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Silicon Valley Has Learned to Love the Bust 285

Posted by timothy from the but-has-your-ira dept.
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."'"
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Silicon Valley Has Learned to Love the Bust More

Silicon Valley Has Learned to Love the Bust

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  • couldnt last 4ever (Score:4, Interesting)

    by deadsaijinx* ( 637410 ) <animemeken@hotmail.com> on Monday April 28, 2003 @07:47PM (#5830210) Homepage
    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

    • Re:couldnt last 4ever (Score:5, Insightful)

      by delcielo ( 217760 ) on Monday April 28, 2003 @08:38PM (#5830526) Journal
      Agreed.

      The so-called "Tech Boom" and bust were really an investment boom and bust.

      At about the same time that .com's became so ubiquitous, home investors and online trading also boomed (largely for the same reason: the internet.) For the first time, Joe investor could do extensive research and play complicated strategies all on his own. The problem was that Joe investor didn't have an institutional mind-set. There was no governor on Joe investor's button.

      That, combined with the young entrepaneur who thought you just needed to be a good geeks to survive as a tech company breeded the bubble and consequently the bust.

      The recession wasn't the fault of tech (entirely) or Greenspan (entirely), etc. It was largely the fault of the unreasonably (and that's a polite term) optimistic investors.

      • Re: Little People (Score:2, Interesting)

        by Baron_Yam ( 643147 )

        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 watch

      • Re:couldnt last 4ever (Score:5, Insightful)

        by yintercept ( 517362 ) on Monday April 28, 2003 @09:49PM (#5830925) Homepage Journal
        The so-called "Tech Boom" and bust were really an investment boom and bust.

        Worse than an investment boom...the "tech boom" was a marketing boom and bust. Remember all the garbage about the Internet being the greatest wealth producing industry ever?

        The tech sector was growing at a nice healthy pace, when suddenly it became the center of every MLM or Nigerian fraud scheme ever conceived.

        The heart of the investment bubble had very little to do with the technology but was centered around the marketing opportunity of the Internet. Every investor wanted a piece of the company that cornered the bicycle or furniture market on the net. The bubble was all about marketing.

        The actual technology was growing about at the same pace before, during and after the boom and bust cycle. The marketing sector of the web, however, consumed itself and flamed out.

        • Re:couldnt last 4ever (Score:2, Insightful)

          by pyrrho ( 167252 )
          To add to what you've said, however, the funding of all these market experiments did create an incredible coverage of ideas. A lot of good ideas got funded that wouldn't have. It's like laying fertilizer in the gound the strongest seeds come up, though a lot of the fertilizer goes to waste if you actually measure the percentage that's put to good use.

          But basically I agree with you, and the keyward was "market driven". Ug.

      • Re:couldnt last 4ever (Score:5, Interesting)

        by LaCosaNostradamus ( 630659 ) <LaCosaNostradamus.mail@com> on Tuesday April 29, 2003 @01:09AM (#5831874) Journal
        I take great exception to your laying much of the blame for the bubble on all those individual investors (I prefer to call them gamblers), which I assume you are doing when you say "largely the fault of the unreasonably [...] optimistic investors".

        Those investors certainly relied upon a financial information system for their optimism. But more and more this system turned to outright fraud in order to continue to pull investment money (from whatever source, large and small, centralized and diffused) out past any barrier of hesitation or consideration.

        A good book has been recently released called "Buy, Lie and Sell High" (available here [emory.edu], here [amazon.com] and here [global-investor.com]), which more than emphasizes this point. There is also enough information out on various news services about the too-cozy relationships between investment banks, regulators and institutional investors. The bubble was a period of burning investment capital like is was so much cord wood ... and there were many financial professionals who threw morals, guidelines and law books to the wind in order to fan the flames.

        To sum up: The yokel doing the the day-trading I could chalk up to simple stupidity ... but the professionals behind the financial information system operated in full knowledge of the fraud.

    • Re:couldnt last 4ever (Score:4, Interesting)

      by the-build-chicken ( 644253 ) on Monday April 28, 2003 @10:49PM (#5831251)
      I remember reading an article back in 1998 in (I think) fortune magazine...it talked about the sustainability of the dotcom economy...they said that, it would continue to go crazy, until early into 2000, when there would be lots of industry shake outs, lots of ppl loosing jobs etc, which would continue till 2005, and by 2005 the industry would settle down into a stable industry of development, mainly populated by the a hand full of companies that actually made their cash in the boom and didn't waste it...with little new development (or startups) entering the market...wow, they were kinda right on the money huh?

  • I love... (Score:5, Insightful)

    by brundlefly ( 189430 ) on Monday April 28, 2003 @07:49PM (#5830227)
    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.

    • Re:I love... (Score:5, Interesting)

      by Pharmboy ( 216950 ) on Monday April 28, 2003 @08:28PM (#5830476) Journal
      its called finding the silver lining in the cloud.

      My industry (very not related to tech) has been down 30% a year for a few years. We have grown in excess of 40% per year during this time. We found a way to grow in turbulent times. This doesn't make us bad, or the fact that we did hogwash. It means we are playing the game smarter.

      The top 25% and the top 1% are generally there for a reason. I don't begrudge anyone who is more successful than I am, and would rather emulate them than bitch. That may be why we succeed where other just complain.

      No one wants to interview an unsuccessful person. Failing is easy, just complain and don't try. Kicking ass in this economy is hard, and worth looking at.

      • Re:I love... (Score:3, Interesting)

        by crazyphilman ( 609923 )
        Rich people (and rich people wannabes) always say that wealth is created by hard work, and benefits the best people (i.e. those who work hard). But really, all they're doing is slapping each other on the back and cheering "rah, rah for me, I'm rich and I deserve it!" Right. Like their rich family and friends had nothing to do with it -- like joe sixpack down the street gets the same investment advice and opportunities as the son of a banker. Suuuuuurre.

        Poor, working, and middle class people, who work MUCH
      • No one wants to interview an unsuccessful person.

        I would if I was hiring in this economy, because I know some excellent people who are out of work right now. Apparently you're more interested in how people "play the game" though, so I hope you find some experts at selling themselves.

    • Re:I love... (Score:3, Funny)

      by Nindalf ( 526257 )
      With that subject, I was expecting "big BUST and I cannot lie..."

  • CEO/CIO versus the grunt laborer at the bottom (Score:4, Interesting)

    by reporter ( 666905 ) on Monday April 28, 2003 @07:50PM (#5830229) Homepage
    The grunt workers, who bore the brunt of the layoffs, at the bottom of the company hierarchy are likely to have a far different perspective of the bust than the million-dollar-salaried CEO of Google and the million-dollar-salaried CIO of FedEX. The bust can come and go, yet the CEO and the CIO shall live well.

    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 ....

    • Re:CEO/CIO versus the grunt laborer at the bottom (Score:5, Insightful)

      by ajiva ( 156759 ) on Monday April 28, 2003 @08:01PM (#5830321)
      People with H1-B visa's are not your problem. I know too many people that got some dinky tech degree from ITT Tech, got paid great money during the Boom, and now bitch and moan about H1-B workers taking their jobs. Its capitalism at is best!
      • More importantly how many people do you know that got into the tech industry in the boom and have no real ability there. The big thing about the tech industry is it knows how to automate there shouldent be any grunt jobs thats part of the point your either inovating solutions or your out. Some people are not ready for this and dont have the aptitude and that is the vast majority of the people I have found that have trouble getting work in this market. I dont hire people that dont do tech work as a hobby and the educational background unless it's entry level. That guy that wants to put in a 40 hour week and dosent build / hone there skills dosent belong in this business period.

        • Re:CEO/CIO versus the grunt laborer at the bottom (Score:3, Funny)

          by Anonymous Coward
          With grammer like that and not knowing the difference between there and their, your and you're, and they let you hire people?

          (shakes head)

          Slashdot

        • Re:CEO/CIO versus the grunt laborer at the bottom (Score:5, Interesting)

          by Anonymous Coward on Monday April 28, 2003 @09:23PM (#5830758)
          That guy that wants to put in a 40 hour week and dosent build / hone there skills dosent belong in this business period.

          So here's a married man, with two kids, trips to little league and ballet practice, active in the community, likes to travel, and volunteers at his church. This guy doesn't belong in the business?

          And then we have a 21-year-old, fresh out of college, no kids, no relationship, lives on taco bell and mountain dew, works 70 hours a week on code. He does belong in this business?

          Are you familiar with the term "drag coefficient [business2.com]" with a slightly revised definition? An alternative definition is: "having a life." The article I just linked to was written in 1999, but it's nice to see the attitude is alive and well in 2003.
          • > So here's a married man, with two kids, trips to little league and ballet practice, active in the community, likes to travel, and volunteers at his church. This guy doesn't belong in the business?
            >
            >And then we have a 21-year-old, fresh out of college, no kids, no relationship, lives on taco bell and mountain dew, works 70 hours a week on code. He does belong in this business?

            The ones who belong in the business are the ones who turn out the most maintainable, bug-free code per week.

            From th

          • Are you familiar with the term "drag coefficient [business2.com]" with a slightly revised definition?

            I glanced at that article, and the fact that anyone can think in those terms is sickening. Why should any industry punish those people who don't want to be enslaven to it? Is this a return to 19th century industrialization?

            A person could spend seventy hours a week just keeping up with the artificial barrage of IT buzzwords. It isn't worth it. If a company can't train its employees on the buzzwords it

        • Re:CEO/CIO versus the grunt laborer at the bottom (Score:4, Interesting)

          by Tablizer ( 95088 ) on Monday April 28, 2003 @09:24PM (#5830765) Journal
          More importantly how many people do you know that got into the tech industry in the boom and have no real ability there.

          Not true. They often have one ability that "true geeks" lack: social and marketing skills. They are often favored because of this. They speak the same language as the boss (even if that language is sometimes BS). Raw tech is either not appreciated, or easier to move overseas. IOW, the less people want or need to interact with you face-to-face, the easier it is to farm your job off to India or China for $2/hr. This is the big catch-22 that us nerds now face. The boss will not know whether or not you know how to normalize a database, but he/she will know when you irritate or bore them. It is a people game out there more than a tech game.
          • sad part is your right. the funny part is that this is exactly what the friggin problem with the industry is.

            innovation does not work 9-to-5. PERIOD ! and all these "non-geek" tech workers ONLY want to work 9-to-5.

            let american companies offshore. in 5 years when german and japanese companies are ruling our tech sector and all the fat-cat-whiteboys are out on their ass i'll be laughing at them saying i told you so.

        • False presumption (Score:5, Insightful)

          by Fastball ( 91927 ) on Monday April 28, 2003 @10:37PM (#5831188) Journal
          Some people are not ready for this and dont have the aptitude and that is the vast majority of the people I have found that have trouble getting work in this market.

          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.

          • It isn't the technical, geeky half that is the problem. It's the other 90% that sucks.

            haven't read anything more true in a LONG LONG time. (5 minutes)

            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 ....

            see thats the problem, what got the industry to this point is not some fly by night club goer who works only 9-to-5. what got
          • It isn't the technical, geeky half that is the problem. It's the other 90% that sucks.

            Hmm, half (50%) + 90% = 140%

            How many clones do you have?
        • The H-1B program is a corporate subsidy. Government is artificially driving up the supply while doing nothing to change demand. You don't have to be a genius to see that this isn't a free market. The only people that believe H-1B is anything other than a subsidy is either here on an H-1B visa or is the ITAA. By the way, Milton Friedman, the premier free-market economist of our time has stated that H-1B is a government subsidy.

        • 40 hours per week. (Score:5, Insightful)

          by jotaeleemeese ( 303437 ) on Tuesday April 29, 2003 @05:25AM (#5832478) Homepage Journal
          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.
      • People with H1-B visa's are not your problem. I know too many people that got some dinky tech degree from ITT Tech, got paid great money during the Boom, and now bitch and moan about H1-B workers taking their jobs. Its capitalism at is best!

        And quite to the contrary, I know too many people that got some dinky BS from a university in India or Malaysia or China, and they couldn't code Hello World to save their life.

        That is what disgusts me about H1-B visas. It's easy enough for an American employer to che
      • Its capitalism at is best!

        Agreed. However, has the drop in income for these people been matched with drops in the cost of living? I think a lot of people are seeing the simple dream of a house, a backyard, a car, and a dog evaporating before them.

        Outside of a downtown, should families really be raised in two-bedroom apartments with thin walls? Should they be denied owning real estate (often the only stable investment available)? Should we drop our standards so low that living in tenements and corpora

    • Re:CEO/CIO versus the grunt laborer at the bottom (Score:5, Insightful)

      by TopShelf ( 92521 ) on Monday April 28, 2003 @08:04PM (#5830333) Homepage Journal
      Many of the "grunts" of the tech boom were hardly grunts at all, and fared better in those years than they would have under more normal circumstances (HTML-monkeys making $100K+, for example). And again by historical standards, unemployment has remained low during the recent recession. Things have looked bad for the last couple years, but that's mostly a matter of perspective compared to the Go-Go 90's...

      • Unemployment Rate (Score:2, Interesting)

        by reporter ( 666905 )
        The unemployment rate for the overall economy is about 6%. The unemployment rate for engineers is around 7%. The unemployment rate in Silicon Valley is around 8%.

        So, yes, the engineering grunts are having a hard time. Read " Will code for food [com.com]" by C|Net [news.com]. 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

      • I'm curious whether you have any first-hand experience with these so-called HTML-monkeys making 100K+. I wouldn't be surprised if some very talented DHTML and JavaScript experts made that when they were being asked to work 15 hours a day to beat the competition at "MyManicurist.com", but they aren't monkeys any more than the server side guys. And then there are the people who don't do scripting but are really graphical designers for the web. I'm not one of these talented client-side or designer guys but wh
        • I'm curious whether you have any first-hand experience with these so-called HTML-monkeys making 100K+.

          Not html guys, but I did run into quite a few "senior architects" and "senior designers" who made 120k+ and were completely useless, hand-waving monkeys (their primary skills were in drawing UML diagram of unworkable architectures that ignored the messy details that exist in real systems and talking really loud).

          I used to run into web guys all the time who claimed to be making that much, but had no w

      • by historical standards, unemployment has remained low during the recent recession...

        Overall unemployment has remained relatively low. Unemployment in certain sectors (for instance, IT) is much higher than the overall rate would indicate and matches or exceeds historical downturns.

    • So the CEO/CIO in question are not Americans? No, really, I am curious.

      There aren't droves of H1B workers either. There are droves of these people leaving -- if you are looking for droves. And when the phoenix rises, are companies going to look to hire a tech worker 6 months from the rise-D-Day (may or may not based on whether the visas come through) or a local veteran.

      The H1 droves will come back only if there is sustained growth and good hands are hard to find at competitive prices.

      Just my 1 rupee.
    • huh? Just because you don't have the stats of the number of h1bs that got affected by this? If you are still unemployed, first of all I wish you good luck but try this - Change your resume to say you are an h1b and see how you start getting 'only permanent residents' replies.
    • The bust can come and go, yet the CEO and the CIO shall live well.

      I suppose in monetary terms you are right, but remember that the CEOs and CIOs are usually extremely competitive. That's how they got on top of the food chain in the first place - they practically live and breathe their company, not so much out of loyalty as a drive to suceed. You've probably encountered rabidly pro-Microsoft people - what do you think the top brass is like? It's easy to look at someone else who doesn't have to deal with y

  • blame the analysts (Score:4, Insightful)

    by Em Emalb ( 452530 ) <ememalb@gmaPARISil.com minus city> on Monday April 28, 2003 @07:56PM (#5830272) Homepage Journal
    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.
    • 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)).

    • Re:blame the analysts (Score:5, Insightful)

      by RickHunter ( 103108 ) on Monday April 28, 2003 @09:01PM (#5830637)

      The thing is, Wall Street is still insisting on these growth rates, even though we're in the middle of what's looking more and more like a bad recession. But that's no surprise, because the focus of business for the past ten-twenty years has been on short-term profits over long-term sustainable growth. In fact, that's pretty much the definition of the tech bubble. Circumstances don't matter, viability five years down the road doesn't matter. All that matters is the stock price and next quarter projections until the current stockholders can cash out with a good ROI.

      All these publications about how the bubble hasn't really burst, and how techies and the tech market (and R&D) haven't really been hurt are bull. They're just the executives trying to convince themselves that their cash grab didn't really hurt anyone. And that outsourcing every job they can justify to third-world nations for a tenth of what the work is worth is good for the domestic economy.

      • "All these publications about how the bubble hasn't really burst, and how techies and the tech market (and R&D) haven't really been hurt are bull."

        It depends on how you read that sentence. In a very real sense the bubble hasn't burst yet. The S&P is trading at 16 times earnings now. That's seriously overvalued. THe norm is something like 6 times earnings.

        This bubble could burst again!

        • Re:blame the analysts (Score:3, Informative)

          by afidel ( 530433 )
          Um traditional P/E for the NYSE is 19 during non-recession years so I don't know where you are getting 6 from. For two decades of figures see the last page of This [nyse.com] pdf, for more historical info search around.

    • Blame the dividend double-tax (Score:5, Insightful)

      by Brian Stretch ( 5304 ) * on Monday April 28, 2003 @10:08PM (#5831034)
      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.
      • Dividends are a sign of a company that does not know what to do with its profits. A company that can find profitable internal opportunities to reinvest its profits would be stupid to give those profits to their shareholders in the form of a dividend. "Let's see," says the investor. "The CEO could have taken the profit, put it into a new project for me and made a 20% rate of return. Instead, he gave me a dividend which gave me a 5% rate of return. Fire his ass." Companies in old mature industries pay d
        • The objective of a company is to make profits, not to increase their share value.

          Some of those profits should be given back to shareholders as dividends, wom of those profits should be reinvested.

          • No, the objective of a company is to make money for its shareholders. Some shareholders may prefer that those returns be paid out in the form of dividends, some may prefer that they be realised as capital gains. The idea that they MUST be paid out as dividends is absurd. It is especially stupid when the company has internal projects that need investment which can offer a higher rate of return than other possible projects where the investor could place his money. This is one of Warren Buffet's investment
        • > First, most individuals who receive dividends hold the stocks in tax-free or tax-defered accounts such as IRAs and 401Ks. So in fact, it is the wealthiest taxpayers who will benefit from Bush's proposal.

          Ahem - hogwash.

          XYZ offers a 5% dividend. It trades at $10.

          Today, a "rich" taxpayer buys 1000 shares ($10K), and a year later, has dividends of $0.50 (5%) per share. Total income $500/y. After tax, $250/y. (38% Federal, 10% Kalifornia, 2% rounding :), or about 2.5%. But why not just buy $1

          • Without that double taxation, the same investor has a new choice: Get $250 on a fixed income investment, or $500 on XYZ. All of a sudden, that $10 stock is worth... more. How much more? Well, the reward has doubled, the risk hasn't. Lots of rich folks will see that, and buy XYZ. XYZ's price will rise - in fact, it'll rise until its after-tax yield is what it was before.

            You forgot that the investor is going to have to sell something else (those municipal bonds) in order to buy X
      • > [Blame the dividend double-tax] which nearly killed the classic dividend-paying stock model in favor of the far riskier growth stock model.

        *applause* (Nail. Head. Hit.)

        The other nail in the coffin was when Congress enacted an effective cap on executive salaries at $1M. In order to "make things fair", Congress said that companies couldn't deduct paychecks for executives over $1M.

        With low CEO supply and high CEO demand, the $1M cap became the baseline, and the only thing a company could offer wa

  • Long Term Goals (Score:5, Insightful)

    by Devil Ducky ( 48672 ) <slashdot@devilducky.org> on Monday April 28, 2003 @07:58PM (#5830291) Homepage
    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.
  • and, at first thought it was a piece about how the herion chic was out in silicon valley, and an actual womanly shape was in.

    Then, of course, I realised that it would be about pr0n firms locating in Silicon valley.

    I think I need time off, away from a computer screen.
  • I'd be saying the future never looked brighter, at least when the VC's were around...

  • They don't have a choice (Score:5, Interesting)

    by aqkiva ( 629658 ) on Monday April 28, 2003 @07:59PM (#5830303)
    When people start a company, they go to work for the challenge. When the company is successful, they go to work for the money. And when the bang occurs, they go to work for the technology. Sounds to me they are and have been doing the same thing all along and this may just be some psychological defense mechanism to explain their situation. Up next, the big crunch.

  • Silicon Valley is rather empty right now. (Score:5, Interesting)

    by Animats ( 122034 ) on Monday April 28, 2003 @08:08PM (#5830359) Homepage
    40% of Silicon Valley commercial real estate is currently available. But it's interesting to see what's available and what isn't. We're looking for about 2000 square feet with a large, fenced yard where we can test robots. Will pay $0.50/$0.75 per square foot (which is about where the market is right now). Acres of office space are available. R&D space is vacant all over the Valley. I've been inside several defunct dot-com buildings in the last few weeks. But the yard is hard to find; old economy companies like plumbers want those. Any suggestions?

    The tech bust isn't just about profits. There's far less real R&D activity. All the classic research centers (DEC/Compaq/HP, IBM, Apple, PARC, SGI) are in terrible shape.

    "salesforce.com" isn't exactly an example of rocket science.

  • The Iraqi Information Minister at work again? (Score:5, Funny)

    by JediTrainer ( 314273 ) on Monday April 28, 2003 @08:16PM (#5830411)
    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.

  • The Bay Area has never been better (Score:5, Insightful)

    by phippy ( 176682 ) on Monday April 28, 2003 @08:25PM (#5830462)
    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.
  • 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 breas
  • Bottom feeders like me are eating it up - I just bought an SGI Indigo2 for $96 - that's with the monitor, vid cable, remote control, internal 2g scsi disk w/ Irix 5.2 (or was it .3?), external 2g scsi disk, owners manuals, spare drive sled, microphone, audio, 128Mb ram, etc - boots and runs fine. Then I picked up an Octane with 6.5.14, 512Mb memory, SE graphics, etc - $250. Jeebus, these were over $20,000 machines at one time, now they're giving them away at surplus prices.
    • Might I ask where you get stuff such as this? :)
      • for what its worth.

        search for "alpha" "sparc" and "SGI" and you will come up with some nice stuff .... i picked up a dual proc 533mhz alphaserver DS20 for $800. and an Octane for $285 ..... both of them sold in the 10k plus range a few years ago .....

  • Great time to be a startup company? (Score:5, Insightful)

    by slashdot_commentator ( 444053 ) on Monday April 28, 2003 @08:51PM (#5830590) Journal

    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.)

    • Re:Great time to be a startup company? (Score:4, Interesting)

      by PCM2 ( 4486 ) on Monday April 28, 2003 @09:07PM (#5830661) Homepage
      They only make their money by pumping in money into startup companies likely to succeed.
      Actually, some of them make their money by pumping money into startups whether they have any merit or not, helping to generate a lot of buzz, then gutting the company when they figure the momentum has run out. Some of the happiest entrepeneurs I've spoken to keep that way precisely because they stayed the hell away from V.C. money and funded their companies in other ways.
    • I recall having some ideas during the boom that could have been (say) million dollar companies, doing some reasearch, and finding that some company was already doing it with $30,000,000 of VC. They could therefore do things like give stuff away to customers, buy the best servers and connections, and be totally unconstrained by the need to turn a profit. It was intimidating. I never tried to implement any of those ideas.

      Now those companies are all out of business, and a sane company could do those same

    • Got any hardware experience?

      If so, let's build this [slashdot.org] :)

  • perspective. (Score:2, Insightful)

    by Anonymous Coward
    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.

  • they are correct (Score:4, Insightful)

    by Archfeld ( 6757 ) <treboreel@live.com> on Monday April 28, 2003 @09:07PM (#5830659) Journal
    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.
    • 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.

      Yet somehow, salon.com is still solvent...

  • Umm Silicon Valley?.. Bust?.. Must ... Not ... Make ... Obvious ... Comments ... Here ...
  • "The sound we heard wasn't the bubble bursting; it was the big bang."

    And here I thought that noise was Bill Gates breaking wind. ;-)

  • Why does it happen? (Score:5, Insightful)

    by danila ( 69889 ) on Monday April 28, 2003 @09:17PM (#5830720) Homepage
    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.
    • But that's what all journalists do -- it's what all journalism and english majors are taught to do when they're undergrads. Consider how they put together papers while in college:

      1. They decide what their paper is going to be about. Perhaps they tell their professor: "My paper is going to be about hedgehog mating rituals!"

      2. They do a little prep research and formulate a position: "Hmm... None of the literature supports the idea that hedgehogs have the brains to have a mating ritual. Fuck. So... Ok, I'll
  • Don't take any tech analysis from Fedex seriously. These guys have no clue about technology. Their answer to every problem is just to throw ridiculous amounts of money away on huge sun systems for the smallest problems.

    On the worker side, everything important that gets done gets done by contractors because the tech employess who are capable, competent, and arent lazy are few and far between.

    Fedex has used its "high tech" image basically as a bluff to its pilots to keep them from unionizing. They have th

  • Big Bang? (Score:2, Funny)

    by neiljt ( 238527 )
    The sound we heard wasn't the bubble bursting; it was the big bang.

    Plenty of everlastingly expanding nothingness between the bright bits then ... Not to mention Black Holes and more Dark Matter than it might be practical to shake a stick at.

  • What small business owners have known forever. (Score:4, Interesting)

    by rice_burners_suck ( 243660 ) on Monday April 28, 2003 @11:04PM (#5831328)
    Too many folks have become accustomed to the myth that huge multinational corporations have a God-given right to eternal, perpetually increasing profits and market share. This view is wrong because:
    • 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:

    1. You go miserably out of business.
    2. 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.

  • Times have never been better! (Score:5, Funny)

    by brundlefly ( 189430 ) on Monday April 28, 2003 @11:21PM (#5831418)
    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?
  • Wall Street Has Learned to Love the Shapely Derrière.

  • Cheap labor to finish up the work (Score:3, Insightful)

    by foniksonik ( 573572 ) on Tuesday April 29, 2003 @12:48AM (#5831785) Homepage Journal
    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.

  • Silicone.... Busts....

    Must surf.
  • Right. Next we'll be hearing about how Internet Appliances are going to be the next big thing.

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