Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Silicon Valley is Back, Baby.......Dotcom

Posted by Tom Foremski - November 15, 2004

by Tom Foremski for SiliconValleyWatcher.com

I've had lots of chats about Silicon Valley lately and I’m of the Bachman Turner opinion that you ain’t seen nothing yet.

When I arrived here November 8, 1984, Silicon Valley was going through the down cycle following the PC boom. A hundred PC companies wanted just 10 per cent of the market, wanting to strike it rich, as rich as the Apple IPO—the Google celebrity IPO of its day.

Hundreds of Apple staff became millionaires, including secretaries and the guy that ran the parking lot. The media coverage was massive. VCs rushed in like a herd and funded a huge number of PC companies and when the bubble popped, the down cycle was harsh. Stories about Silicon Valley’s death were constant and grinding for several years. I’ve seen several business cycles and the same thing happens in each down cycle, endless speculation about Silicon Valley’s future. What future does Silicon Valley have?

I think I can answer that question very easily—and I’ll accept any size bet on this call: when Silicon Valley comes back, it will be bigger than before. (Actually, it’s been back for a while--hence this venture.)

I was chatting with Ron Piovesan, from Cisco on this topic recently, and he says has also seen signs of improvement. He laughed when I said I own the dotcom name: SiliconValleyIsBack.com.

I said I’m serious, I do own it. I also have SiliconValleyisBackBaby.com! I'm going to set them up as headlines--heck, they were only $8 apiece. I bought SiliconValleyGarage.com for $8 too. Maybe I'll set it up as a tribute to HP?

Things in Silicon Valley might look bleak if you look at the big cap tech companies but they don’t when you look at startup activity.

Silicon Valley is very much like a fairground slurpy -- big chunks of ice with most of the juice at the bottom.

And there is a lot of juice accumulating, the laptops are discretely reappearing in bars and restraunts, and there are many signs of bubbly behavior.

Getting back to Silicon Valley…

It’s going to have a larger impact than before. I’ve been through about 5 business cycles and each time Silicon Valley has come back stronger.

The most recent comeback, the dotcom boom, was the first time Silicon Valley was able to have an immediate worldwide economic impact. It was the first time it became hooked up to world stock markets through the tech IPO flood. This provided a mechanism for trading in Silicon Valley’s ideas. Remember, many dotcom companies were stories--stories about business concepts--revenue models were not necessary.

I think this time around, Silicon Valley's ideas will have a larger impact and things generally will be done differently. The way Silicon Valley innovates will be different, media will be different, PR will be different.

And this time around, dotcoms will eat the lunch of the established companies. Then they will eat the companies (or at least suck out the soft fatty stuff such as the brand image and leave behind the crunchy legacy infrastructure stuff.)

There will be many companies that won’t be able to reduce their cost base fast enough to meet the efficiencies of new Silicon Valley "new rules" ventures.

I’ve got some views on where I see things heading, and I will write about those trends and I’ll probably check them out myself. That’s because the next phase of the internet is going to be all about . . .

To be continued . . .in SiliconValleyWatcher. Reporting on the business of Silicon Valley.

(Drop me a note sometime…!)

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