No more fun in the Valley

If you read about Silicon Valley these days, you’ll notice quite a bit of opinion out there that a new dot-com bubble is building. A sense of dot-com deja vu, some say.

One of the Silicon Valley movers I give quite a bit of attention to is Michael Arrington at TechCrunch. He’s posted an interesting assessment of the current climate there:

[…] Times are good, money is flowing, and Silicon Valley sucks. I don’t know what it is, but the same thing happened in the late nineties before the bubble burst. Lots of startups got funded that made no sense but people got excited anyway. A unique, beautiful and well executed idea was not a story worth talking about until that first round of big, eye-popping capital. People become more anxious, and more likely to snap at someone in anger or jealousy. Rumor mongering spikes, and a crucial balance is lost. It’s no longer about beautiful products and genius developers. It’s about the money and the status, and hot PR chicks and marketing departments.

It’s an interesting perspective. On a tiny scale by comparison, throughout this year I’ve been experiencing a sharp upturn in the volume of unsolicited press releases and other information I receive from PR firms on behalf of new startups in or close to Silicon Valley, or small tech firms elsewhere in the US who want to get onto the current wave.

Is that indicative of a bubble about to pop? I don’t know but it’s a feeling I have that’s been building all this year.

The concluding paragraph in Arrington’s post best sums up the picture:

[…] I left Silicon Valley at the peak of the insanity last time around, and I was pleasantly surprised when I returned in 2005 to see so much goodwill and community surrounding innovation. Now, it’s just like the old days again, and Silicon Valley is no longer any fun. In fact, it’s turned downright nasty. It may be time for some of us to leave for a while and watch the craziness from the outside again. In a few years, things will be beautiful again. The big money will be slumbering away, and the marketing departments will be a distant memory. We can focus, once again, on the technology. And the burgers and beer.

Is he right? Is there a metaphorical South Sea Bubble about to pop?

Time will tell although they may not be a lot of that before it does.

Neville Hobson

Social Strategist, Communicator, Writer, and Podcaster with a curiosity for tech and how people use it. Believer in an Internet for everyone. Early adopter (and leaver) and experimenter with social media. Occasional test pilot of shiny new objects. Avid tea drinker.

  1. Ivan Pope

    I don’t think Mike is a good bellweather – as he has made himself the point man for everything that happens around 2.0. He’s obvously going to get a lot of pressure. As money enters the equation (and isn’t that the whole point, let’s not kid ourselves), that money will be used to drive the levers of success. And Techcrunch is perceived to be one of those levers. So Mike will see all the pressure and the desperation and the nastyness head on. And as he’s not a professional editor or publisher, he’s probably not geared up for it. As he says, he started this whole thing in his living room, he’s the living embodiment of this bubblette. That said, he also has form for getting upset when the pressure mounts – I remember him going off for a break around Xmas last year. So let’s not take him as the oracle. Sure, it was quieter a couple of years ago. But then, Mike and lots of other people didn’t have a business a couple of years ago.

  2. Jeff Clavier

    It is true that there are a number of startups coming out for funding, etc. and many feel incremental as opposed to offering radical innovation. And it is also true that some companies raise amounts of capital that left some of us wondering. But besides that, the fundamentals are completely different from the first bubble where tens billions of dollars had been invested in hot air.
    As one of the most active angels in the space (22 deals), I can tell that there are still opportunities out there, but my own threshold has definitely gone higher in the past few months. Time will tell whether this will be a smart move or not.

  3. Eric Rice

    Silion Valley is bigger than TechCrunch’s coverage market. Our heritage and future will transcend the hype of the moment of slick little feature apps– and also, let’s not confuse the Valley with SF. Fundamentally different cultures.. also, tremendous amounts of massive players are anchored here. Search engines, computer makers, chip makers, etc.

    THIS might be a third or fourth bubble, I can’t keep track, but that’s no way an indicator of the region’s power (especially considering the cost and quality of life).

    I dunno, sky falling?

  4. Phil's Blogservations

    A Skewed Perspective In Silicon Valley…

    Neville points me to this post from Michael Arrington, who argues that things are good — maybe too good — in the region I call my “career home”: Silicon Valley….

  5. neville

    As someone who’s not from Silicon Valley (heck, not even from the US), and who doesn’t live or work there either, I suppose it’s easy to see a glossy view – well, in this case not glossy – and miss all the nuances and detail such as you, Eric, describe in your own post today.

    And Ivan I wouldn’t disagree with you when you question whether Mike Arrington is a good bellwether. Good or not, he’s still a bellwether with signficant influence. Doesn’t mean he’s necessarily right in this matter, but I don’t think anyone will agree on who’s right or wrong anytime soon.

    Jeff, very interesting when you say “the fundamentals are completely different from the first bubble where tens billions of dollars had been invested in hot air.” That’s exactly what I say to people when the bubble subject crops up in conversation.

    Yet maybe it’s because it all does seem so different to the last bubble. More players in the game, more going on, much higher stakes, things happening bigger and faster.

    If you think about it, the term ‘Silicon Valley’ has scaled globally. I think it’s a representative phrase, maybe even a metaphor, that means more than just a place on a map.

    That makes the present picture even more riskier, more connected. More interesting!

  6. CoRrElate

    Views on the Bubble…

    Recently, Michael Arrington posted Silicon Valley Could Use A Downturn Right About Now causing some interesting and probably healthy conversation. This includes the Valleywag criticism within their coverage The Genie is Out of the Bottle and The Bubbl…

  7. Jonathan Marks

    Interesting to see the business models and products at work here

    I think many are heading for bust in the near future. Too much overlap and proprietary systems. When so much time is put into tagging stuff in Web 2.0 it is important that if you decide to migrate your photo collection from say, Flickr to Picasa the tags as well as the photos would go with the move.

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