Predictions are great, except…

November 02, 2021

Most of us have learned that predicting the future is difficult.

When I graduated from college in the 1980s, I swore I’d never work in the business world. A mere decade later, I graduated from Harvard Business School. So much for my personal prediction powers. 

So, it’s with trepidation that I share with you some predictions about what will trigger the next recession.

I’ll begin with new research from two economists – research I’m skeptical of.

They conduct an interesting analysis that shows a drop in consumer confidence correlates with the onset of a significant increase of unemployment 12 to 18 months later. We all know that correlation is *not* causation, but their paper is worth scanning, especially because recent drops in consumer confidence mean they are now predicting a downturn in 12 to 18 months.

I think we’ll find they are wrong, mostly because it’s very hard to get the timing right in predicting future recessions.

Timing aside, I have a track record of “predicting” recessions, though I use the term *predict* very loosely. 

What I mean by that is that I have been accurate in predicting the *trigger* for the next recession, but *not* the timing.

In the fall of 1999, I co-authored a report that said the dotcom craziness could not continue – that ecommerce conversion rates were dropping even as VCs poured more money in – and that a downturn was coming. We got a lot of media attention and, of course, six months later the dotcom crash began. 

Again, I believe you can’t know *when* a downturn is coming, but you can form an intelligent hypothesis about *what* will trigger it and thereby make appropriate preparations.

In 2004, I started analyzing the housing market and giving keynote speeches about the coming mortgage crisis. Again, I did not  know *when*, but I knew something was coming and shared that in my talks at, private companies, and with the CG community. 

To prepare for whatever was coming, I suggested companies invest even more in the customer experience and software product quality.  I also suggested that individuals be careful about their real estate purchases and certainly avoid interest-only mortgages (btw, my extended family sadly did not listen 😉

It took four long years to prove my clouded crystal ball right.

I’ll also note that the depth of the Great Financial Crisis caught me by surprise. I had no idea that the mortgage crisis would nearly throw us into a Depression. 

I can only claim that my hypothesis about *where* the downturn would come from was accurate. 

Since 2008, I’ve wondered about the source of the next recession.

For years, I’ve had no idea.

Now I do.

I now believe that the private capital markets will be the source of our next downturn.

Here are several of the factors I’m tracking:

  • Too much debt
    Private equity is layering too much debt on companies thereby weakening them significantly. If interest rates increase or economic activity slows down even a bit, then many of these companies may go bankrupt and layoff people. (To get a sense of the “debtfest” check this out: PE firms have sold a record amount of bonds just to do so-called “dividend recaps.” A dividend recap is a debt issue where the proceeds  are used to pay a dividend to the PE firm. In other words, the cash is *not* used to help the company invest in growth, but simply to give the PE owners cash. This is not necessarily a problem. The problem is that it’s happening in record amounts).
  • Overall size of private markets
    The total overall size of the market is gargantuan (more money has been raised in the private markets than in the public markets in the last few years).
  • The *opacity* of these markets
    The fact that we don’t know what’s going on tells me there’s likely a lot of fraud and mismanagement happening (note: these are *private* markets and, as such, we have almost no information about what is really happening including the real track records of these PE firms).

Turns out a book just published by Columbia Business School confirms some of my hypotheses.

The Myth of Private Equity, by PE veteran Jeffrey Hooke, provides data to back up my concerns. It’s worth a quick read.

As I learn more and gain more confidence (or not) in my hypothesis about the private capital markets and the next recession, I’ll update you.

Until then, remember this: predictions are difficult, especially about the future.


Fall Keynotes

  • The Hows and Whys of Hybrid Work – Thu, Nov 11 @4pm ET
    Jaime Teevan, Chief Scientist for Microsoft’s Experiences and Devices
    with moderator Ron Pessner, Vice President of Product Microsoft Office

    To registerClick here to email Britany Chism (register your teams to join too!)

    Jaime Teevan, Chief Scientist for Microsoft’s Experiences and Devices, is charged with creating the future of productivity at Microsoft and for its customers. As part of that effort, she helps lead the New Future of Work: the largest research initiative in Microsoft’s history with hundreds of researchers from across Microsoft, LinkedIn, and GitHub. Their task is simple (and very hard): make this new future of work – in office, remote, and especially hybrid – possible and productive. Jaime Teevan, and moderator Ron Pessner, will provide an overview of what Microsoft has learned and will offer tips for effective and inclusive hybrid work.
    Jaime Teevan is Chief Scientist for Microsoft’s Experiences and Devices, where she is responsible for driving research-backed innovation in the company’s core products. Previously she was the Technical Advisor to Microsoft CEO Satya Nadella and a Principal Researcher at Microsoft Research, where she led the Productivity team. Dr. Teevan uses AI to help people accomplish their goals, developing the first personalized search algorithm used by Bing and introducing microproductivity into Office. Her groundbreaking research has earned her numerous awards, including the Technology Review TR35 Young Innovator and Karen Spärck Jones awards. She holds a Ph.D. from MIT and a B.S. from Yale, and is an affiliate professor at the University of Washington.
    Ron Pessner, a longtime CG Councils member, is in charge of collaboration across the Microsoft 365 collaboration suite (th that span across Word, Excel, PPT, etc). He has spent 18 years at Microsoft and has done a number of things including GM for Games for Windows, senior role at Xbox, led Windows 10 for Window Phone, and multiple roles in the Office organization. Prior to Microsoft he worked with a number of startups in the early days of the web and mobile internet. 

First Two Fall Keynotes 

  • Heartwood: The Art of Living With the End in Mind
    Barbara Becker, Author

    To access recording (Council members only)Click here to email Britany Chism
     For our second Fall Meeting keynote, Barbara Becker, author of Heartwood invites us into a conversation about the art of living.Members of our Councils are facing difficult life moments now, as they have in the past and as we each will in the future. With this talk we help to further deepen the trust and safe space needed for members to be vulnerable, to find support and connection, and, of course, to ask for help throughout the meetings and beyond.We also hope to reveal, for your own reflection, the individuals and events in your life that shaped who you have become as a person. In work, and in our daily lives, we aren’t often granted the opportunity to name and to process the people we love, the challenges we face, and the difficulties that become part of us – that become our own Heartwood.Bio: 
    Barbara Becker is an ordained interfaith minister and has sat with hundreds of people at the end of their lives. Barbara speaks on a wide range of topics, including deepening our sense of meaning and spirituality and mid-career pivots.  She has dedicated more than twenty-five years to partnering with human-rights advocates around the world in pursuit of peace and interreligious understanding. She has worked with the United Nations, Human Rights First, the Ms. Foundation for Women, the Grameen Bank of Bangladesh, and teaches at Columbia University.
  • The What & Why of Continuous Discovery
    Teresa Torres, Author, Speaker, and Product Discovery Coach

    Most product teams are starting to adopt discovery best practices (e.g. interviewing customers, usability testing, experimenting). However, many of us are still stuck in a project world. We do research to kick off a project, we usability test right before we hand off to engineers, and our primary means for experimenting is a/b testing. These methods are better than nothing, but the best product teams are shifting from a project mindset to a continuous mindset. In this talk, we’ll explore the key differences between project-based discovery and continuous discovery and give your team a clear benchmark to aspire to.

    Bio: Teresa Torres is an internationally acclaimed author, speaker, coach, and longtime friend of the Councils (she was a moderator of one of our Product Councils at one point). She’s coached hundreds of teams at companies of all sizes, from early-stage start-ups to global enterprises, in a variety of industries and has taught more than 7,000 through her Product Talk Academy. She’s the author of the recently published book, Continuous Discovery Habits, and blogs at\

Previous 2021 Talks

  • Clubhouse and the Audio Revolution (not recorded)
    Jonathan Ehrlich, Partner, Foundation Capital
     Two things to know about Jonathan Ehrlich:
    1) he co-led the seed round in Clubhouse and was thus the first venture capitalist to spot its potential;
    2) he’s a Councils alum with an interesting career arc.We held an informal conversation with Jonathan about Clubhouse, the future of audio, and Jonathan’s career journey from a mostly offline retailer in Canada to relocating to Silicon Valley and reinventing himself.

    Jonathan Ehrlich is a Partner at Foundation Capital who invests in early early-stage consumer, marketplace, commerce, and SaaS startups and technologies. He joined Foundation Capital in 2013 as a partner after spending nine months with the firm as an entrepreneur-in-residence. Before joining Foundation Capital, Jonathan spent 17 years as an operator during which he founded three companies, built a $100M+ revenue business, and ran marketing for Facebook. He is the first institutional investor in Clubhouse and currently sits on the board of Bulletin and Chord. His Foundation and personal investments include Shelf Engine, Mainstreet, Truepill, Hooked, WayUp, League, Front, and Flexport. When not working, he can be found on his bike or chasing his four kids around.
  • JTBD in Large Distributed Environments
    Jay Haynes, Founder & CEO,

    Jobs To Be Done has proven to be an effective methodology for building much better holistic end-to-end products and customer experiences.

    *But* CG Council member companies with large distributed environments are finding it difficult to apply JTBD in effective ways.

    Jay Haynes, CEO of thrv, and a global expert on JTBD will come and speak to the Councils community on this specific challenge of using the methodology in large, complex technology environments.
  • Groundwork: Get Better at Making Better Products
    Vidya Dinamani and Heather Samarin, co-Authors of Groundwork

    Product leaders are all too familiar with the one to two-year period it typically takes to train and coach PMs. Product leaders hire smart people and then work with them individually, guiding them through how to think about product management, and watching them develop. Vidya Dinamani and Heather Samarin wanted a much faster way to help cultivate efficient and effective product managers that consistently create products that delight customers, regardless of the industry, the environment, and the development methodology that the team employed. They took years of experience as product executives and working with hundreds of teams as product coaches to create a framework to Get Better at Making Better Products.

    The design philosophy and methodology behind Groundwork was created to help product leaders be confident that their teams were committed to solving the right customer problems, minimizing costly rework by using individualized needs, and leveraging actionable personas in big and small product decisions. Vidya and Heather want Groundwork to help product teams have a much higher chance of success in the market—and help every product manager shine.

    Join Vidya and Heather as they share the background, principles, and methodology behind the Groundwork to help you, and your team, get better at making better products. 
  • Making the Case for Empowering Your People
    Marty Cagan, Partner, Silicon Valley Product Group
    Talk Type: Product, Leadership Development, Culture
    Audience/Roles: All Roles

    From Marty: “I have long been interested in the difference between how the best companies work, and the rest. Working with both types of organizations for so many years, there are many differences ranging from culture to process to staffing to roles to techniques. But at its core, strong product companies empower their people, and most of the rest do not. My focus over the past few years has been tackling this issue head-on, which means the product leadership. In this talk, we’ll discuss why this model consistently yields better results, and what’s necessary to transform to work like the best.”

    Marty’s Bio: Marty Cagan is the founding partner of the Silicon Valley Product Group, which he created to pursue his interests in helping others create successful products through his writing, speaking, advising and coaching. Before starting SVPG, Marty served as an executive responsible for defining and building products for some of the most successful companies in the world, including Hewlett-Packard, Netscape Communications, and eBay.As part of his work with SVPG, Marty advises tech companies of all sizes and stages, stretching far beyond Silicon Valley. Marty is the author of the industry-leading book for product teams, INSPIRED: How To Create Tech Products Customers Love, and the upcoming book EMPOWERED: Ordinary People, Extraordinary Products. Marty is an invited speaker at major conferences and top companies across the globe.
  • See talks from the last month and beyond here.​

About the Author

Phyl Terry

Phyl Terry, Founder and CEO of Collaborative Gain, Inc., launched the company’s flagship leadership program – The Councils – in 2002 with a fellow group of Internet pioneers from Amazon, Google, and others. Thousands of leaders from the Internet world have come together in the last 15 years to learn the art of asking for help and to support each other to build better, more customer-centric products, services, and companies.

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