"When it rains, you get wet." I use that expression with my sons if they complain about the weather turning bad. I found myself using the same words a few days ago while talking to an executive at a major Wall Street company. Aggressive bets on mortgage securities had forced the firm, like nearly all of its brethren, to write down billions of dollars. The executive was lamenting that her firm had quickly turned risk-averse, stung by its losses. It had ever-so-eagerly embraced bundled mortgages when they were throwing off huge profits. No one complained — or even seemed to worry — about the risky ways they were being traded until the practice began raining red ink instead of money.
I don't know what I would do if I were running a major Wall Street firm right now. I'd like to think I'd make prudent investments at both ends of the cycle, but the pain of loss is so much more intense than the thrill of victory that it can distort your judgment.
So it's helpful to remember that many of today's most successful businesses were born in the cauldron of difficult times. The seeds of Web 2.0 grew from the ashes of the dotcom meltdown. The equity boom of the 1980s and 1990s grew out of the crushing bear market and stagflation of the 1970s. The cash-gushing oil-and-gas industries owe much of their fiscal discipline to the painful doldrums of the cheap-energy era, just a few years in our rearview mirror.
Where is opportunity lurking today? There's no one formula, but at Fast Company, we believe breakthrough ideas — and the people behind them — offer the clearest clues. Our cover story this month, on fast-rising tech newcomer Ning (Ning's Infinite Ambition), is as much about the idea of frictionless "viral loop" marketing (and the vision of cofounders Marc Andreessen and Gina Bianchini) as it is about the specifics of the company. Writer David Kushner's spotlight on what he calls Hollywood's Geek Elite (see Rebel Alliance) illuminates not only the individuals behind successful shows such as Lost and Heroes but also the insights that allow them to exploit social media and other interactive touch points for fans. The biggest new idea in the issue is Ruben Toral's assertion in Medical Leave that the solution to rising U.S. health-care costs is systematically outsourcing treatment to foreign locales like Bangkok. Unknown to most of us, major insurers including UnitedHealth and Aetna and employers as mainstream as the city of Myrtle Beach, South Carolina, are already implementing the idea.
We're eager for your insights into where the welcome rain may fall next — and whose ideas and businesses are worth following. You can reach me on FastCompany.com.
A version of this article appeared in the May 2008 issue of Fast Company magazine.