Tech Watch: Bush win won't ease tough overseas tech markets
The re-election of President Bush was not a welcome outcome for some Silicon Valley companies. I know several tech company executives who have been complaining that US foreign policy has not been good for business in Europe. With about 50 per cent of revenues for many tech companies coming from overseas markets, US foreign policy can have a large effect on business--especially for many small companies.
Tech markets are tough enough for Silicon Valley companies without having to also deal with the negative connotations of being a US company in today's world. There was hope among some local companies that a John Kerry win would set a course of improving US foreign relations and that this would help business.
However, Kerry's support in Silicon Valley was tempered with uncertainty over his stance on offshoring. Although most local startup companies offshore very small amounts of their engineering work, there had been concern that the government might limit their future ability to use offshore development facilities.
Interestingly, it is the venture capital firms that have been pushing their startup companies to use offshore development facilities. One entrepreneur told me, "Most of the venture capitalists are insisting that business plans include an offshore component, otherwise they will not look at it."
The venture capital firms will reduce the size of their investment to make up for the savings that offshore development work can save a venture--but the milestones remain the same. Very crafty: the VC's take the savings upfront!
Interest in politics, however, is rare. I would characterize most Silicon Valley executives as "libertarian" in that they want as little government involvement in their ventures as possible (except, of course, for government research grants!).
Gary Reback, an attorney at Palo Alto's Wilson Sonsini Goodrich & Rosati, is concerned however that Washington, D.C. does not understand the tech industry and that this ignorance could harm the US tech sector. When I met with him recently, he was considering writing a book to highlight some of the potential problems he sees in the future in regard to possible US government actions and their effect on the technology industry. For those who have short memories, Mr. Reback helped lead the fight against Microsoft's anticompetitive practices.
