LA Times Examines Silicon Valley

Richard Finney writes "The Los Angeles Times has a special section on Silicon Valley. Most of the stories focus on the 'survivors struggling through the toughest stretch in tech industry history.' There's also a story on Five Reasons to Hope - New technologies that may help Silicon Valley rise again: Biotech, microsensors, nanotechnology, flexible electronics and data mining. We'll see."

Comments

Nanotech...

[Anal Jouster]

...is the next big sector according to most business. Naturally, a place like Silicon Valley oriented for the next big thing with all those new building and free space will explode with growth.

Re:As the saying goes...

[odyrithm]

There's way too many IT people nowadays & it's spoiling it for everybody.

I take it by that you mean theres to many early twentish males who lernt html from magazines and think there gods gift to the net, then bullshite there cv to get a job, get fired soon after and relise there actualy not that good, then either decide to do advertising instead or try harder ;)

I know this is how it works here in Manchester(UK).

Affordable to whom?

[__aadkms7016]

The number of people who can buy a Mountain
View (Los Altos, Palo Alto, etc) house cash
exceeds the number of houses on the market.
The semi-retired gentry likes the lifestyle
of the area, and 30 years of tech success
has produced a lot of gentry. And in many
many cases, these folks can design prototypes
with their own hands, and think its fun to
do so. I don't think a comeback hinges on
re-locates -- it hinges on lifers.

Who are they kidding? Themselves?

[Travoltus]

There is a shrinking market for those with postgrad degrees and many years of experience. What's left, is about to be farmed out to East India.

The countries with the most lax labor laws (short of allowing child or prison labor, and I am not even too sure of that) will get all the new jobs, in the near future.

As for those just getting in, there are NO more entry level jobs in the tech sector. Heck, there are no more entry level jobs anywhere except in fast food restaurants.

The party's over.

It's tough here

[DavidNWelton]

But it's also a rewarding feeling to be making a go of it as an independant consultant. No silly dot com ideas, just getting paid for work done. It's tough, but I'm happy.

That said, I don't see the long term prospects here as being very good. It's too much of a pressure cooker.

Re:War

[asparagus]

My cynical predictions:

1) Bush continues buildup.
2) Bush does quick + fairly clean war. A few Americans die. Iraq is offically 'cleaned up'.
3) Bush rises in polls. The (US, short-term) economy recovers on the positive effects of the war. (Long term world economy predictions are nebulous.)
4) Bush is voted to another term.
5) Midway through next term, Bush proposes war against another country.
6) World condems attack. World pressures said country into capitulation.
7) Bush goes with world opinion and is praised for peaceful solution to problem.
8) Bush exists office, hailed as great leader in both times of war and peace.
9) Everybody else is pissed.

-Brett

Re:War

[groove10]

I have to disagree with your claim that "the effects of the Iraq war aren't likely to be profound, positive OR negative". They may not be in an economic sense in the near future, but perhaps in a political sense they may be. I believe we are seeing the formation of a new (or at least growing) type of foriegn policy. The policy of "oderint dum metuant" is rearing its ugly head right now, and I don't think its increasing the safety of Americans or furthering their interests in the long run. True, most countries will be forced to concede defeat and capitulate to the power of the U.S., but eventually the luck runs out in my opinion. This policy will come around and bite us in the ass by fostering MORE anti-american rehtoric. If Europe's economy rebounds out of this recession faster and stronger than the U.S. then watch out, you may see more geopolitical wrangling across the Atlantic for years to come.

This war may be the galvinization that the people of Europe need to elect representatives that will agree with their constituents and not give the U.S. everything it wants. It could have a huge negative impact in the long run. Obviously this is speculation right now, but with the way that the world has reacted to Bush thus far, it may not be that far off. Perhaps the rest of the world put up with Regan and his policies which were very similar was becasue of the balance of power between the U.S.S.R. and the U.S. at the time.

Re:To be fair, employers...

[ornil]

Come on, that's hardly fair. There are all kinds of people who worked in the dot-coms at some point (and no, I am not one such). I would understand your comment if you meant people who only worked in dot-coms, but even that's not fair for people who got their bachelor's 3-5 years ago. What were they supposed to do when dot-coms were more than half of programming job market?

Interview them, give them a chance to tell you what they actually did. Many of them actually worked for successful (*gasp*) dot-coms. Many were lowly entry-level employees who did what they were told and produced quality work within those constraints.

And as for CTOs of failed dot-coms, well those resumes you can probably safely through into trash. They deserve to be judged by the quality of their work.

Re:To be fair, employers...

[xenophrak]

I would agree with you...but you are only half right. I was in the middle of everything from before the boom, and still in it.

I know a hell of a lot of engineers that worked their asses off during the bubble. What I saw more of, however, was a lot of barely-got-my-mba types who wanted to drive their Ferrari's and schmooze and didn't know whack about managing a company, or what a business plan was.

It was this class of individual that ruined the economy, not the engineers. So, I would agree with you that the execs should be put in the circular file, but there are still some solid engineers out there looking desperately for work that do have proven track records marred by the dot.com bubble.

I would be careful of putting yourself on such a high pedistal...are you sure that you didn't profit from the bubble too?

Re:peoples opions from the area

[Anonymous Coward]

I spent a year in the Valley looking for work... unsuccessfully. I'm now back in Australia and will try again in a few years. Jobs in the Valley are very much Cutting Edge Tech jobs, and i think it's very difficult to get into them unless you have recent experience working with them. (I'm talking software here - there are plenty of Verilog/VHDL/FPGA/etc jobs.) The software jobs almost all demand recent and extensive experience in J2EE/.NET/etc. The only jobs i ended up getting interviews for while i was staying there were in Fresno (central California/redneck zone) and in and around LA... and they were your average Linux/UNIX/C/VMS/etc jobs - exactly the stuff i am skilled and experienced in.

I think the Valley is trying too hard to be "cool" and ahead of the curve, at the expense of seeing that innovation can happen in other areas. Linux is a perfect example of something that is based on OLD technology and paradigms, but is still doing pretty cool stuff. Hell, even Windows app development is relatively old tech and "traditional" software paradigms, but there is a lot of flexibility available and a lot of Windows apps are far from "uncool". I don't know if we can blame this on the Dot Com boom... but it's frustrating that most developers who have honed their skills in other countries or even other states - or even OTHER CITIES IN THE SAME STATE can't find work because they weren't working with "hip" technology. It seems like Apple is about the only place in the Valley still doing interesting stuff with software. Hell, most of the game development houses are in LA, Microsoft is mostly in Seattle, Amazon is too... Linux development is distributed across the whole world, and IBM closed down its San Jose operations... All we can hope is that a few REAL visionaries end up in charge of companies there soon and start hiring people who have real-life skills rather than just a collection of certifications and J2EEE/.N3T/L33TPROGRAMMER!@23$ acronyms in their resumes.

Re:Progress marches on... slowly...like evolution

[kisrael]

Maybe we should forget waiting for the next boom. A different way of looking at things is that the way things are working now is 'normal'. Of course, then we get into debates about what 'normal' is. ;)

Yeah, entering the field in 1996, ridden the boom, surviving the bust (amazingly, to me, with a stable and slightly rising salary), I wonder what "normal" should be thought of as.

But it is interesting to see how the evolution of technology is close to the current theories about evolutionary biology (something I know only a little about) in that there are incremental changes and modifications over long periods, interrupted by sudden large changes.

Ehh, because I'm such a Dennett fanboy (and love his book, Darwin's Dangerous Idea), I guess I agree with his view that the neodarwinian "puncuated equilibrium" is mostly a mismeasuring of the historical record.

In general, though, there really hasn't been many qualitative changes in my online life for a number of years now. I'm programming in J2EE that got started in 2000, use a PDA 80% identical to the one I got in 1997, connecting to the internet at the same cable modem speeds as I was in 1998, using a desktop OS whose UI at least was 90% established in 1995...and don't even get me started on how old the essential principle of Unix is...

oops on the history

[b17bmbr]

let me corect a little history:

the depression was a result of a few things that date back to WWI. in th teens, with europe at war and no end in sight, wilson and especially the banks encouraged farmers borrow, borrow, borrow, and grow, grow, grow, since WWI was being fought on french farmlands. well, great idea. except, it takes about 2-3 years for the farmers to realize return and so by 1917, US enters the war, and within a year, it is over. (great move wooodrow. sorry, my $.02) so...farmers go bust. banks begin to feel the heat. large migration into the cities, where farmers are now competing with immigrants which drives down wages, etc. industry is doing well, but like today, it was built upon a bubble. so about late 20's, it begins to slip. germany can no longer pay its reparations to france and britain, who can no longer repay their loans to US banks. we decide to pass hawley-smoot tariff, and close off foreign trade. which causes huge banking losses. so...

the stock market was built on a bubble, like today. the collateral for a stock was the stock itself, and the holders had margins of like 10%. so, when the banks called their loans, and the stock was almost valueless, the banks began to fold. as banks began to fold, the stocks nosdived. and thus, october 29, the crash. (which btw, was not as big as the 1987 crash). since the economy was mostly cash based, the banks were way short cash, thus they close. now the good part...

the fed chairman, ben strong, was a student of marshallian economics. big time monetarist. so, there's a formula called the quantity theory of money, or MV=PQ.

#include <econ101.h>

basically, the quantity of money is supposed to be some proportion of the GDP. as GDP fell, ben strong "rightly" shrunk the money supply. then GDP fell, then strong shrunk money, etc., etc., etc. by 1932, the quantity of money was 2/3 of what it had been in 1929. thus, the severity of the depression. that is why some republicans, like jack kemp, have deep seated fears and distrust of the fed. also some democrats, since both see the power over the economy money has. long enough lecture.

Re:oops on the history

[Malor]

This is a common analysis, but it's probably wrong.

During the 1940s and 1950s, economists were worried about the money supply, which had grown only 18% for the entire two decades, while GNP (it's GDP now, but it was GNP then) had grown something like 65% over the same period. They were worried that there 'wasn't enough money', but the economy seemed to be doing just fine anyway.

In 2001, the Fed grew the money aggregates by about 18%. (Which by any historical standard is INSANE -- this is crazy! they did in ONE YEAR what it took TWO DECADES to do back in the first half of the 20th century.) They grew money supply by, um, 8 or 10% last year (I forget right now, I'd have to look it up to be sure), and this year they're running at about a 12% rate.

But things are still going down, and in fact they've really set off the mortgage finance bubble by doing this. It's obvious that they learned the particular lessons that you describe, but it also appears very likely that these lessons are wrong.

If just printing money led to prosperity, the banana republics would own the world. Money and wealth are different. Money is a scorekeeper used to track real wealth. If the money supply contracts somewhat, that won't cause severe problems in a healthy economy; there are ways of adjusting. It might cause a little pain short-term, but long-term it's no big deal.

And the biggest reason the money supply shrank so much in the 1930s was because of debt defaults, not the Fed. If I owe you $50, and I have your $50, then we BOTH think we have the same $50, and we both carry it on our books. If I then default on my loan to you, $50 is destroyed. A small deflation can trigger a series of debt defaults, which makes the deflation worse (destroys more money), which triggers more defaults, and so on.

The Fed at the time was TRYING to grow the money supply but couldn't... because the Fed lends money into the market, it is dependent on finding a willing borrower to take it. In the absence of willing borrowers, the Fed can't do much. This is where the 'pushing on a string' observation from the 1930s came from.

Silicon Detroit

[sunspot42]

It's over - the goose is cooked. Silicon Valley is Silicon Detroit. It isn't coming back. Not when cheap engineering and coding labor can be had in India for about $3/hr, "benefits" included, and the US government won't institute tariffs to stop it. What happened to blue collar labor in the US in the '70s and '80s will now happen to those smart, hard working, well-educated white collar boys (and girls). No amount of education or hours on the job will make you competitive with a trained monkey who works for bananas and isn't allowed to talk back to his keepers.

It's purely a race to the bottom. Look for the United States to become the world's most powerful third world nation within a generation, displacing Russia. Kiss your Constitutional rights goodbye - they'll be auctioned off to the highest bidders (corporate America and the religious fanatics).

The good news is, you'll be able to buy a home in California for $50,000. The bad news is, you'll only earn $5,000 a year, half of that will be taken in taxes to support the military and the official state religion, and you'll run a substantial risk of being killed when a gang of religious fanatics lights your train on fire because opposing religious fanatics are allegedly aboard.

If you're lucky, you'll be able to marry a European and emigrate to a country where the utilities are on 24/7, citizens can vote without being shot at (frequently by soldiers), murderous religious fanatics are kept behind bars, healthcare is free, everybody has at least a halfway decent education, plutocrats don't control the media, there's still a substantial manufacturing sector, and workers earn more in a month than you're used to earning in a year.

Re:Silicon Detroit

[Anonymous Coward]

Y'know, supposedly the whole economy is in the shitter, but, I don't actually see the streets lined with beggars any more or less than ever... And I certainly don't see a whole lot of people who've gone from wealthy to homeless yet. In fact, I see just as many expensive cars on the road as ever, and a general attitude that everyone should have money to feed, clothe, and house themselves -- and it is a very odd situation if you cannot.

Let's have 80% unemployment and a complete collaps of stock markets, insurance companies, and the federal reserve. Then maybe we will see society as a whole respond to it... As it stands, it is rather easy to look at the situation and think "business as usual". People are still living indoors, eating at least one meal a day, and generally not dying in the streets in abject poverty; not even in California.

I'm not saying we need to see all that, but I do think it might give society the attitude adjustment it needs if we did.

Re:Progress marches on... slowly

[ergo98]

What will bring the next windfall will be a synergetic grouping of cost effective methods or products, with multiple applications, each resulting from a different source (corporation, university dept, etc.) It most likely won't be nanotech or biotech, considering the cost of development. I do know that it will seem obvious in hindsight.

Again I just wanted to clarify: The "windfall" in technology was never a windfall at all (technology has been making the steady march forward for a couple of decades now), but rather was a classic investor's pyramid scheme -- It could have easily have been marbles or George Foreman Grills that got the markets fired up and we'd have the "Grill Heavy Nasdaq Composite". As far as hindsight, there were many people clanging the bells of doom for the ridiculous overvaluations back in 1998, but to many investors they were just trying to rain on their parade so they were ignored.

Tech spending is basically the gross sales of the major technology companies: It has actually been edging UPWARDS year over year. Never confuse the stock markets with reality, because they often are quite disassociated.

Oh, you nattering nabob of negatism, you!

[LibertineR]

I love it when people like you spew such facts, because although I cannot dispute what you say, I can dispute the logical conclusion of your argument, which seems to suggest that we should all just kiss our financial asses goodbye?

I dont think so.

One thing that has always set this country apart from others, is that when we needed an idea; be it war, or a new gadget that spawned an industry; we got one. I believe that will happen again. No one in America should doubt that we will return from the brink once again.

Debt itself is NOT a bad thing, there is good debt and bad dept. Bad debt is what most Americans have because they cant stand not having the biggest SUV on the block, whether they can afford it or not. Sooner or later, someone (or some hundreds of folks) will go into debt to finance a good idea, which will bring us right back into solvency.

I am doing all I can to stay in debt, buying up all the cheap real-estate I can find, and renting it out at confiscatory prices. Good economy or bad, people will always need a place to live. Buy and Hold is not a bad idea; it just depends on what you are buying and holding.

The Valley is a Harsh Mistress

[MichaelCrawford]

After reading Valley of the Stunned Raccoons at the LATimes page, I thought you might enjoy reading my essay The Valley is a Harsh Mistress.

I wrote it in late October 2000, as the meltdown had already begun to happen but before I had become fully aware of it. I came to a deep understanding of the depth of trouble we were all in when I was out of work the following month, and passed the time by emailing a few thousand resumes without getting any response.

Printing More Money

[Tablizer]

Right now the economy is terribly sick, from unrelenting dollar injection from Sir Prints-A-Lot (Greenspan),

What is wrong with printing more money? Let's look at 3 potential problems:

1. Inflation, which does not (yet) seem to be an issue here.

2. People put it under their matress instead of spending it. But with America's credit-card fast-draw ways, this does not look likely either. How many women do you know who can look at a pile of cash and not have an itching to spend it?

3. Falling value of dollar compared to other currencies. This makes exports cheaper (and Indian outsourcing more expensive.)

So far it looks like cranking out more greenbacks is a good move.

Silicon Valley ghost town

[cbdavis]

Im one of the lucky ones who still works in the
valley. On my commute to work ( 101 is a breeze
now), I see rows of empty buildings. The place is
becoming a ghost town. Housing is still $$$ but
it is a renters market. I have a friend who owns
a restaurant and his business is down 25%. I have
heard that the new business to be in is repo-ing
luxury cars. No new jobs, lotsa people looking
for work, gas is over $2.30 for premium. The
state of CA is billions in debt. I just had my
first heart attack last week.

Land of the free - home of the brave.

Retirement is only 10 years away. It will be a
tough 10 years.

Re:we just went through a bubble....

[Anonymous Coward]

How creepy... I could hear my voice in your entire post. Let me add to the pessimism :)

Joe Investor looks at a chart of the Dow and sees a bunch of pretty lines, and can point out the "consolidation" we are currently going through. He doesn't see the gigantic (flat) top with astronomical volume. All he hears is that the markets will (guaranteed) return 7% as long as you don't sell too soon. As all the 20 year olds managing your retirement savings were collecting huge bonuses by convincing you to buy every dip to insure you didn't miss the next run, all smart money was running like hell. The drop in the NASDAQ signifies the panic selling as people realized they were holding the Old Maid at the wrong time. This still hasn't happened in the Dow as there is an enormous amount of foreign money propping it up. Well, the plunging dollar will solve this.

Lots of people have cut their losses in the tech stocks and moved into the "safer, proven" Dow stocks that haven't felt the selloff. They don't realize that they are going to sustain enormous losses in those as well. Buy high, hold long term, and you're going to get cleaned out. I'm looking forward to people begging me to buy their BMWs.

More about debt: Essentially the only thing propping up our economy now is realestate. Even with the 'slump' in the economy, people are taking on even more debt by borrowing against their hopelessly over-valued homes. Boy Jonny, that seems like a GREAT idea. Ma and Pa are both out of jobs, but that shiny new SUV in the driveway sure is pretty!

I think it's a shame that Clinton will be remembered by the euphoria of over-indulgence and Bush will have '666' tatooed to his forehead. Folks, BUSH HAD NOTHING TO DO WITH THIS. By the time he reached office, it was way too late. Blame Honest Al if you need to blame anyone.

I could go on for hours. Luckily for you, I need to wake up in a few hours. While Joe is sitting around waiting for the tech recovery, I'm going to be sleeping like a baby.

Re:Does Silicon Valley Matter Anymore?

[Anonymous Coward]

Theoretically, sure. But do you know anybody that is part of a 'geographically dispersed' design team? I didn't think so.