Silicon Valley - The Geeks Are Back In Charge?

securitas writes "The New York Times' Steve Lohr reports on a fundamental shift taking place in Silicon Valley in the post-dotcom era: the geeks are back in charge. New start-ups and companies that survived the bubble 'are based on innovation and are run by people with deep technical skills.' These companies have real technology and a solid technical base that have historically been the bedrock of Silicon Valley - something that was temporarily forgotten during the dotcom bubble. Profiled companies include Tellme Networks (speech recognition), InterTrust (DRM - digital rights management), VMware (virtual machines) and Scalix (Linux e-mail servers)."

Comments

Quattrone is out/Torvalds is in

[andy1307]

As in you-know-who Torvalds and Frank Quattrone

NEW YORK - The month-long criminal trial against Frank Quattrone, Silicon Valley's once-high-flying financier of the technology boom, crumbled Friday when a judge declared a mistrial after jurors deadlocked on a verdict.

Inside Frank Quattrone's Money Machine

Nobody knew it at the time, but the apex of the Internet rocket ride came on the morning of Dec. 9, 1999. Executives of computer maker VA Linux Systems Inc. gathered at 6 a.m. in the trading offices of Credit Suisse First Boston (CSR ) on the 17th floor of a San Francisco skyscraper for the company's initial public offering. Among those assembled were Larry M. Augustin, the chief executive, and his friend Linus Torvalds, the inventor of the Linux operating system, who was dressed in his customary T-shirt and sandals. Their three toddlers scampered around underfoot while the adults watched in stunned silence as the stock price jumped from 30 a share to more than 200 within minutes. Augustin nudged Torvalds and whispered: "Did you ever think we'd be here?" At the end of trading, the company's shares were worth 239.25 apiece, up 697.5%, making it the best-ever first-day IPO performance.

DRM?

[gunix]

"These companies have real technology and a solid technical base
InterTrust (DRM - digital rights management), "

Is it just me, or why do I feel bad when I read "real technology" and DRM in the same text?

Re:DRM?

[DrEldarion]

Is there a reason why DRM shouldn't be labeled "real technology" besides the fact that you don't like it?

-- Dr. Eldarion --

Myths

[cubicledrone]

1) Everyone fired or laid off post-dot-com was a skill-less, freeloading slacker who got their technical skills from "Learn $TECHNOLOGY in 21 days" books.

False. In fact, middle-management is now finding their IT department unable to do much of anything without a huge budget increase or new equipment. Middle-management, as expected, is still sitting there, having meetings and trying to figure out what to do.

2) Anyone who can't get a job as a programmer now is a skill-less, freeloading slacker who got their technical skills from "Learn $TECHNOLOGY in 21 days" books.

False. There are Masters Degree holders in both engineering and scientific fields of IT study who cant rent interviews, much less jobs.

3) Technical skills are a commodity.

False. Perhaps 10% of the working population has the training, education and experience to build a complete computer program. Middle-management, unable to understand this fact, much less the technologies they are in charge of, continues to presume that ordering a database is no different than ordering new file cabinets.

When these and other myths are no longer givens in the discussion of improving the IT department, then, and only then, will things improve.

Re:Myths

[squiggleslash]

Much of this perception has to do with the fact that when there was a shortage of people with computer skills in the late nineties, two things happened:

1. There were an awfully large number of "Learn $TECHNOLOGY in 21 days" types who got hired. Actually, more seriously, there were an awfully large number of "Know the buzzwords associated with $TECHNOLOGY in 21 days so you can pass interviews" types. I know this, I had to work with so many of these people. Programmers who didn't understand such basics as modularity and FOR...NEXT loops, who couldn't read a two paragraph spec, etc.

These people were eventually fired or laid off, which in turn lead to an assumption of guilt on the part of anyone fired or laid off. But I also know skilled, talented, individuals laid off from my own company, which didn't feel the recession (or, if anything, benefits from it - we do consultancy that tries to make certain types of retail outlet more efficient and profitable in a business where it's vital stock keeps moving) who were discarded due to temporary shortages or office politics. If I started my own business, I'd hire several of the people we laid off in an instant, above many of those I work with today.

2. Programmers got greedy. Seriously greedy. I recall two or three years ago reading poster after poster on Slashdot protesting that employers with problems finding employees were just paying too little, and if only they understood that $150,000 was an entry-level salary these days they'd see...

What they forgot was that few businesses can justify $150,000 on a computer programmer. Those that were paying those kinds of salaries were generally the dot-coms, who also had no business plans and were little more than VC money-pits. But because they were paying so well, programmers held out for those kinds of salaries, with the disasterous consequences we're seeing now - something close to a tech recession, many competant programmers drawing welfare, and businesses outsourcing programming - a medium where traditionally communications are already awful and need improvement - to other countries where they can find cheaper labour. Businesses were forced to look elsewhere, and that's exactly what they did.

How you resolve this issue is open to question. Despite general pessimism, the fact is businesses that need programmers will always find it easier to locally hire than set up labour pools in other countries, but it's time for some realism and some recognition that a safe, well paid, job is usually better than a temporary obscenely-paid one.

Re:Myths

[kfg]

Gold is rare. Gold is also a commodity. It is bought, sold and traded as well as used as a basis for buying, selling and trading other commodities.

Technical skills may be both rare and needed, misunderstood and overlooked by managment and HR, but that does mean such skills are not a commodity. If they can fire you and hire someone else to do the same job, you are a commodity. Like it or not, right or wrong, businesses are structured in such a way that anyone can be fired and replaced by someone else.

Checkout clerk is actually a small technical skill. You can confirm this by going through nearly any Wal-Mart check out line. The low quality of of most checkout clerks is palpable. When you hit a good one these days it's almost a religous experience. I had someone actually count back my change to me the other day. It made me want to marry her.

This doesn't mean that checkout clerks are not a commodity.

You know the joke?

"What did the employed physicist say to the unemployed physicist?"

"Would you like fries with that?"

10% of the population? Hell, that isn't even rare. Colleges sell Master degrees, and even doctorates, as commodities. Get the right degree, get the right job. I'm sorry, but that's a pure commodity market. The very fact that you're talking about it in terms of job interviews proves it's a commodity market.

Get the right degree, go live in the jungle with gorillas. Get the right degree, live in a garret/basement writing poetry/free software.

That is not a commodity technical market.

The second you walk into an HR department you pick up a big sign that says, "I am a commodity, please buy me."

If they do not, but buy someone else instead, that proves you are a commodity.

The fact that they can't differentiante between a good apple and a bad apple when they are in the market for apples does not mean apples are not a commodity.

There is a way not to be a commodity. Don't walk into the HR department. It really is that simple.

But that's hard. You'll need some serious skills to pull that off. Skills the other 25 million engineers don't have. Some of those skills have nothing to do with the tech. They are life skills.

Aquire them. Make yourself unique in your niche and able to maintain life and limb without an HR department (although this may mean going to live in the jungle with gorillas. If what you want is a condo and BMW you just might have to enter the commodity market. In this case you'd be better off producing the commodity rather than being the commodity).

Otherwise you can just keep adding your resume to the stack that grows higher, and higher, and higher. . .

Other than that, I'm with you.

KFG

Re:Myths

[Knights who say 'INT]

but it's time for some realism and some recognition that a safe, well paid, job is usually better than a temporary obscenely-paid one.

Actually, you need to do a present-value cashflow comparison between the two options.

Really, "present-value cashflow comparison" is a Business 101 buzzphrase, but it's pretty much how you understand how financial decisions should be made. Everything else in finance (from internal rate of return decisions to Black-Scholes derivative evaluation) are variations on that theme, with different degrees of sophistication.

Here's a quick tutorial I just found on Google. It's really easy to understand, and might avoid unwanted insertions in thy financial behinds.

Re:Myths

[elpapacito]

I think there is a common misconception of what programmers really do. If we compare the cost of resources (in a certain moment in time) of the resources used by programmers (mostly books,hardware,beverages,food) and the cost of resources used by other workers (for instance , a plumber) with the market prices of their products/services and quantity of good/service produced , I think we'll see that programmer are living goldmines.

Let's say that a plumber spends some money in materials to build a network of pipes needed to bring fresh water to an house. He sells his product to one person, with one house. You can't resell that very same work to other persons, because each and every house needs its plumbing works and materials.

Now the programmer spends his/her lifetime in front of a computer and does some investments in himself by buying hardware and books.Some company may pay these costs.Once the program reaches a mature stage it can be sold to MILLIONS of clients with ridicolously low replication costs.

The programmers usually don't get royalties on quantity of software sold : once the program is developed, it's company property and (in theory) the programmer could be fired. Thanks for your help, goto hell.

Now is it unreasonable for a programmer to ask for -comparatively- otrageous wages ? NO ! We have just seen that he's not likely to see his revenue increase EVEN IF the company for which he developed the software sold some million copies.

He may choose to have stock options instead of cash , but as many programmers have understood that's too much of a risk expecially when there isn't a system preventing management from doing wrong business decision or simple fraud.

Someone may say that the programmer doesn't know jack about selling products, financing, accounting , laws etc so he deserves to be paid little because he's not sustaining all the costs involved in running a company. But how the f*ck is a programmer supposed to do ALL of that and still do his job of daily coding and bugfixing ?
It seems humanly impossible to me.

Yet, his product can be sold in enormous quantity and he's supposed to sustain all the risks of his job without a fair share on the QUANTITY of product sold. No wonder he's going to ask for comparatively huge wages.

VMWare

[AmigaAvenger]

VMWare is considered a new startup? They have been around since 1998, andn actually have a very solid product at a reasonable price to offer... nope, can't be a dotcom2 startup!

Is Carly going away?

[IM6100]

Does this mean Carly will move back in with her mother at the trailer park?

Will the good stuff get re-branded back to Hewlett-Packard and the bad product lines get sold to Dell?

A geek can dream, can't he?

tellme does not belong on the list

[andykuan]

How does tellme.com fit in here as a company run by geeks? They got over 200 million in capital for a quintessentially dot-com biz model: a consumer-oriented the-advertising-will-pay-for-everything phone service. They've only made it through the dot-com crash because they're sitting on a ton of cash and they've got AT&T backing them. Besides, they're less technology producers than technology integrators: the speech recognition engine they use is from Nuance.

Anyway, nice premise for an article. It's good in concept, but the writer could've done a better job finding companies that really represent the ideal of companies run by geeks and driven by innovation.

Interesting cycle

[nepheles]

It's interesting to see a shift this way.

It seems that the tech industry is highly cyclical, and, once the current batch of geeks have innovated sufficiently to create marketable products, slowly business people will come to replace them

Once these products have run their course, and a recession kicks in, the shift happens the other way.

It's a fairly symbiotic relationship, I think, playing to each group's strengths. It's certainly worked for the past 40 years. Long may it continue

one of them is a lawsuit company

[MobyTurbo]

Intertrust, an example of a "geek company" in the article, stopped being a technology company with over 300 employees, and became a patents-on-DRM IP lawsuit company with a little over 30 employees, and no new programming. They are now involved with a lawsuit over DRM features of Windows Media Player.

I don't know why the New York Times chose them as an example of a "geek company" really the only true example of that was VMWare, which never was a dot-com bubble company in the first place.

Geeks in charge

[mabu]

I think the geeks have always been in charge (though I think "nerd" is a more appropriate characterization). It's just that for awhile, during the dot-com-boom, a bunch of MBAs showed up and snowjobbed management with their magical doublespeak skills and ran the companies foolish enough to drink their kool-aid into the ground.

Meanwhile, the many solid companies with a solid foundation of technical talent who maintained control over their ventures just plugged on. With all the FOD out of the way, they look like they're new when they're not.

Re:skilled=unemployed=screwed

[Ranger]

Not only that, if you are skilled, employers for unskilled jobs are reluctant to hire you for fear you'll leave them as soon as you find a better job (which is true). Unless of course they know you can't find a better one because the economy sucks so bad (which is also true).

Skilled tech workers are in a double bind. Their jobs are being replaced by H1-B's, or outsourced overseas. The problem is companies go too far in reducing labor costs. Everyone wants the best bang for the buck. I do to, but you still have to spend money. It should be about getting the most value for your dollar and not spending the least you can possibly get away with.

The worm has turned.

[LibertineR]

I dont know what to attribute it to, but at least in my field, interest has exploded just in the past 3 weeks. It is as if someone pulled a switch, and Silicon Valley was turned back on again. For the past 6 months, I was getting 2-3 inquiries a week, and since October its been 2-3 a day.

Last week, I turned down business for the first time this year for lack of available time. I dont think there is going to be a lot of hiring, but for Consultants like me, things seem to be getting good again really quickly.

If things continue like they have been, I may have to hire an extra couple of consultants myself.

The same could be said...

[uptownguy]

bad programmers got greedy. good programmers are worth their weight in gold.

The same could be said of good teachers. Or good dentists. Or lots of other jobs that require equally as much talent, innate skill and hard work to earn the label of "good". Seriously, just because our field of interest happens to be technology doesn't mean there aren't other careers out there where dedicated, brilliant people don't stand apart from their peers and make a difference. And good _______ usually make more money than bad __________. But salaries for other fields still don't compare to what techies are paid. Programmers are still unrealistic about their expectations; management not so much... which is why you see the disasterously short-sighted trend to outsource overseas. They might be making the wrong decision, but they are reacting to a very real problem: IT salaries are still overinflated. (I say "over" inflated only because I think we are in the process of a correction in that valuation. If you want to get pedantic, I think that the market always pays PRECISELY what it values for careers. By definition. But because we are in the middle of a correction, those salaries will be sharply different in a few years.)