A Fog of Anxiety Invades Sunny Thinking in Silicon Valley
With the stock market in turmoil, a U.S. bailout up in the air and recession seemingly inevitable, that faith is now being seriously undermined. High-tech entrepreneurs, investors and executives now believe the question is when, not if, the financial chaos will have an impact on the cradle of innovation in the United States.
From San Francisco to San Jose, the effects are already palpable. This week, Apple, one of the Valley's high-fliers, lost 13 percent of its value as investors reasonably concluded that consumers would shun pricey gadgets over the holidays in favor of lower ticket items -- or paying down their credit cards.
On Monday, Microsoft's chief executive, Steve Ballmer, traveling in Europe, conceded that financial problems would drag down business and consumer spending -- and that many technology companies, including Microsoft, were vulnerable. (Page 20)
The heart of the Valley's success is, of course, its ecosystem of start-up companies. Many claim that ecosystem remains healthy, thanks to the lessons learned and prudence gained from the dot.com crash.
Nevertheless, a dense fog of anxiety has settled over the land.
"Funding will tighten up. We are certainly going to see some ripple effects," said Ron Conway, a prominent angel investor who has invested in hundreds of Web start-ups over the last decade. Start-ups that have less than six months of cash in the bank "better reduce costs," Conway said. "I will certainly be advising my companies to do that."
Silicon Valley has recited several calming mantras to itself during the prolonged economic turbulence. As the influence of the Internet becomes even more pervasive, goes one mantra, advertising will inevitably follow. Blue-chip tech firms like Google, eBay and...