Slashdot Mirror

← Back to Stories (view on slashdot.org)

The Walking Dead of Silicon Valley

Posted by michael on from the shotgun-usually-effective-on-zombies dept.

Frisky070802 writes "CNN has a column about a liquidator who refers to thousands of Silicon Valley startups as the walking dead. It states: 'Pichinson, a self-described "doctor of reality" who helps liquidate companies, says he wouldn't have moved from Los Angeles to Palo Alto a few months ago had he not smelled more high-tech trouble looming.... "There's still another 6,500 to 7,500 companies out there who are among the walking dead."'"

11 of 247 comments (clear)

  1. Managers taking hostages? by fjordboy · · Score: 5, Interesting
    Sometimes, Pichinson and Sherwood's 60 employees are able to salvage troubled startups by cutting costs and training the executives to rethink their ways. Sherwood even brings in an FBI consultant specializing in hostage negotiation techniques to help management.


    This is possibly an idle curiosity, but how is having hostage negotiating skills going to help out management? Or are these tech firms even worse off than we thought?
    --
    The anti-salmon
    1. Re:Managers taking hostages? by swb · · Score: 5, Interesting

      Some companies fail because they have a stupid business model (or none at all), and no amount of business savvy can save them. But some fail because their management is in collective denial about their situation and management strategy.

      A hostage negotiator is largely a psychologist, and psychologists are fairly good with people in denial. Get management to snap out of it, realize that their strategy is in need of correction, and in some cases you can save a company that has at least a good idea.

  2. How does this compare..... by wpiman · · Score: 5, Interesting

    With other industries starting up? What percentage of restaurants fail? Bookstores? Coffee shops? Are these number way out of whack with business as a whole?

    1. Re:How does this compare..... by BillFarber · · Score: 4, Interesting
      With other industries starting up? What percentage of restaurants fail? Bookstores? Coffee shops? Are these number way out of whack with business as a whole?

      Something like 70% of all new businesses fail within their first five years.

  3. Small companies can still survive by Gary+Whittles · · Score: 5, Interesting

    Recently, I was inspired to look up an old company I use to work for. They employed about 12 people total.

    They had three sales people, three support people, on tester, one secretary, three programmers. One of the programmers doubled as their sysadmin. The support staff had to work on bugs for Q&A in their time between calls. They literally had clients that were some of the biggest lawfirms around.

    They made a product. They sold a product. They made money.

    The guys who started the thing took out personal loans to keep it going for awhile. He passed out profits back to the employees when times were good. Honestly, if there was a place to be promoted to or a position open when I was ready to go on I probably would have never left.

    Small companies can survive in the IT world. They just have to have half a clue in their heads to do it.

    Fill a niche, concetrate and expand along the niche not outside it, keep employee and overhead costs low (their building was nothing grand but I had my own office).

    This is basic business stuff that many companies still have no concept of.

    --
    1. Re:Small companies can still survive by fuzzybunny · · Score: 5, Interesting


      A couple of years ago, I was invited to join some colleagues in a payment technologies startup in Munich.

      This was a highly impressive bunch of people. The senior guys came from one of the major producers of financial transaction enabler platforms, which would be a core part of our offer, with a huge customer base. The management of that company was friendly with the guys starting ours, who had an excellent understanding of the technology and the field, and great customer contacts.

      We had backing from one of Germany's major prestigious conulting firms, and a very senior, respected politician, who would help us to many useful contacts in industry. No fixed costs, and a free office in one of the country's most prestigious locations didn't hurt.

      We had awesome ideas which could be translated into real-life technology pretty quickly (essentially taking existing components and putting them to fairly revolutionary use.) A lot of companies were really looking to do business with us. But we failed. Why?

      The "guys in charge" were an incredibly venal, slow bunch. They took about 6 months (!!!!) to come up with a semi-legible business plan, and refused any sort of capital, even angel funding, beyond what they themselves had put in initially (complete refusal to hand over any control, anyone?) They did not understand the concept of "do something, do anything to get started", including low-level use of free technology, such as improvised websites and initial customers, preferring to plan for pie-in-the-sky everything-must-be-perfect-before-we-move. Suck. A lot of startups die because they have crappy product, or work inefficiently, or a bad business model, or economic realities. Us? Our own goddamm fault, 100%, and I could kick some people for it (no, not myself, I was one of several people constantly screaming to DO SOMETHING, so I feel pretty vindicated, if disappointed.)

      It especially irks me nowadays to see a lot of the technology and processes that we came up with in our spare time (!) in use commercially, 4 years after we died miserably. My girlfriend started work in one of the big-howevermany consulting firms, and showed me a presentation they'd done that year for some eastern european telecoms and financial institutions, which went over like gangbusters. Not plagiarized from us, since someone was bound to do this stuff in the long run, but eye-popping nonetheless. If we'd only...

      The thing that bugs me so tremendously is the sheer wasted opportunity here. I have no mercy with all the crappy dot-coms that blowthedotoutyourass.com (look it up) was so bitter about--there was no reason for most of them to exist. But I really really hate it when a good thing dies for no really justifiable reason.

      Blargh.

      So your comment about "half a clue in their heads" is so spot-on I could spit.

      --
      Cole's Law: Thinly sliced cabbage
  4. The Walking Dead of ... India! by Channard · · Score: 5, Interesting

    With so many IT call centre roles being outsourced to India, why not utilize India's Walking Dead. Specifically, there's an army - pun intended - of people who are considered legally dead in India due to corrupt officials declaring them dead so their relatives could get their hands on their land. I'm not making this up.. see this story

  5. I would take his comments lightly... by mtrupe · · Score: 5, Interesting

    This guy has an interest in tech companies going out of business. What is the difference between what he says and what the dot-commers were saying 3 years ago when they were constantly bragging about huge internet growth predictions?

    --
    [FromTheMorning]
  6. Chapter 11 protection by Zog+The+Undeniable · · Score: 4, Interesting
    I don't know a huge amount about US company law, but it seems to me that a lot of firms over there that file for Chapter 11 protection eventually emerge from it and become successful again, so the system works if the fundamentals of the business are good. Here in Britain, once you're seen to be insolvent (however temporarily), 99% of the time you're completely fscked.

    The guy in the article has at least saved a decent proportion of his client firms; it's pretty rare here unless you get a management buyout (e.g. Rover Cars - not exactly a roaring success). Most of the time the firm just shuts down and gets asset stripped. Oh well, we've never had anything *quite* as big as Enron.

    --
    When I am king, you will be first against the wall.
    1. Re:Chapter 11 protection by jj_johny · · Score: 4, Interesting
      But the guy's point is that there are tons of companies that even if you wiped out the debts, don't have enough cash or positive cash flow to make it in the long run. These companies are not going to get credit if they go through bankrupcy. Lots of these companies don't have significant debt anyway since they were VC funded - VC exchange funding for equity not debt.

      When I worked in Silicon Valley, there were tons of people who thought that they were smarter than they were, that theit product was better than it was and that the market was bigger than it is.

  7. That article is about right by Animats · · Score: 4, Interesting
    I predicted the dot-com collapse with Downside's Deathwatch. Most of the companies listed have went out of business long ago. The remaining ones are mostly just hanging on, with stock prices in the penny-stock range. They're examples of the living dead. Internet America (GEEK) is still around, with the stock around $1 and 82,000 customers left in Texas and Louisiana. Claimsnet.com (CLAI) is at $0.38. There are others. Even after downsizing, the bad-idea companies tend to remain unprofitable. But some of them raised enough money to continue losing at a very modest level for years.

    Silicon Valley has many non-public companies that are quietly dying. Often it's not their fault; they were support companies for the semiconductor industry, which has moved elsewhere.

    I've been reading "The End of Detroit", on how the US auto industry blew their market share. I see many parallels to Silicon Valley. Auto manufacturing hasn't been centered in Detroit for years now. Detroit, as a city, is a ghost town. The population is half of what it was at peak. See The Fabulous Ruins of Detroit. That could happen here.