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The Walking Dead of Silicon Valley
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."'"
I hate Zombies....
- It is easier to fight for one's principles than to live up to them. - Alfred Adler -
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
In breaking news, a professional liquidator who gets paid to oversee companies that are in bankruptcy said that he expects there to be a lot of companies in bankruptcy next year, helping his business.
Facts pointing out this may not be the case were pushed aside.
Film at eleven.
Up a little... you know... Redmond? Had to be said.
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?
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.
This is more like an advert for his company... I wonder what this will have done to his stock price.
The only difference between a liquidator and a vulture is that the sh*t from a vulture goes back into the soil as nutrients and helps other things to grow.
Gentoo Linux - another day, another USE flag.
This could be part of the "jobless economic recovery" that we have been hearing about. Seriously though, the $4,000 chairs and plasma monitors have to get sold by someone, right?
I hate sigs.
From the article: 'Sherwood Partners "comes in and talks tough," said Doug Koo, who ran a failing San Francisco startup, Cat Technology. "They teach you that some of the things are a necessary evil."'
;-)
In other words: "Your employees ain't doing shit, but do let some of them read Slashdot all day, it's a necessary evil"
My Stack Overflow user
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
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]
Have you ever had to negotiate salary and benefits with management? I imagine that many of these companies will try to get of their obligations. These hostage negotiators can convince you that you're getting everything you are demanding... right before they slap the cuffs on you.
Sounds like a perfect skills match to me. ;)
Maybe He'll open a branch office in Lindon Utah. That would be nice.
Hostage negotiation is getting people to listen and talk when they are feeling hostile towards you.
Quite a useful skill if you have it.
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.
I used to work for a rather large and well known national (US) retailer in their store operations division. One of my responsibilities was to deal with stores that were slated to close for any number of reasons, perhaps up to 30 a year. If a facility is due to close or upper management is thinking about this (ignore what they tell you - trust me), the one thing they will inevitably do is try to save money on something that won't be around. Executives simply can't resist the allure of saving these costs when they can "get away with it".
The first place to save said money for a closing or may be closing facility is operational maintenence. These are the kinds of things that can function for a while before their lack of maintenence can be noticed. On a routine basis, it makes economic sense to do certain preventative and aesthetic work on a schedule. Maintenence and building engineers know this, and they know what tends to be put off in the event a building will be closing. While they may not get the official word first, they will almost always know that a facility is closing before someone like the executive secretary.
Here is what to look for, even if you know your company is in healthy financial shape and that your facility is not about to close. Pay attention to these because the good times are not always so good.
Parking lots striping, is the parking lot badly in need of painting those lines that tell everyone where to park? Parking lot potholes, are the only potholes that are fixed the massive ones?
Paint on the walls, most businesses will paint their walls every x number of years, it saves money on electricity (brighter walls allows less light ergo less electric), and this is one of those subconcsious things that can reduce or enhance worker productivity.
Electrician, does your facility have a dedicated electrian, and if it does, has he been deemed unneccasary? This is a big one, electricians aren't cheap, but their vital to maintaining a smooth facility.
Light bulbs, most businesses don't wait for those overhead lights to burn out to change them. It costs too much in terms of time when you have thousands of them. It's cheaper to change them all at once over the holidays or the like before they burn out. This is done on a schedule, learn what this schedule is, for this is also a big one that is easily overlooked.
HVAC, heating ventilation air conditioning. Preventative maintenence like coil cleaning can be put off for a while if you know the facility will be closing, but would never be put off otherwise. Coils are typicaly cleaned at least once a year in the spring, and you can seem them from the outside. HVAC equipment is extremely expensive to service and even more expensive to fix. This is a big one, pay attention to if units are working properly (not if your hot or cold).
Carpet, this is less obvious since it can last longer, and sometimes a really cheap company is perfectly content to let 15 year old carpet remain in place regardless. This can be a red herring, but it bears watching.
It is not uncommon for maintenence and building engineering people to feel that the people in their building are stuck up and pretentious, and as a result they will probably feel no need to warn the occupants of the coming closure. While the facilities people probably want nothing to do with you, your security and janitorial staff aren't so biased. They work with facility maintenence on a daily basis and they can often also get wind of what is coming up.
From the article:" "There's still another 6,500 to 7,500 companies out there who are among the walking dead."....
Last I heard SCO had sent only about a 1,000 letters or so; wiat a minute, does it mean SCO has 7,000 sister concerns or alibis??
-
If you keep throwing chairs, one day you'll break windows....
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
Yes, as explained here, Chapter 11 bankruptcies allow the company to reorganize and keep going. It is up a judge to decide if this is in the best interests of the creditors. If the company can make a good case that continuing the business would help them pay off more of the creditors, then that's the route they will go. Companies in chapter 11 can even get funding with debtor-in-possession deals that sign the assets of the company over to whoever is providing the money. Chapter 7 bankrupties (more like true bankruptcies) liquidate the assets of the company and divide the procedes among the creditors.
With both types of bankrupties the creditors get pennies on the dollar and the shareholders get nothing.
Two wrongs don't make a right, but three lefts do.
Funny you should mention it, but it's pretty spooky around here now. Driving around, I see all around me empty buildings and "For Lease" signs everywhere. Go by the old 3Com/Palm building and the parking lot is just empty, (well, almost empty). Run over to AMD (Spansion, it's called now)and most of the buildings have been vacated, once again, "For Lease" sign proliferate everywhere. While we're in the neighborhood, we can stop by Fry's and find the store mostly empty, where we used to be able to find all the tech-heads here during lunch hour. D2 (Intel) seems to be ok, meaning it's still hard to find a parking space during the day. Many other companies such as LSI Logic, HMT, HP, Read-Rite, and others have been bought out by another company and liquidated, gone by the wayside and closed up shop, or just relocated and combined operations elsewhere.
The traffic also shows a dramatic change as well. What used to take me about 2 hours to get home to the Central Valley, I can usually make it in just over an hour, oddly enough, the worst is when I get to Tracy, wjere everyone seems to have moved (It's become a bustling little city, which I woulda never imagined growing up near there back in the 70's.
Back from the minor digression, It seems sad to me that the whole valley has become fairly lifeless and droll, considering this was where the whole technological revolution began. Thinking optimistically, this may only be a temporary condition until the next great advancement. Or things have just settled down from the great boom of the 90's and are back to normal. I guess we'll see.
Posted AC because, well, it doesn't matter.
Sounds like somebody is a little worried that their lucrative business of stalking dying companies won't be quite so lucrative in the near future. So he now proclaims that times will still be bad in an attempt to stifle spending by consumers and companies, thus furthing this slump that we're in.
This reminds me of the Simpsons episode where Bart joins an Internet company and they die at the end of the episode as Bart is confronted by a repo guy lighting his cigar with dollar bills.
This article
states that 4 out of 5 new businesses fail is a myth. Take it for what its worth, another opinion.
Dogma - "let's just say we'd like to avoid any empirical entanglements."
The repo business is in a golden age, one that will never end! So when is this guy's IPO coming out?
So this guy does "business process reorganization" or whatever it's called this second. That's way more of an empty career than even being involved in a "Walking Dead" business is.
These guys are only half a step above cult leaders and gurus, and their entire job consists of being professional scapegoats. Show me one who has ever recommended to cut the salaries of executives... you can't. Their ultimate conclusions are always to get rid of bottom-rung personnel. I don't think you need a third party to come up with that bit of genius to help your company along... you just need an executor to pose as the motivation for the decision.
same difference.
m.
This story was painfull to think about. I am 23 years old, I have been laid off 5 times, 3 of those companies don't exsist any longer.
- Directv BroadBand
- Transport Logic (Bought by Firstworld, who is no longer around I believe)
- Encompass Telesystems (Didn't even make it to having a web presence)
5 layoffs in 5 years. I live in fear, but have become bitter and jaded. I expect a layoff to come at any time. Especially since I work at Intel now.Pretty Pictures!
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....
/.
If any real estate agents sell this guy a place in Lindon, Utah around 2005 can they post the news on
Cheers
Hmmmmmm..... Deep fried and look like Squirrel.
I didn't notice the warning signs. During the job interview they asked me "Where do you see yourself in five weeks?"
One line blog. I hear that they're called Twitters now.
However, that said, it would interesting to see some reliable figures. Funny how it's run full circle - 'dot-com' started out as a pejorative, was the latest rage, and is now a pejorative again.
Beta is broken and the link to classic doesn't work. Stop wasting our time or there won't be anybody left here.
A lot of the dot com babies were pushed to expand by their venture capatilists, who didn't really care about the companies' long term health. Momentum, expand, expand, expand, get more funding, get some press, then do the ipo so that the VCs can cash out.
-------- In Soviet Russia, "Soviet Russia" sigs hate Slashdot.
Oh how I use to love that site lol...
I would get a 20 dollar check every month just for running that ad banner thing at night.
I cant believe there are any of those paid to surf companies still around.
Anyone who uses them are the people that can break the rules, or they are just the massive pyramid scheemer guys that host websites for the sole purpose of refering people to such site so they get x percentages of whatever their referers do.
The software biz is just beginning to enter a phase of massive consolidation and commoditization just as these firms need to show strong revenues. I must agree with Larry Ellison's self-serving comments that 80% of the software firms have no future.
This will impact Silicon Valley, which contrary to reports has not really generated much in the way of new industry in the last few years...the area is in fact turning more and more to the large firms (Adobe, Yahoo, Oracle, Cisco, Intel, Applied Materials etc) to shore up the local economy.
But, for anyone who wants to start a new business, I can't imagine a city with more commercial real estate on the market. Take your pick!
Sure, a few smart guys in a garage will always outmanuevre a mound of VCs and suits. Thing is, the VCs don't care about small potatoes, even very well run and profitable small potatoes. They want big potatoes. They have A LOT of money to manage and they need a MAJOR payoff to make it worth their while. This kind of company doesn't 'scale' in their minds.
.com thing came and went. The VCs (and Wall Street), who have the money, created an evironment which led to lots of 'fluff' in the form of huge headcounts, 'internet presences' and above all, growth (profits be damned!). Heck, they essentially automated the creation of companies very much like the music industry automates the creation of music (ok, write a business plan, get a valuation, hire, make a website, etc.).
And this is really why the
Does it hurt to hear them lying? Was this the only world you had?
- MCI-WorldCom: in Chapter 11
- McLeodUSA: in Chapter 11
- Exemplary Technologies: Chapter 7, CEO did time in Club Fed
- Network Associates: the division I was at got annihilated
... I'm currently in graduate school because I've come to the belief that the Industry is just not worth it. Whenever I hear HR reps talking about how they're irked that young engineers have no company loyalty and will abandon ship for the next good offer to come along, I want to shake them vigorously and shout that we've got no loyalty to employers because it's been proven the employer has no loyalty to us.I'm 29, and I want out.
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.
Most of the failed tech companies had doomed business models in the first place. Rather than plan for a conservative, common-sense approach, they opted for the "whore model" where they gave out products and services at a loss, thinking that at some point they would later get customers to pay. Even companies like Amazon.com, that has whored itself out and hemmoraged money since day one, with substantive market share, still can't quite figure out how to turn things around so the company is on solid ground.
There are still a lot of solid, tech companies that are growing, but these are companies that didn't dine on the magic mushrooms being handed out by VCs and other people who were only in it for the short-term payoff at the expense of shareholders, the greedy public and their common sensibilities.
As the owner of a successful "dot com", I deal with customers every day who wonder why I don't charge "whore" prices for hosting and other services. And they wonder why their cheap-ass services blink on and off or the company they've chosen isn't around a few months later? It used to be that businesses were afraid of dealing with small Internet companies for fear they wouldn't be around or would leave them hanging. Now it's the other way around: they don't trust the big companies, and rightly so!