15:47 PM

Silicon Valley is back . . . I have the dotcom

By Tom Foremski for SiliconValleyWatcher

[There has been a lot written recently that Silicon Valley is back--here is part of a post I wrote in mid-November 2004.]

Slurpy-Exec.jpgI'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!]

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.

Silicon Valley is going to have a larger impact than before. I’ve been through several 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 . . .

- - -

I didn't finish the sentence in November 2004. (I usually sit on things for six months or more, so that I can try and figure out if I can exploit any insights I have, I'm learning to be a media entrepeneur so I might get better at it :-) But Let me finish the sentence now: it is going to be about media technologies, it is all about publishing.

And now every company is a technology-enabled media company to some degree...and that means every company will be affected by the innovation coming out of Silicon Valley.