While I often say ‘to the optimists go the spoils’, a lot of things have been bothering me as this stock market bounce/rally has continued on this month.

Yesterday, Google cut its marketing budget by 50 percent for the second half of 2020.

Of course everyone is making cuts but Google has better data than anyone and these cuts seem rather dramatic. Over the summer we will know more, but the rest of 2020 is starting to feel rather gloomy.

I really liked this post from John Luttig titled ‘When Tailwinds Vanish – The Internet In The 2020’s‘. The gist:

The vast majority of the country spends 6+ hours per day online, frequents social media, uses a smartphone, and shops online. This usage will undoubtedly continue to grow: e-commerce will continue taking over physical retail, and SaaS spend will continue replacing manual business processes.

But people can’t spend more than 100% of their time or money on the Internet. As we approach full online penetration, new companies will need to steal revenue and users from Internet incumbents to grow.

Like any mature industry, Silicon Valley must battle to maintain growth in the face of immense economic gravity. For the first time in Internet history, startup growth will require a push from the company and not a pull from the market. Unlike the organic pull that drove many of the dotcom-era successes, today’s Internet startups need to fight for growth by investing more heavily into sales, marketing, and operations.

Tapering tailwinds mean that incremental spend will slow. This empowers Internet incumbents to capture the remaining incremental spend with their existing product and go-to-market organizations, leaving Internet startups with fewer shots on goal to capture spend.

With respect to the technical side of the markets, things can change quickly, but my favorite follows are rather bearish on stocks for the moment.

On the long-term positive side…there is a record number of cash on the sidelines and a ‘Pandemic Wall of Worry’ for the markets to climb in years ahead.