Comments on: How Wall Street Can Hurt Silicon Valley

By: What If It’s Worse Than We Think?

What If It’s Worse Than We Think? — Sun, 08 Feb 2009 17:00:24 +0000

[...] last fall, it took many technology companies some time before they were able to appreciate the impact it would have on them. This year, we’re seeing the fallout in the form big losses or shrunken profits, layoffs and [...]

By: Wall Street affonda la Silicon Valley » Panorama.it - Hitech e Scienza

Wall Street affonda la Silicon Valley » Panorama.it - Hitech e Scienza — Thu, 02 Oct 2008 08:30:26 +0000

[...] il problema è capire cosa potrà accadere da qui ai prossimi mesi. L’aumento del costo del denaro potrebbe rendere difficile per le aziende della Silicon [...]

By: Andy

Andy — Wed, 01 Oct 2008 17:13:48 +0000

I suspect that the biggest effect on silicon valley from the banking crisis will come from restricted budgets to buy more technology. Silicon valley is one of the biggest (if not biggest) suppliers of technology to companies and if the bricks and mortar companies are falling on hard times, the ripples affect the supplier market. I don’t know how many times I’ve seen companies building their business model on selling to the financial services industry.

By: Michaeldj

Michaeldj — Wed, 01 Oct 2008 13:29:11 +0000

I really agree with waitingforliberty, the trends now is far more different than what is before. Holding on to the past doesn’t help a bit. Looking at the facts that the globalization is slowly weakening the US and is lurking like a cancer. Just as we see. China is leading the export business. But that is not the point. The point here is, when will US lift the heavy and hard immigration process? Based on my research. Petitions and Immigration process takes a 2 or more. And it has average of 5 years for those who can hardly comply the heavy requirements. Thus reducing the interests of foreigners to live, stay, study and work in the US.

One more thing. US is always throwing money outside. They scatter dollars everywhere they go. And making other competing countries stronger. On the other hand, weakening the dollar. “A peso earned by foreigner, is a peso taken from us”-famous Spanish governor general. Same applies for US. As long as they won’t resolve the economic issue and will not stop wasting money, they will be in that poor condition.

-Michael DJ

By: WaitingForLiberty

WaitingForLiberty — Wed, 01 Oct 2008 00:43:37 +0000

The naysayers saying that all assets backed by mortgage by securities are worthless. How can a freaking house become worthless? Yes its market value may have fallen but it is quite possible to increase the market value of houses by increasing demand. And how one can increase demand of houses? Simply by welcoming more skilled and educated foreign workers and making US immigration system more friendly to the immigrants who wants to stay here, buy a house here and raise a family. USA needs fresh blood not protectionist measures that will simply make it a country with huge tracts of land , low population density and constantly outmaneuvered in the international market by other economic superpowers like China.

By: Kevin Kelleher

Kevin Kelleher — Tue, 30 Sep 2008 17:40:37 +0000

Robin, some of the names that are usually mentioned to make this case are:

-IBM, f. 1896 (end of Long Depression)
-H-P, f. 1939 (end of Great Depression)
-Microsoft f. 1975 (end of Oil Crisis)
-Apple f. 1976 (technically not a recession, but the whole 1970’s sucked)
-Sun, Electronic Arts, Symantec, etc. f. 1982 (end of early 1980’s recession)

What’s interesting are rarely noted is that these companies were founded at the *end* of recessions/depressions. Not the beginning, where we are now.

Also, as I noted, recessions have been relatively mild for the past 25 years, so I’m not sure the rule applies as much in that time.

By: Robin Wolaner

Robin Wolaner — Tue, 30 Sep 2008 16:43:14 +0000

Erica, I agree with many of your points, but this statement “Many of today’s top tech companies got their start in the dot-com bust” is one of those statements that sounds good but then doesn’t appear to stand up. Can you name a few?

By: Kevin Kelleher

Kevin Kelleher — Tue, 30 Sep 2008 15:51:36 +0000

Erica,

I wrote this, not Om. But you raise a good point.

There will be a recession, but what preventing a meltdown can do is limit its severity.

It’s often said that great tech companies are founded during recessions, but the giants of this decade – Google, Yahoo, eBay, Amazon – were founded between recessions. What great startup was founded during the 2001-2003 recession? Myspace? Even Facebook was in 2004.

By: Erica Douglass

Erica Douglass — Tue, 30 Sep 2008 15:13:49 +0000

Hi Om,

I’m seeing a logical fallacy in your (otherwise good) roundup.

You wrote: “…where the economy was about to melt down and the government couldn’t agree on how to stop it.”

That’s the fallacy. The government can’t stop this. No matter whether a weakened bailout plan passes or not, there will be a recession. We can solve the credit crisis ourselves, but it will take a concerted effort — and still won’t completely avoid a recession.

What’s important to remember, though, is that recessions are golden times for startup companies that start then. Required financial discipline means only the best survive. Many of today’s top tech companies got their start in the dot-com bust.

No matter what happens, there will be short-term (3-5 years) pain. But long-term, Silicon Valley’s brightest will shine by creating sustainable businesses instead of bubblicious enterprises that require more and more capital just to survive.

-Erica