Friday, March 7, 2008

In Silicon Valley, a Flight to Safety

The Wall Street Journal did a page one story today about how some people in Silicon Valley are leaving startups for the relative safety of larger, more mature tech companies such as HP and RIM ("flight to safety"). This is similar to what happened during the dot-com bust earlier in the decade, except all tech companies were hurting back then and there was a mass exodus of 108,000 workers from 2000-2003 (according to the WSJ article, referencing the CA Department of Finance). Another sign of the tough economic climate we are facing in early 2008. The bad news seems to be coming out on a daily basis: home foreclosures rising, weak job reports, higher prices on gas and at the supermarket, and people with good credit being denied approval to refinance their mortgages. The problem is excaberated in Northern California where everything seems to be more expensive (especially housing, and I can relate having just moved here!). So I guess it is no surprise that some would seek the safety of an established company with good benefits and a guaranteed paycheck. Even so, entrepreneurs will continue to flourish, but perhaps now only the true diehards will gut it out. Is the economic downturn (recession?) really hurting startups in Silicon Valley? Or do startups simply need to figure out a way to monetize what they are doing vs. developing cool technology that nobody is willing to pay for? I'm looking to hear from other startup founders and early stage employees for your thoughts on how your businesses are developing, and how you see the economic downturn affecting your startup (or not) whether it be through raising money, generating revenues, hiring good employees, etc.

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