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Silicon Valley Has Learned to Love the Bust
An anonymous reader writes "Fortune's David Kirkpatrick interviews scores of valley execs who have stopped worrying continued innovating. He writes: 'The underlying tech boom that began the bubble actually has never stopped. It just stopped paying off. Says Eric Schmidt, CEO of Google, the company that has emerged as the head of the new class: "If anything, the rate of innovation in technology has increased in the past couple of years. But that doesn't necessarily make it a good business. The beneficiaries are the end users." Agrees Rob Carter, the CIO of FedEx: "The sound we heard wasn't the bubble bursting; it was the big bang."'"
the bust was bound to happen. what goes up must come down, and the faster it goes up, the faster it seems to come down. but at the same time, there was no danger of the technology disapearing. its not like i'm typing away on a typewriter, or a pen and paper, or a rock and chizel. the bust was just economical evolution, shaking off the weak and wasteful companies that wouldnt have made it very far. fp
YOU SUCK BALLS!
I love how all the quotes come from the top 25% (nay, even the top 1% in many cases) of the food chain. Hogwash.
Certainly the unemployed fledgeling DBA who never gets interviewed does not love the bust.
By contrast, the grunt workers, of whom most are Americans, will need to scramble for the next job. In this climate, the next job does not appear for more than a year. When a potential job does arise, the grunt worker will need to fend off droves of H-1B workers.
But then all that big-bang innovation will make up for the months of unemployment ....
on wall street.
there the ones giving these CEO and CFOs all the ideas that they must increase profits and growth at unatainable/unsustainable rates.
Now, I have never been to business school, but even I know that companies can't expect to increase forever at insane rates.
The bust will give these people time to grow at a slower rate, while not worrying so much about what some dork on the street thinks.
Sent from your iPad.
So a few companies have managed to survive once the investors pulled out. General economics tells me that these survivors are the few that actually have a viable product (i.e. google) and also that these were what should have been invested in and not the ones that just had a good domain name. Great, I'm happy this is how real innovation in capitalism works.
Now I'm being told that these remaining companies still aren't making money (you're going to have a hard time convincing me that google's owners aren't happy with their current financial situation). To innovate a company must do at least the following: do something, test that thing, pay the people who did that thing (got to eat, no matter how much you like who you're working for), and advertise (what's the point of something new if noone knows about it?); How does one do these things without at least some income? If anyone knows how this works please tell me, I have no money and would love to do something with it.
Devil Ducky
MY peers would get out of jury duty.
So, yes, the engineering grunts are having a hard time. Read "Will code for food" by C|Net. The CEO of Google and the CIO of FedEx are living incredibly well on their million-dollar salaries, but the grunt American engineer is not doing well at all. There's mortgage payments, clothes for the kids, insurance bills, etc. The high-tech sector of the overall American economy is going through its worst recession in almost 3 decades.
No. We don't need any more H-1B workers.
There was no bust. What is this I'm hearing about a bust? There was no bust. The infidels are committing suicide on the gates of Silicon Valley. Everything you are hearing are all LIES, LIES, LIES! I triple-guarantee you that there was no bust in Silicon Valley.
You can accomplish anything you set your mind to. The impossible just takes a little longer.
I left a permanent position when the bubble burst to become a contractor and I am finding work just fine, and less headaches trying to park since people left.
For those people who think they have an idea what Silicon Valley (and San Francisco) is like "post-bubble":
It's just recently that you really start to see "for rent" signs in San Francisco, in the way you see it in *normal* cities, like Boston or New York. It's not a ghosttown, it's just normal.
There are plenty of VCs who have money. They're just not spending it so crazily. Not everyone is crying 'poor me'. Not everyone blew all their money here. The media makes it out as if there are 25 year old millionaires sitting in the gutter outside a bar with a suit on, homeless and whining. Far from it. It's not like the area is Flint, Michigan or anything.
Maybe my experience is the exception. Sure, work is not crashing on my door, but I have had thus far an ok time finding work in the area of expertise I had during the bubble.
To sell magazines and to sell advertisements. When one of the officers at my company was featured in Fast Companies, my company was bombarded with Fast Companies subscription offers, Fast Companies free samples bookmarked to the article in question, and Fast Companies advertisement requests.
Fortune Magazine is probably more subtle than Fast Companies, but the same agenda remains -- whoever pays the bill gets to decide on the content.
has learned to love silicon ;)
I don't know what silicon valley is thinking. I've been loving the bust for many years now. When I was in high school I was fascinated with especially large blouse bunnies. But once I dated a girl who overflowed a DD bra, and those things were all over the place when you set 'em free. That sent me scurrying off in search of less robust busts, so to speak. I later dated a girl who was a competitive figure skater. She was very skinny, and had no bust to speak of. My man teats were larger than her breasts! I found the lack of breasts to be totally unsatisfactory, so after that I set my sights more on girls with b or c cup breasts. Since then I've been quite satisfied.
It does make me wonder though, who DOESN'T love the bust?
Breasty nature aside, I have found a womans shape rarely has any baring on her level of insanity. It seems MOST of them have insecurities and worries, and many of the same troubles we all do.
Kikoman doesn't judge people by their appearance. Unless they are wearing jeans that are far too large, and hang down halfway off their hips showing off their underwear. In this case Kikoman judges these people to be pathetic idiots, and hopes their pants fall down while running across a busy street, causing them to fall and possibly to be run over by a cement truck or maybe seven motorcycles.
KIKOMAN!
blame VCs.
they were throwing gas onto the flames of an inflated economy.
keep doing that and you'll get burnt (as well as many other innocent/not-so-innocent bystanders (stockholders, retirees, etc)).
Perhaps its my utter ignorance, but I would think it is a great time to start up a new company. Yeah, there's less money floating around, but VC's are in a bind. They only make their money by pumping in money into startup companies likely to succeed. If you have a credible business plan, and there are no major flaws in your management team, I can't see why you'd have a problem finding investors. (Unfortunately, I don't possess that surefire idea that would make me want to quit my job.)
There is no America. There is no democracy. There is only IBM and AT&T and DuPont, Dow, General Electric, and Exxon
I guess that it's a matter of perspective. We've got plenty of work, just no money to hire people - so I wouldn't say that it's a boom, either.
It was not a tech bust but a VC funding bust, and the ones that went bust did not have 2 brain cells to rub together between them. The Tech boys wore out there vapour-ware welcome. You can only promise the sky and deliver dirt so many times before even a moron with too much money and not enough brains will wise up and stop giving you cash.
errr....umm...*whooosh* *whoosh* Is this thing on ?
Why does it happen that when the journalists write about anything that you know at least a little about, you understand that it's bullshit almost 100% of the time?
The whole article consists of random facts collected to support the idea they a priori had. Oh yes, "Adobe Acrobat has brought the same benefits to sending documents over the Web". How insightful. Look what we found! That is surely a sign of things to come...
It's no different from any article written during the dot-com boom. They first decide what they want to write (and what their subscribers want to read) and then dig up the facts to support their preconceived ideas.
This is not research, just a lame article that is not worth the magnetic particles that it is stored on.
Future Wiki -- If you don't think about the future, you cannot have one.
I've always believed Heinlien had it right - you know that the economy is in danger when too many of the 'little people' get directly involved.
Sure, you have some issues with economic power being concentrated in a few institutions, but I'd rather have 1K investment houses than 10M sheep using online trading.
I've seen a tech office where every manager had an online trading program running in the background so he could make trades based on the latest Nortel ticker news. Of course, all the other sheep watched the same ticker, and made the same decision - making uninformed decisions based on other sheep's uninformed decisions was a recipe for disaster.
The sound we heard wasn't the bubble bursting; it was the big bang.
... Not to mention Black Holes and more Dark Matter than it might be practical to shake a stick at.
Plenty of everlastingly expanding nothingness between the bright bits then
which nearly killed the classic dividend-paying stock model in favor of the far riskier growth stock model.
Most stocks are supposed to pay dividends. In effect, dividend-paying stocks act like bonds with greater risk in exchange for potentially higher payouts (good companies can and will increase their dividend payouts over time; really good companies do so steadily) and not having to pay back any principal. The company can cut its dividend if things go Bad, which is a risk for the investor but can help keep a wounded company from flatlining; a company financed with debt instead of equity would go straight to bankruptcy court.
So most new companies either go with the growth-stock model (which demands growth rates that are rarely plausible) or the debt-financed (junk bond) model (which imposes a crushing payment schedule). All because the American tax code is so fscked up.
Dividend payouts are also a concrete sign of financial health. It's way harder to cook the books when investors are expecting their quarterly checks to clear.
Of course, the odds of Congress actually killing the double-tax (by either letting companies tax deduct their dividend payouts or letting investors receive their dividend payments tax free, not both as is the case today) are slim, because the average lefty journalist and congresscritter thinks it would strictly benefit The Rich (tm).
Anyhow, human greed combined with the bubble-prone growth stock model caused the financial havoc of the past few years. Most of the putrid tech IPOs of the 1990's (literally half of which were dumped on the market by Goldman Sachs, run by Democrats like Sen. Corzine and ex-SecTreas Rubin) couldn't have made it as dividend-paying companies, public or private (and private makes a lot of sense when your capital expenses are small and you're just trying to retain techies), which in retrospect was a major Clue.
Distinguishing those with the aptitude and those without for this industry is virtually impossible using the classical resume/interview approach. You *must* be networked, and folks who work in the tech industry aren't "Let's Do Lunch" types.
The bigger problem is that people in the tech industry have poor project management skills. Either too many people launch in with their pet ideas and agendas or management can't buy a clue. E.g., a friend got me an interview with her sister at a nice company in Cincinnati after I passed along my resume. Interview went very well. Days turned into weeks into months. Finally, after a couple of calls and e-mails, they confessed that they couldn't fill the position because they couldn't hire anybody for new projects. Seems they were having trouble completing projects they already started. In other words, a clusterfuck.
That guy that wants to put in a 40 hour week and dosent build / hone there skills dosent belong in this business period.
Don't mistake a man with priorities for one who rejects subservience. Again, if the emphasis was put on getting shit done instead of the perpetual feature creep, 40 hours a week would make perfect sense. Sure, your average Slashdotter could show a little more sack, but why is the prevailing sense of the tech industry I read here so fatalist? A lot of folks used to love the art of the hack, and they're railing in the dust these days. So much of what we do now has nothing to do with hacking. The creativity has escaped out into the vacuum of the business world unless you're one of the privileged disallusioned (read: CEO, CIO).
You're right about tech work as a hobby. There's no better way to learn the trade. It's what drove so many of us to this point. Yet if programming for a living were anything like programming as a hobby, nobody would be complaining about work weeks in excess of 40 hours. Instead, I'm told I can't work over 40 hours a week, because I would accrue too much comp time. Additionally, I am told I have to use what comp time I have when I go on vacation despite having 150+ hours of vacation time.
It isn't the technical, geeky half that is the problem. It's the other 90% that sucks.
- The market is finite.
- At some point, someone will come up with a better equation (to selling), displacing the current market leader.
- Arrogance in a large corporation, in conjunction with utter greed, two negative virtues that have a tendency to come to those in power, will cause the downfall of even the most powerful entity.
One day, people will figure out the sorry fact that what goes up must come down.Some corporations in silicon valley have figured out what small business owners have always known and used to their advantage: In a time of economic bust, one of two things happen:
- You go miserably out of business.
- You innovate so that when things turn around, you have a head start against the competition.
Don't worry, though... They'll forget this lesson long before the next economic downturn.Every day I get literally dozens of offers.
Most of them offer lucrative business opportunities from the comfort of my own home. I can make up to $6000 per week, working just a few hours a day, for just a small investigative investment!
Other offers are seven-figure partnerships which often involve travel perks to exotic locations such as Nigeria.
With so many offers coming into my email inbox *without even looking for them*, times have never been better. How can folks say things are tough out there?
Sorry, but I'm waiting for everyone like you to be unemployed long enough that you're forced to sell your house into a buyers' market flooded with people who can't get even close to what they're asking for.
Housing prices in the bay area are artificially high - everyone leveraged themselves 30 years into the future based on dual incomes with yearly bonuses and stock option grants already factored in as to what they could afford per month in the late 1990s... then all-time low interest rates pushed housing demand, which kept prices high. Now, people are still unemployed, still losing jobs, still not getting raises, and stock options?? fuhgeddaboutit...
Just look at nearly any property in silicon valley and look at the discrepancy between what it would *RENT* for now as opposed to what it would *SELL* for.
Depends. Do you have big hooters, a tolerance for pain and O faces, and a video camera?
I've never said that.
How many of you are working the same job for less pay/perks/compensation than during the 'bubble'? Why is your work so much less valuable now than it was then? I'm making twice as much as I did in 1997 but then again I was 19. How about the rest?
I'd like to propose that the VCs who still have all that money invested, one way or another in technology already got their cake and are now getting to eat it for cheap.
Step 1: Put out a lot of money to create a new industry
Step 2: Make a lot of money off of IPOs and idiot public traders. Pull out of the market.
Step 3: Call the bubble over and tell all your now barely surviving companies you can't afford to give them any more money, after you've made such a huge killing the year before.
Step 4: Create huge savings by cutting huge numbers of employees and cutting out all the perks. Bring down that 'burn rate'.
Step 5: Make longterm gains off the overworked proceeds of a 'recession'.
Well it may not completely accurate but I think it applies to some of the venture operations.
A fool throws a stone into a well and a thousand sages can not remove it.
Google do not require capital.
The only reasons for an IPO is if the market values their profit cash flows more than Googles owners do, the owners can cash in.
The other reason is if they want to cash out of the business.
The Mars confectionary company is extremely profitable, very large and privately owned. IPOs are not neccessary in all circumstances. They are necesary for undercapitalised businesses who's significant returns are a number of years away.
You're google, just keep collecting cash. I somehow doubt they're going to let a bunch of overpaid used car and insurance salesman who call themselves investment bankers (lower case under advice) talk them into anything.
I have worked 35 hours per week for the last 5 years.
I don't plan to change that, unless I take one of the many offers I keep receiving from headhunters and move to an industry in which my contract demands 40 hours per week, in which case I will work the fabulous amount of 40 hours per week.
I am amazed about how many people will demand contracts to be respected with the only exception of a contract that regulates the relationship with their own employer, in which case they are willing to be humilliated and disrispected as much as they can endure and then a bit more.
If you are contracted to work 40 hours/week and need to work 50 or 60 hours per week your company forgot to hire somebody for a half time position.
IANAL but write like a drunk one.
According to the IRS, the top 25% make over $55,225 for the calander year 2000.
The top 10% of taxpayers are people who make $92,144 or more for the calander year 2000.
The top 5% of taxpayers? To qualify, you have to make $128,336
Now, to be in the top 1% of all taxpayers, you must make $313,469, a pretty good jump. Thats a difficult club to join. Once again, all for the calander year 2000.
Surprised? Its all at the IRS website. Why do people think that you have to make a million bucks to be in the top 25%, or even top 1%? That should tell you how BAD most people are doing, very often by their own bad choices. You probably work hard, and are in the top 25% easily, but just did not know it. Most hard working people who get laid off find good work again, the cream always rises to the top.
The middle class IS the top 25% of income tax payers.
Tequila: It's not just for breakfast anymore!