Case Blog

Last week Michigan Senator Carl Levin, Chairman of the Senate Subcommittee on Permanent Investigations, brought Goldman Sachs’ (GS) Chairman and CEO Lloyd Blankfein and a number of his colleagues to Washington, D.C. to hold a hearing on the fabled Abacus derivative deal. The cast from the Goldman side included Fabrice Tourre — Tourre is also known as “Fabulous Fab” in the press — who structured the transaction with input from John Paulson. (Paulson is no relation to Hank Paulson, the former Treasury Secretary in the Bush administration and Blankfein’s predecessor at Goldman Sachs. John Paulson is the founder of the hedge fund Paulson & Co.) The 11 hours of hearings provided countless news clips on broadcast newscasts and across numerous websites, along with cute headlines for the tabloid press. In the end it amounted to political theatre, with the Goldman Sachs team, led by Blankfein, vigorously defending their transactions. While many of us may prefer the old image of the sage investment banker providing advice and counsel to their clients, it is clear that the current leadership team at Goldman Sachs is led by former traders that view deals that have counter-parties as the normal course of business.

In the end I find myself joining with former President Bill Clinton and the Sage of Omaha, Warren Buffett, chairman and CEO of Berkshire Hathaway (BRKA). Speaking at a conference on April 28th, Bill Clinton raised the question: did the Abacus transaction  break any law? Clinton did this in the context of the current civil suit against Goldman Sachs and the possibility that had been raised of criminal charges. (CNN: April 28, 2010) Buffett came to the staunch defense of both Goldman Sachs and Lloyd Blankfein at Berkshire Hathaway’s annual shareholders event in Omaha, Nebraska over the weekend. While the press and hearings have provided political theatre, it has not gotten us any closer to a solution on how to avoid another subprime mortgage debacle in the future.

The primary focus of this blog has always been to offer my perspective on specific deals and the overall deal climate in the B2B space. However, the events of the past year required most of my commentary to focus on the terrible economic climate we found ourselves in, with very few significant deals taking place. Yesterday, before the market opened, Pearson (PSON.LN) announced that they were selling their stake in Interactive Data Corporation (IDC) to two private equity firms. Pearson had stated in mid-January that they were exploring strategic options for IDC, a financial market data provider in which they hold a controlling interest of 61 percent.  Silver Lake & Warburg Pincus will be paying $33.86 per share, which represents a 33% premium over IDC’s January 14 share price, which is the day before they announced their strategic review. (WSJ: May 4, 2010)  When a financial services firm is once again in demand, it’s clear that the deal climate has improved dramatically.

Another such deal is Salesforce.com’s (CRM) announcement on April 21st of a definitive agreement to acquire Jigsaw Data, the cloud-based data services company in Silicon Valley. Jigsaw was backed by El Dorado Ventures, Norwest Ventures and Austin Ventures. I am pleased to note that I had the privilege of serving on the Jigsaw Board over the past 3 years and working closely with the other board members and Jim Fowler, the founder of Jigsaw. Together with Jigsaw senior vice president and COO Kevin Akeroyd, Jim built a compelling crowd-sourced data company that grew significantly right through the Great Recession and exceeded every growth metric the board established. I cannot think of a better outcome than Jigsaw joining Salesforce.com. This acquisition was exceptional for all involved and I applaud the entrepreneurship displayed by the Jigsaw team.

Mary Claire and I are off to London next week and I trust that I will have some special insights to share with you on tomorrow’s U.K. election upon my return.

This article was originally written for BtoB Media Business at BtoBonline.com.

We have been in the middle of the perfect storm since last September. Beginning with the demise of Lehman Brothers through February of this year, all of the markets were in free fall. The only other period that I can compare this to is after 9/11 in the fourth quarter of 2001, when the economies of the world ground to a halt and Herculean efforts were required to jump-start the world stock exchanges. While the wheels of commerce ground to a halt during both of these periods, this recession has been much deeper and cut a wider path of destruction.

After the collapse of Bear Stearns and the demise of Lehman Brothers, all eyes turned to Merrill Lynch. As we have recently learned, Treasury Secretary Paulson and Fed Chairman Bernanke were not taking anything for granted, and Ken Lewis, CEO of Bank of America, could not walk away from the Merrill Lynch deal even after he learned the extent of their losses in December.

While the bailout of the financial industry was getting underway, all attention then turned to the automotive industry. Could anyone have predicted that the American automotive industry would be brought to its knees, or that two of the Big Three, Chrysler and General Motors, would end up in bankruptcy and need to be bailed out by the United States Treasury?

We were not looking at run-of-the-mill businesses, but rather American icons that once were the envy of competitors around the world. The events of the past year will have a lasting impact on how we conduct business and will shape our information industry for years to come.

What will the markets we serve look like in 2010 and 2011? I sense that we will initially emerge as a smaller and more focused industry. Many of the venerable B2B names will not survive intact. Some of these have been part of the industry since the beginning of the 20th century, but they have not evolved and have lost focus with unwieldy portfolios, serving too many markets. Others that were acquired when money was cheap are now overleveraged and will need to go through a deleveraging process. In many cases their new owners will be their former lenders.

As the recovery accelerates in 2010 and beyond, the debate will intensify over branding vs. lead generation. Over the past several years we have become expert at developing lead-generation programs that meet our clients’ needs. Lead generation will remain a high priority for B2B marketers and will continue to fuel the growth of all vertical sectors. We will continue to refine how to package and deliver those leads in a format that works best for our clients. The best marketers will restore the equilibrium between branding and lead generation. The difference now, though, compared to how we emerged from the 2001 recession, will be that the majority of branding dollars will be spent online. Print will be continue to be a part of that mix, but it will represent a smaller and smaller percentage of the overall marketing budget as we accelerate into the digital world. In addition, live and web-based events, together with rich data and analytics products, will command a larger share of marketing services budgets. Companies that have not invested in content management systems (CMSes) or had their editors tagging content for easy repurposing will not survive as strong competitors. There will also be less competition from our old competitors, many of whom have made deep cuts to stay afloat. However, nimble all-digital competitors will emerge very strong during this period. Many of these companies still reside in the portfolios of venture capital companies, where they have been nurtured during the downturn and are now positioned to grow quickly during the recovery. There is another Google waiting to emerge, as they did during the last recovery, demonstrating that the marketing and advertising spend has not disappeared, but that technology has provided more efficient solutions that will meet market demand.

I would love to hear from you which venture capital backed companies you believe will become the new market leaders in our industry. You can reach me at: jcasella@assetinternational.com.

As we emerge from the long winter recession, once more the debate is underway about whether marketers should spend any of their budget on branding or focus entirely on lead generation. I, for one, believe that this is not an either/or decision. The best marketers, those who have created growth during this downturn, continue to rely on a marketing mix that includes both.  Amazon (AMZN) has seen dramatic growth since they introduced their Prime membership program, which included free shipping. There were many skeptics, but this innovative approach fueled their recent growth at the expense of their major competitors, Borders (BGP) and Barnes & Noble (BKS).  In the case of Amazon, they also regularly communicate by email with their large, established customer base. They also gained market share in the consumer electronics category when Circuit City committed so many missteps that they found themselves forced to declare bankruptcy and close their doors.  Once again Amazon has innovated with the Kindle 2 and has been rewarded.  Mary Claire and I each have one and love the flexibility they provide when we travel.

Apple (APPL) is another example of a company that has continued to successfully invest in branding. Apple has one of the strongest consumer brands, one that stands for innovation and style. They have taken this strong brand and turned the smartphone market on its head. Apple and AT&T (ATT), their distribution partner in the U.S., both reported strong earnings last week because of the iPhone, which continues to eclipse all of its competitors.

As B2B marketers, we need to offer our clients opportunities for both brand building and measurable lead generation opportunities. We must do this across multiple platforms, both online and offline, through opportunities like live events. I hear more and more clients asking for “thought leadership opportunities” tied to whitepapers and conferences. Those among us that are most responsive to the unique marketing needs of our client base will emerge from the downturn stronger and with increased market share. Stephen Moylan, who joined us at Asset International a short time ago as Executive Vice President of Sales & Marketing, is one of the best marketers I have had the pleasure of working with over the years. He listens to customer and client needs and is then able to respond with creative programs tailored to help them meet their specific goals. In many ways, in this weekend of the NFL draft, Stephen is my go-to guy, the person I can depend upon to make certain that our customer base is receiving the attention and creative programs they deserve.

On Saturday, the first day of the NFL draft, we drove up to Hafner Vineyard, www.hafnervineyard.com, just north of Healdsburg in Sonoma County. The Hafner family has an annual luncheon for their best customers to show their appreciation. They have 120+ people to their home, which has magnificent views out over the valley and their 1,000+ acres. They have never used the retail channel, because they found it too impersonal. They only sell to a small select group of restaurants and individuals by direct marketing. Their client base is very loyal (we have been customers since 1992, when we moved to the Bay Area) and is appreciative of the number of ways that the Hafner family has found to say thank you.  A long time ago I attended a lecture by Peter Drucker and came away with one memory, which I will paraphrase: the primary objective of a business is to create a customer. As we work our way out of this deep recession, we would all do well to celebrate and recognize the unique contributions of our customers.

This past Monday morning as I was preparing for my evening flight to London and reflecting on the exciting Super Bowl win by the Steelers on Sunday evening, I received an email notifying me that my Virgin Atlantic flight from JFK to London had been cancelled because of snow. London had just been hit by its worst snowstorm since the early ’90s.  I turned on CNN and after a short time I heard London’s mayor, Boris Johnson, explain why snow plows were not justified when you did a cost-benefit analysis. Once every twenty years, you shut down for a day or two. The city ground to a halt. My trip was delayed for a day and London came back to life by the time I arrived on Wednesday morning.

I decided that I needed to read a football book on the flight over that reflected in some ways the tradition that the Steelers and the Rooneys have built.  I chose “WAR As They Knew It: Woody Hayes, Bo Schembechler, and America in a Time of Unrest” by Michael Rosenberg, which I had purchased as a Christmas gift on Amazon but realized that my list did not have anyone on it for whom it seemed appropriate. It went on to the bookshelf, while I waited for a long, round-trip flight.

The “ten year war” between Ohio State and “that school up north” began when Woody’s former protégé and former assistant, Bo Schembechler, became the head coach at Michigan. In their first meeting in November of ‘69, a game I still remember, the Buckeyes went into Ann Arbor with a 22-game winning streak on the line and lost to the Wolverines, 24-12. In ‘73 both teams entered that year’s match-up undefeated with a trip to the Rose Bowl in the balance. (In those days, only one school from the Big Ten could represent the conference in a bowl game and that bowl game was the Rose Bowl.) They fought to a 10-10 tie. The 10 athletic directors from the Big Ten voted and Ohio State was selected to go to the Rose Bowl.  This decision did not sit well with Michigan fans. After 10 years of war, Bo’s record vs. Woody was 5-4-1.

As we were landing back at JFK on Friday evening and I finished the book, I thought back to the IDG vs. Ziff-Davis battles in the ’90s, which I wrote about in Rivals this past June, and decided that Asset International is going to need a strong competitor to keep us focused as we look to grow the business on a global basis. We are having a sales meeting in several weeks and this clearly will be one of the breakout topics!

London is where we publish Global Custodian. Charlie Ruffel launched this brand 20 years ago in New York. As Asset International grew and he launched events and other publications, including Plan Sponsor, the leading resource for pension and retirement issues, Charlie turned to a former classmate from Cambridge, Dominic Hobson, to take over the editorial responsibilities for Global Custodian. Under Dominic’s leadership it has continued to distinguish itself as the leading information source covering the international securities services business. It has become the relied upon source for investment professionals around the world. And its annual surveys have established benchmarks for the entire industry.  This coming June we will celebrate this 20th anniversary milestone with the industry in London , and toast GC, Charlie and Dominic.

Before I end this column, there’s one more competition heating up I want bring to your attention. Just when I thought there might not be many deals to write about in the first quarter, along comes a potential battle between Mel Karmazin’s Sirius XM radio and the tenacious Charlie Ergen, who controls EchoStar.  Karmazin has been battle tested and scarred from losing his war with Sumner Redstone over the leadership of Viacom, but Sirius XM has significant debt that is maturing shortly. In an interesting strategy that may well reflect the times, Ergen has been buying up a substantial part of the bonds that are coming due.  In spite of the low level of new car sales (this is where most satellite radio subscriptions are sold) and the negative impact on subscriber growth, with the merger completed and costs being cut, this 19 million strong subscriber-based business is going to be attractive to Ergen, if he can take it over prior to bankruptcy or even in the bankruptcy process. Can John Malone, who now controls DirecTV through Liberty, sit on the sidelines and watch this battle unfold? Will Rupert Murdoch view this as an opportunity to re-enter the U.S. satellite business, after having traded Malone DirecTV in exchange for his News Corp position?  In the current market, we may see more media deals that involve over-leveraged assets from another time, with the bond holders controlling their fate.

In April of this year, in a blog entry titled, Transitions, I focused on the analog to digital transition that media companies were faced with, and how difficult this would prove in a challenged economy. In many ways, I did not envision the challenges that September and October would present us. This is clearly the most difficult advertising environment that we have experienced since the fourth quarter of ‘01, after the tragic events of 9/11.

I would like to focus, though, on the transition that will take place between President-elect Obama and the current Bush administration. After a primary season that seemed to go on forever and a bruising fall campaign, it became clear on the evening of the  election, which I spent in London, that President-elect Obama and his team had run a flawless campaign, which was evidenced by his commanding margin in both the Electoral College and in the popular vote.

Our democracy, around the world, will be judged on the transition between administrations. We should all take a deep breath and allow the Obama team the time to select the key positions in their administration. As President-elect Obama has pointed out, we have one president at a time, but his transition team  should be able to focus, in a collaborative way with the departing Bush administration. Some have been too quick to criticize his pick of Rahm Emanuel, as chief of staff, as too partisan of a choice.  History has shown that within the modern presidency, this is a critical choice and one that only the president can make.

President Bush has reached out and tomorrow the Obama family will visit the White House, which is very appropriate. In a time where we are challenged at home and abroad, we should allow President-elect Obama to prepare for the next four years.  As someone, who has taken over companies and divisions from previous CEO’s and their administrations, I have come to appreciate most, those who have left me a clean balance sheet. I hope that the Bush administration takes this approach and acts in the best spirit of bipartisanship. As the new opposition party, the Republicans will have plenty of time to critique and reflect on why they lost the support of the majority of the American public and what they must do to address this, as the minority party.

Turning to football, why have the Miami Dolphins improved to 5-4, with 3 straight victories, to find themselves in the thick of the AFC East divisional race, after finishing 1-15, last season? During the past several seasons they have employed some excellent coaches, for example Nick Saban, who now has Alabama back on top of the college polls at #1, and yet was not able to turnaround the Dolphins.  Bill Parcells, who has directed winning transitions for the Giants, Patriots, Jets and Dallas got bored in his latest retirement. He realized that the sidelines were really for a younger person, but he put together a strong transition team, mostly from his days in Dallas, and arrived with new head coach, Tony Sparano, and once again has turned a losing franchise into a winner.  They have even given the NFL the Wildcat offense, which is being copied around the league. 

I spent Saturday evening, in Chestnut Hill with my brother-in-law, John McQuade, watching Boston College defeat Notre Dame for the 6th straight time. The final score was 17-0. Several observations; Charlie Weiss has an improved Notre Dame team, but it is not of caliber of the teams in the top 25, although it is one victory (6) away from being bowl eligible. Clausen will complete all four years at Notre Dame, because the NFL is not going to call on him to enter the draft, early. I got my tickets late and found myself in the far end-zone, with many Notre Dame fans. I was impressed to see several rows away, Mike Golic, co-host of Mike & Mike in the Morning on ESPN with Mike Greenberg, sitting with other parents and Notre Dame fans. His son, Mike, plays for the Irish. Obviously, during an ESPN broadcast, he could have been in the booth, but on Saturday evening he was there as a parent.

Transitions are never easy, but when executed well they can be exhilarating and allow a new team to prepare for all the challenges they face!

In the fall of last year I wrote about doing business in China and the many trips I made to China during my time at Reed Business (B2B in China). As I watched the XXIX Olympics’ masterful and beautifully choreographed opening-night ceremony on Friday evening, I thought back to many of my visits. My last one, in the fall of ‘06, when Mary Claire accompanied me, was one of my most memorable and as always my dear friend Hugo Shong was an impeccable host.

The historian Arnold Toynbee’s prophecy that the 21st century would belong to China is becoming more and more of a reality to the global community. This is China’s time on the world stage. As host to these 2008 Summer Olympic Games, the world will watch with awe and fascination this rich and complex culture.  I trust that it is time for me to plan another trip to China in the not too distant future. History is clearly a “long march” and there remain many opportunities for media investments for those who have patience.  I believe that the B2B sectors, in particular, will provide excellent returns over the long term. I also sense that the events and exposition business will prove very profitable.

For those of you now in Beijing, my favorite high-end restaurant is Tian Di Yi Jia, which translates into Heaven & Earth Restaurant. It is located at 140 Nan Chi Zi Dajie, Dongcheng, in Beijing. The phone number is 8511-5557. It is only a 5-minute cab ride from the Grand Hyatt Hotel. The cuisine is superb and it has a world-class wine list, with many first-growth Bordeaux wines, as well as outstanding wines from other parts of the world.

In late June, I wrote in a posting titled “Summer”: “As we move into summer, the financial markets continue to be unsettled, with the surge in oil prices continuing to depress the stock markets. Is this surge truly driven by demand from growth economies like China and India? I have a hard time reconciling this with the slowdown in growth the last several quarters around the globe, including both China and India. How much of this is driven by commodity speculation, which is fed by a weak U.S. dollar?” This past week we continued to see the price of a barrel of oil spiral downward to $116 and it now looks like a $100 per barrel price may be closer to becoming a reality than a $200 per barrel price. This fall has taken place concurrently with the strengthening of the U.S. dollar versus the Euro and other world currencies.

It was not that long ago that all the large, well-known private equity firms in the United States and Europe were focused on the largest deals they could find. I remember meeting with many of them as I was deciding on what I wanted to do in my next chapter after Reed Business, and the question for many of them was how large were the deals I wanted to do or how large an equity check they could write.

After having spent many years in the B2B global markets, I had a clear understanding that most of the transactions took place in the middle market.  I placed the transaction values in a range of $50M-$500M.  This played a large part in my decision to partner with Austin Ventures to start Case Interactive Media.  As the credit crunch has continued, I have been surprised at how many large private equity firms are redefining themselves as having a middle market focus.

I read recently that Tony James, Blackstone’s president, defined their core to be the middle market. I was surprised at first to read this, but upon reflection it became clear that the middle market definition is being expanded to include deals up to $2.5B, which is still much smaller than we were seeing during the spring of ‘07 when covenant light deals were in vogue.  In some ways it feels like the Triple A minor league teams are now playing part of the season against the major league teams.

The good news in all of this is that I see the market window staying open for deal flow with a very strong second half of this year. Clearly the Reed Business transaction will be a major one in the second half, and I believe that we will see more deals along the lines of CBS acquiring CNet.  The activist funds, Jana and Sandell, got their desired outcome and CNet gained a parent. The larger media companies have strong balance sheets that will allow them to acquire digital properties to assuage the concern of investors that the media companies’ core revenue streams will be marginalized over time by the Internet.

We will get to watch the next round of the battle between Microsoft vs. Yahoo unfold over the next several weeks. I must admit that I find it somewhat strange to find Carl Ichan and now Boone Pickens in the middle of the fray! I do admire that both of them are still keeping score and have not retired to the sidelines.  I would love to hear their thoughts on Vista and search marketing! The ending to this story should unfold shortly.

In the fall of ‘07 I wrote a column titled “Global Brands,” where I stated, “As we transition to a digital world, managing our brands becomes ever more demanding….All of us in the B2B or B2C world tasked with transitioning to the digital world are looking for the Holy Grail, an umbrella brand that inspires confidence and trust and at the same time can support many vertical channels…” These challenges in the spring of ‘08 look even more daunting, with an economy that has stalled and a digital revolution that has accelerated. Clearly, ‘08 is turning out to be the most challenging year for our industry since ‘01-’02. The current economic malaise will accelerate the movement to digital from analog. Measurable marketing programs will be the demand of the day and will be married to social networks. In sectors like Information Technology, challengers like Tech Target and ITToolbox will gain share at the expense of the incumbents unless they respond with ever more speed to the demands of their customers. There are always clear winners and losers in transitions. Shareholders will not be patient as they see shareholder value diminished.

Look at the newspaper industry and the carnage that has taken place. Will McClatchy’s public shareholders and family board members continue to back current management while their stock has fallen from a 52-week high in the mid-30s to below $10 per share? What happened to CEO Gary Pruitt’s “once in a lifetime deal”? When one looks back to the announcement of the acquisition of Knight Ridder, the loss of shareholder value has been even more pronounced. Why did management double down and buy more newspapers, as opposed to digital assets? Will McClatchy become the target of an activist shareholder group, or will the family look to take it private with a change in management?

It is not just the traditional B2B companies that are faced with these challenges. Will CNet respond to their activist challenge to move from a Web 1.0 company to a Web 2.0 company and beyond? Is current management up to the task or do we find incumbents trying to protect themselves at the expense of the shareholders? These dramas will continue to play out, many of them under the spotlight of the public markets.

Our response time to these challenges has become shorter, out of necessity, and the margin for error has become very small. For the B2B industry to escape the fate of the newspaper industry, we must accelerate our response and put managers in charge that can deliver on their promises. We have never been a capital-intensive industry, but we need to find a way to make the resources available to our star performers to execute against a blueprint for change. As I have argued previously, private equity firms are ready to assist in this process at a time when many of the large strategic players have moved on to new horizons.

We will be judged as an industry and as individual companies and management teams by how well we manage these transitions. I sense that our industry knows that we can manage this transition as we have managed others, and that new leadership will emerge as it has in the past to guide us. But the next several quarters will clearly test us all.

While we are on transitions, with the Pennsylvania Democratic primary behind us, it is becoming very clear that the Clintons and Senator Obama cannot make a successful transition to the general election. I am coming to believe more and more, with each body blow back and forth, that Hillary and Bill are going to go to the convention and have a credentials fight over Florida and Michigan and that either side will leave the August convention with John McCain in the lead. I have been surprised by how many Obama supporters have told me that they would prefer to vote for McCain if the Clintons deny the nomination to what was once a fresh face, who brought with him a message of putting partisanship behind us.

Finally, the sports excitement in New York this weekend was the NFL Draft. I am certain that both Jake Long, from the University of Michigan, and Chris Long, Howie’s son from the University of Virginia, respectively the #1 and #2 draft picks overall, will make the transition from the collegiate ranks to starting in the fall for the Miami Dolphins and the St. Louis Rams. Matt Ryan, from Boston College, the #3 pick by the Atlanta Falcons, has a much more difficult transition facing him this fall, but I am confident that over time he will establish himself as a legitimate leader along the lines of Tom Brady and Peyton Manning.

As we start the new year, the word that keeps coming up in politics and business is “momentum.” Hillary lost it in Iowa but regained it in New Hampshire. McCain lost it six months ago when his campaign started to run out of money before he had run any ads, but he regained it in New Hampshire and hopes to keep it in Michigan and South Carolina. Rudy believes he will gain it in Florida, but it could be too late in the game going into Super Tuesday, February 5th. Mitt claims he has won two silvers, but silvers do not give you momentum. Edwards clearly does not have it and pressure will mount on him to get out of the race after South Carolina and make it a two-person race for the Democratic nomination. Huckabee claims he had it for a moment in Iowa, but he lost it in New Hampshire. Obama clearly has it, but it slowed down a bit in New Hampshire. One of the candidates in each party will certainly grab the momentum ring on Super Tuesday and ride it to the White House in November.

It is clear that winning or coming close against great odds can establish momentum. The Giants lost to the Patriots in late December, but by playing his first team and coming close, Tom Coughlin gave the Giants the momentum they needed to beat the Bucs on the road in the wild card NFC playoff game and beat the Cowboys this past Sunday to get into the NFC Championship game. The Packers seemed to lose it towards the end of the season, but they regained it in the snow at Lambeau Field against the Seahawks. It brought back memories of Lombardi’s Packers, with Hornung, Taylor and Bart Starr in their glory years. Brett Favre keeps getting better with age! The Patriots continue to have it as they move closer to running the table. Can they be denied before Super Sunday, February 3rd?

min’s b2b keeps us informed every week on which publications and categories are hot and have momentum and which continue to be under pressure. Up until this past year, Hanley-Wood clearly had momentum, particularly with its residential titles. Its focused approach was a winning hand, just as enterprise computing was from ‘92-’01 when CMP, IDG and Ziff-Davis rode the momentum wave. Google has it while Yahoo has clearly lost it. Will Google be able to maintain it during this cooling-down period if it cannot introduce an innovative new product to complement search?

The media business is very similar to politics and sports. When you are winning and on top, it feels like it will last forever. But as Andy Grove, the former CEO of Intel, and others have stated, “only the paranoid survive.” Those of us who grew up on the advertising side of the business know how quickly fortunes can change and how difficult it can be to represent a property that is not #1 or #2 in its category.

As managers, we need to make certain that our businesses are constantly innovating to insure that we are not in the position of losing momentum for our core brands. Media brands with significant goodwill and brand equity will allow for tarnished brands to be rebuilt, but it is very challenging. Does anyone recall brands like Atari and Sega, which were once the leading video game platforms and seemed invincible? Keep checking those scorecards and doing research to insure that your leading properties will deliver strong results in ‘08 and beyond.

NOTE: This column first appeared min’s b2b.

During my last two years at Reed Business, I made 10 trips to China. I was very fortunate during this time to have an excellent partner in Hugo Shong, the Managing Director of IDG China and a general partner in IDG’s burgeoning venture capital business. If you want to do business in China, I strongly recommend the partnership approach–choosing the right partner is the key to success.

During my tenure at IDG in the ’90s, Hugo and I were both colleagues and friends. I had come to admire his intelligence, work ethic and the outstanding results he produced. Pat McGovern, IDG’s chairman and founder, had personally recruited Hugo to IDG. Pat understood that to be successful in China he needed a trusted person who could help him find the right partners to grow his brands in the Asia-Pacific region. Pat had launched Computerworld China in the early ’80s, and as the tech sector exploded in the early ’90s CW was well positioned to chronicle the growth, both globally and in China. With Hugo Shong’s arrival, IDG soon became the unrivaled tech media giant in China. The profits made in the tech sector led to a joint venture in the consumer market with Hearst, initially with Cosmopolitan China, which today is China’s largest consumer magazine (by measuring ad pages). The tech success also allowed IDG Ventures China to become the major force in venture capital investing in China. Hugo Shong and his very able colleague Quan Zhou, who drives the day-to-day investments, have never looked back, and their results are formidable. One of their early investments that had a significant return last year was the Chinese search engine, Baidu (BIDU), which trades on the NASDAQ.

While most companies think of China’s large population in terms of providing a tremendous consumer marketing opportunity, the B2B information services opportunities are equally as attractive and could yield even greater results over time.

For years, many venture capitalists from outside China approached IDG’s team about partnering, and two years ago IDG decided to partner with Accel Partners and Jim Breyer. Their first fund is doing very well and they are in the process of raising a second fund. Even strong U.S.-based venture firms need Chinese partners.

Reed Business was very fortunate to have Hugo’s guidance and partnership as we launched our joint venture company in China. I have learned over the years that even fierce competitors can become partners when each is able to contribute unique assets to a venture. In our case, Reed had some very strong brands with the potential to be global, and IDG had the benefit of doing business in China for more than 20 years, which gave them a significant infrastructure. Partnerships and joint ventures are never easy, but they are often worth the investment of time and nurturing because of their potential to yield very real dividends.

Leaders need to provide the vision and the pioneering spirit to open new markets. Sometimes this means that they must wander for years in the wilderness, believing in their vision while others struggle to understand it, and forging ahead until the results of their work demonstrate to everyone that their vision provided a clear path to growth. Pat McGovern clearly had the vision of China’s growing importance on the world stage long before almost anyone.

While I am writing about a Boston-headquartered company, IDG, I need to take this opportunity to point out that my alma mater, Boston College is 5-0 in the ACC, sixth in the country, and has a strong partner it couldn’t do without in Matt Ryan, the team’s first real Heisman Trophy contender since Doug Flutie. Couldn’t resist: Go Eagles!