5 ms·

Why Silicon Valley Should Be Worried

25 points by dpapathanasiou 18y ago

toki 18y ago
This two day old thread about google is somehow related to this article: http://news.ycombinator.com/item?id=247046 http://news.ycombinator.com/item?id=247046
redorb 18y ago
i think if googles 39 percent growth was a shortfall, its funny, how many businesses as old as google has investors wanting more than 39 percent yoy growth?
- diego 18y ago
  Not too many businesses have a P/E ratio of 34 with a market cap of 150B. It's a matter of expectations, they were expected to grow more than they did and the stock price had those expectations priced in.
dmix 18y ago
"Microsoft posted a 42-per-cent rise in profit" (globe&mail) "Google's net income for the quarter was $1.25B, up from $925M" (Techcrunch) I wouldn't call that bleak. The Silicon Valley leaders may not be able to maintain their high growth rates but I doubt they would be affected in the same way other industries have been. I'd like to see the impact its having on the smaller players and not just the big advertising companies. Is this directly affecting the publishers at the bottom of the pyramid?
- dustineichler 18y ago
  True I wouldn't call it bleak either. eBay posted 20% earnings growth although the stock is down. It is interesting to go through this again though having been through the first one. It's tough. I remember so many friends and colleagues leaving for places like Austin or Boston way back when. Now, I wonder if the same will happen. Engineering wise, I really don't expect many to leave but the mom and pop shops that rely on high valued incomes... and maybe business units, always the first to go.
  - alain94040 18y ago
    Earnings is the wrong thing to look at when you enter a recession. It's easy for companies to manipulate earnings for a little while, by shuffling money around and delaying expenses. Gross revenue is your leading indicator: are they still selling as much, or more, than before? Alain - fairsoftware.net
incomethax 18y ago
Its kinda ironic, Google had been seeing such high growth rates for a business of their age and size that it seemed as if they were defying gravity. Add that to the environment in the Googleplex, and you have a company that doesn't feel like a company. This creates the potential that Google will overlook something, which will lead to some little guy taking their place as they took Microsoft's as the standard in software development
- ovi256 18y ago
  > standard in software development Can I please have whatever you're smoking? It seems good.
sabat 18y ago
Silicon Valley should not be any more worried than the rest of the country or world. Actually, given what people are pointing out here, maybe SV should be less worried than the rest of the country.
Hoff 18y ago
If you want to know the health of an ecosystem, look at the health of the pilot fish, and not at the whales. The indications of latent rot or the incursions of new competitors and of asymmetric solutions can be masked by the sheer scale of an established business. The pilot fish are the leading indicators. Whales can easily coast on revenues and their customer bases and by squeezing their ecosystems and their partners for a decade or more, even with their businesses and business models rotting away underneath them. If the startups in SV are getting squeezed, then SV has something to worry about.
matt1 18y ago
"Now Silicon Valley is in for a long-overdue reality check, one that should worry one and all. Why? Because the news coming out of advertising-focused companies is not good." The article does a good job of explaining how the poor economic conditions are impacting internet advertising, but this has nothing to do with a reality check. People have less money to spend so they buy less things. That doesn't mean that internet advertising models are misguided.

toki 18y ago

This two day old thread about google is somehow related to this article: http://news.ycombinator.com/item?id=247046 http://news.ycombinator.com/item?id=247046

redorb 18y ago

i think if googles 39 percent growth was a shortfall, its funny, how many businesses as old as google has investors wanting more than 39 percent yoy growth?

diego 18y ago
Not too many businesses have a P/E ratio of 34 with a market cap of 150B. It's a matter of expectations, they were expected to grow more than they did and the stock price had those expectations priced in.

dmix 18y ago

"Microsoft posted a 42-per-cent rise in profit" (globe&mail) "Google's net income for the quarter was $1.25B, up from $925M" (Techcrunch) I wouldn't call that bleak. The Silicon Valley leaders may not be able to maintain their high growth rates but I doubt they would be affected in the same way other industries have been. I'd like to see the impact its having on the smaller players and not just the big advertising companies. Is this directly affecting the publishers at the bottom of the pyramid?

dustineichler 18y ago
True I wouldn't call it bleak either. eBay posted 20% earnings growth although the stock is down. It is interesting to go through this again though having been through the first one. It's tough. I remember so many friends and colleagues leaving for places like Austin or Boston way back when. Now, I wonder if the same will happen. Engineering wise, I really don't expect many to leave but the mom and pop shops that rely on high valued incomes... and maybe business units, always the first to go.
- alain94040 18y ago
  Earnings is the wrong thing to look at when you enter a recession. It's easy for companies to manipulate earnings for a little while, by shuffling money around and delaying expenses. Gross revenue is your leading indicator: are they still selling as much, or more, than before? Alain - fairsoftware.net

incomethax 18y ago

Its kinda ironic, Google had been seeing such high growth rates for a business of their age and size that it seemed as if they were defying gravity. Add that to the environment in the Googleplex, and you have a company that doesn't feel like a company. This creates the potential that Google will overlook something, which will lead to some little guy taking their place as they took Microsoft's as the standard in software development

ovi256 18y ago
> standard in software development Can I please have whatever you're smoking? It seems good.

sabat 18y ago

Silicon Valley should not be any more worried than the rest of the country or world. Actually, given what people are pointing out here, maybe SV should be less worried than the rest of the country.

Hoff 18y ago

If you want to know the health of an ecosystem, look at the health of the pilot fish, and not at the whales. The indications of latent rot or the incursions of new competitors and of asymmetric solutions can be masked by the sheer scale of an established business. The pilot fish are the leading indicators. Whales can easily coast on revenues and their customer bases and by squeezing their ecosystems and their partners for a decade or more, even with their businesses and business models rotting away underneath them. If the startups in SV are getting squeezed, then SV has something to worry about.

matt1 18y ago

"Now Silicon Valley is in for a long-overdue reality check, one that should worry one and all. Why? Because the news coming out of advertising-focused companies is not good." The article does a good job of explaining how the poor economic conditions are impacting internet advertising, but this has nothing to do with a reality check. People have less money to spend so they buy less things. That doesn't mean that internet advertising models are misguided.