English shows that investing in companies that provide widely-inclusive services that are affordable and add genuine value to people’s lives can bring in remarkable returns.

Perhaps there’s still hope for this dysfunctional metropolis to grow a real tech scene.

Associated Press Takes a Closer Look at the Need for Microfinance in the US

About two weeks ago, I wrote a post about the pressing need for microfinance services – particularly microcredit, small loans for very small businesses – here at home in the US, not just in the developing world. In that post I featured OUR MicroLending, a Miami-based microcredit company that has disbursed over 1,050 small loans to over 600 South Florida micro-entrepreneurs, to the tune of around $6.2 million, who were turned away by the big banks after applying for loans. In our current credit crunch, the company is giving these hard-working merchants a way to restock, expand, hire and, by extension, stimulate their local neighborhood economies. OUR MicroLending is also working to expand its operations to the entire state of Florida and, eventually, the rest of the country. Because there is so much unfulfilled need for these types of services here, I was heartened to read an excellent Associated Press article, published last week, about the fine work microfinance organizations are doing in the United States. OUR MicroLending had a starring role in the story, which appeared in the Washington Post and at least 25 newspapers and websites, spreading the message of financial inclusion far and wide. My congratulations go to AP reporter Laura Wides-Muñoz for a great piece. Here’s hoping some struggling entrepreneurs who don’t know about microfinance read it and realize there is hope.

Business as Charity: The Ever-Evolving World of Social Impact

As someone who takes social-impact work very seriously, I’ve found the Stanford Social Innovation Review to be an invaluable window into the world of social and economic justice.

I recently came across an interesting SSIR blog post which touches on what I think is a very constructive development in the world of charity: business as charity.

In our current economic climate, where job creation is a keystone in every political campaign, Jim Koch, founder of the Boston Beer Company (they make Samuel Adams beer), decided that instead of giving money to charity he would become, essentially, a microlender. His new program, called Samuel Adams Brewing the American Dream, gives small loans to small food, beverage and hospitality businesses in South Boston.  It also provides free coaching and mentoring from members of Koch’s team. The point? Trying to create new jobs by supporting small business rather than non-profits.

This is an excellent idea. Even a small loan can determine whether a micro-entrepreneur’s business succeeds or fails; I’ve seen this firsthand in my own business.

At ThinkInk we recently launched a PR and thought leadership campaign for a Miami-based microfinance company, OUR Microlending. To date, the company has disbursed about $6.2 million in loans to over 600 small businesses across South Florida, including a Colombian souvenir store, a printing and vinyl signage shop, a cell phone accessories wholesaler and a nutritional consulting and supplement store. These are hardworking entrepreneurs whose loan applications were rejected by the big banks. Because of OUR Microlending’s services – which are sorely needed all over the United States, not just in the developing world – these self-starters have been able to grow their businesses and create jobs to help stimulate their neighborhood economies.

Of course, this is not to say that I don’t think we should support nonprofits. In fact, we are in the process of restructuring The ThinkTank, a division of ThinkInk that is devoted to helping nonprofits grow their organizations through visibility and intelligent PR. We’re recreating the company into a for-profit/nonprofit hybrid that would allow us to significantly expand to this unit to help more nonprofits throughout South Florida.

In his SSIR post, author Aaron Hurst, founder of the Taproot Foundation and a well-known leader in the world of non-profits and social-impact, asks: is business the new charity?

I’d have to say no. Charitable giving is still crucial to nonprofits’ ability to fulfill their missions. However, considering how difficult it is today for the owners of very small businesses to access traditional banking services, I hope to see many more programs like this spring up to help create much-needed jobs and re-energize our still-shaky economy.

Start-Up Capital Democratized: Long Live Crowdfunding!

Back in 1997, the British prog-rock band Marillion was having trouble scraping up the cash to embark on a tour of North America.

This news quickly spread among the group’s devoted fans, who rallied – without the band’s knowledge – and managed to raise $60,000 to help finance the tour. Four years later, Marillion’s hardcore fans, known as “Anoraks,” financed the band’s 2001 record Anoraknophobia by pre-buying copies of an album not yet made.

Just over 10 years after the release of Anoraknophobia, this type of phenomenon now has a name: crowdfunding.  Crowdfunding is getting a lot of media and business attention and there are sites springing up weekly where people can finance start-ups, artists, community projects and charities. What’s unusual about crowdfunding though, is that until now it has only been legal if the funders had no expectation of financial gain. They could receive some sort of benefit-in-kind like an album for example, but it wasn’t considered a bona fide investment – until recently.

Thanks to our slow-jamming President who signed the JOBS Act (Jumpstart Our Business Start-ups in early April 2012), the Securities and Exchange Commission (SEC) is introducing rules that will allow almost anyone to invest in new companies – up to a total of $1 million per year – and receive equity in return, as long as the middleman rounding up the cash is SEC-registered.

The new rules should be in place by the beginning of 2013. This is great news, considering that in our down economy, it’s already difficult enough for start-ups to raise the capital needed for a proper business launch.

So hooray for crowdfunding! This is exactly what those entrepreneurs without access to traditional finance or VC funding need.

The legislators in Washington and suits on Wall Street tell us that the Great Recession is over. But considering the miserable jobs report we got last month, it’s clear that for too many Americans the financial pain endures without respite. Enormous numbers of our young people are graduating from college only to find that the job market simply doesn’t have a place for them.

So, what are many of them doing? They are starting their own businesses, of course. And already, corporations such as Fundable are gearing up to inaugurate investment vehicles wherein anyone with a little cash to spare can help a start-up get a foothold – in exchange for a stake, regardless of its size, in the company.

Let’s hope this democratization of start-up capital fulfills its promise as a fresh new way to support America’s next wave of forward-thinking entrepreneurs.  I’m all for that.

Start Up! Nurturing the Next Generation of Entrepreneurs

Hiring is going down, unemployment is going up and the country's leaders inside the Beltway aren’t doing enough to address the seemingly endless problems – plunging budgets, rising class sizes, teaching “to the test” – afflicting public schools.

Combine these factors with high dropout rates, soaring college costs and lack of job openings for new grads and you have a bleak picture of our young people’s future prospects. What's being done to boost our youth's competitiveness in an increasingly globalized job market? There is no sugar-coating this: American youth trail those of most other developed countries in math, science and reading.

But that doesn’t mean it isn’t possible to ignite that "can-do" spark in even the most apathetic or disadvantaged children. Growing numbers of jobless young Americans have decided to create jobs out of desperation – by starting their own businesses. And here’s something even more inspiring: a lot of these young entrepreneurs are launching businesses that also incorporate social-impact programs addressing issues such as worldwide food preservation, the lack of clean water in the developing world and unemployment itself. Go them!

I happen to know firsthand about the power of entrepreneurship, and not just because I've started a number of businesses. For several years, the nonprofit division of my PR agency, The ThinkTank, worked with a wonderful non-profit organization called NFTE (Network for Teaching Entrepreneurship). NFTE is dedicated to showing at-risk youth and those from low-income communities the world of opportunity that can open up if they embrace the challenge of starting businesses. How rewarding to see the look of pride on the face of an eighth-grade girl from Little Havana as she pitches her business plan for an apparel company. NFTE’s success has been amazing to see: the group started with just a few schools in the South Bronx and today it’s giving start-up classes to kids all over the world. How Nifty!

Kids all over the country are coming up with clever ways to make money. Like 15-year-old Californian Jason Li, who founded iReTron, a company that pays consumers for their old electronics, refurbishes them and resells them, keeping them out of landfills. He’s just one example of the great things a kid with business know-how can accomplish.

I’m convinced, like the author of a recent TIME Magazine article, that it is absolutely crucial that more youth learn the skills to start 21^st-Century businesses. They need to know how to use today’s powerful online tools, social media and mobile technology, not just to create jobs for themselves and others, but to serve as examples for other youth and spread that go-get-it spirit around the country’s wider student population, showing lackadaisical peers just how school is, indeed, relevant to their lives. Furthermore, the country’s economy isn’t only shaky, it’s also changing. Manufacturing, the booming engine which propelled mid-20^th Century middle-class prosperity in America, is a shadow of its former self. We need young entrepreneurs to drive innovation and growth in new industries – tech and green, for example – to fuel a country that can hold its own against the world’s emerging big powers.

Widespread business education programs in our schools could do wonders for the youth who will be running this country in the next 20 years and beyond. Let’s hope that as a nation we can somehow overcome our vast differences – difficult, I know – to make it happen. Our children’s future (and their children’s) will be all the brighter for it.

The Gift That Keeps on Giving: To Yourself

Leave it to marketing professionals to come up with this one. Buying yourself that little “I’ve earned it” pick-me-up has a new name: self-gifting.

Just in time for the peak of holiday season giving and receiving, evidence suggests that 60 percent of all shoppers will add themselves to their holiday lists, spending an average of $130, a 16 percent increase from last year. In the short term, many are quick to call this yet another strong indication that the still-weak US and global economy is taking its vitamins and getting stronger all the time. Deep discounts and the relaxing of recession-era belt tightening seems to have left customers in the buying mood.

But is it me, or does anyone else see a bit of a problem with this “I, Me, Mine” relapse? I remember reading somewhere that Americans’ gluttonous consumerism and anemic savings rate was supposedly at the root of our current economic troubles?

Ellen Davis, Vice President of the National Retail Federation, who was quoted in an Advertising Age post that addressed the phenomenon, rightly points out the pragmatic downside to such an aggressive self-indulgent holiday marketing campaign. If the holiday season becomes overly connected with adding oneself to their annual guest list, as people patiently wait for the end-of-year price slashing, how will retailers attract business during the other 10 months of the calendar, she asks?

Davis’ concerns, however, aren’t even number one on my list, shopping or otherwise.

The bigger question is this: what happens when the over-terming of trends and excessive labeling, waters down the meaning behind such actions? There’s absolutely nothing wrong with an occasional spur-of-the-moment purchase. Such actions send your brain’s pleasure center into the stratosphere, washed over with the neurotransmitter dopamine. And like that coveted end-of-day piece of chocolate, provides your body with warm and fuzzy feel good feelings. But when impulse buys are turned into a self-promoting season of “You’ve Earned It” and “Gift Yourself” tag lines, as is being done by J. Crew, hasn’t the meaning behind the purchases been lost?

Instead, what once felt good has morphed into another transparent attempt to get consumers to open their wallets?

As a public relations professional, and one who is keenly aware of properly calibrating messages for clients, marketers this holiday season would be wise to consider the pitfalls of overly promoting the self-gifting fad. Otherwise self-gifts could rapidly become self-returns.

What Is The New Normal?

Reading an article in the New York Times last week called “But Will It Make You Happy?” struck me as sad, when it should have been uplifting (I think).

Cocooning is nothing new and a return to basics isn’t either. I lived through those phrases during the last recession and look how that turned out. But good on Wal-Mart for finding a way to capitalize on Americans’ desire to stay at home and spend more time with the family. Cha-ching. It seems no matter what the economic climate, most Americans will continue to find fulfillment via way of external sources, i.e., shopping, shopping and shopping. While it’s admirable that people like Tammy Strobel and Logan Smith can downgrade their living needs to just a couple of plates, a cup and a pair of shoes, that is hardly doable for the majority of American families. Besides, where is the balance in that?

And while it’s great to read that “current research suggests, unlike consumption of material goods, spending on leisure and services typically strengthens social bonds, which in turn helps amplify happiness,” will the focus on creating experiences versus the accumulation of material goods continue once the good times roll round again? I am undecided.

Which brings me to the V-shaped economic rebound.

Forbes analysts Brian Wesbury and Robert Stein recently launched a new column. Their prediction, which was released in advance of the official GDP stats last month (read here), told us that we are well on our way to a robust recovery, a V-shaped economic rebound. Their diagnosis included two generally held predictions: that we are bound to slip into another recession, or Depression Part 2, or that the economy is recalibrating to a ‘New Normal’ marked by anemic growth and persistently high unemployment. The latter sounds more like it.

Given that the vast majority of economists and analysts were caught unawares by the global financial meltdown and the severity of the recession that followed, the temptation to avoid the appearance of Pollyannaism at all costs is great. It is hard to argue with the unemployment numbers, which have shown precious little signs of improvement. And it is hard for me to conceive of a robust recovery without a substantial uptick in the number of Americans gaining full-time employment.

I’m no economist, but I think I am seeing more of the New Normal out there than anything else right now.

And then I have to ask myself, what exactly is the New Normal anyway?

The Dropout Economy, Innovation and More…

Two great reads today, one in today’s NYT courtesy of Thomas Friedman called “Just Doing It” and another, The Dropout Economy from the March 22nd issue of TIME.

What’s so special about these two articles? They both talk about the new, next wave of innovation in the United States. Born out of necessity, frustration, need and, well, pursuit of the dream that anything is possible – the American way, right?

From all walks of life and backgrounds, we are being forced to look at new models, invent new ways and eek out a living for ourselves. Unemployment be damned!

The past two years have been awful, to be sure, but they’ve given birth (or rebirth I should say) to a dynamic innovation culture that had fallen off the bandwagon.

Not innovating yet? Get out there and start doing it!