5 ms·

Silicon Valley’s Undertaker: "We're Anticipating a Major Fallout"

82 points by jamesjyu 15y ago

mathattack 15y ago
On the one hand, the article can be depressing - each fallout is a dream that died. On the other hand, one of the things that makes the Valley succeed is it's capacity to celebrate failure. A mistake? What did you learn? Now move on! Companies that facilitate this are part of what makes for such a healthy eco-system. Compare this to Japan - much of their lost decade(s?) was caused by an inability to accept failure, and shut down unproductive firms.
- grimen 15y ago
  Yep, I've learned a lot by failing - I don't regret those failures (the paradox), I think I've ended up in a better position now as a cause of those failures too. Trial-n-error is the best way to learn as they say. I mentioned previous failures in a startup competition and we still won, I think it's important to mention failures.
  - mathattack 15y ago
    I had two folks re-interview with me who in the past 6 months had declined offers from my firm. They both went to other firms, and massively failed. In my eyes they are now more valuable to me, not less. More maturity, humility, sense of boundaries, etc... In both cases we re-extended the initial offers.
    - svmegatron 15y ago
      You sound like a good person to work for.
- jpdoctor 15y ago
  > much of their lost decade(s?) was caused by an inability to accept failure, and shut down unproductive firms. Unfortunately, the systemic Japanese malaise was a failure to shut down insolvent financial firms. Kinda like the US today. (Let's face it, the VC ecosystem is mice nuts compared to the greater economy.)
  - mathattack 15y ago
    In Japan it was a 2 tier issue. Insolvent (Zombie) banks were allowed to stay open. They in turn kept many insolvent companies alive. It's a testament to the strength of the Japanese that they kept the game going on for as long as they did. Of course it's not an exact analogy, but I share your concern that in the US we are trending towards a "Keep them open" mentality, rather than a "Try and try again". A recent quote from Michael Jordan has been making the rounds: (& I believe the real @ is much higher than 9000) "I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed."
- rbanffy 15y ago
  > each fallout is a dream that died Don't think like that. Consider them lessons learned. People learn how not to run businesses all the time.
  - StavrosK 15y ago
    Isn't that the second half of that sentence?
    - rbanffy 15y ago
      Yeah, but don't get too attached to dreams. Or, at least, dont't confuse them with businesses. Confusing dreams and businesses lead to emotional decisions and using the word "dream" and the concept of dreams dying won't help you detach.
- dools 15y ago
  "On the one hand, the article can be depressing - each fallout is a dream that died. On the other hand, one of the things that makes the Valley succeed is it's capacity to celebrate failure. A mistake? What did you learn? Now move on!" The way I think about it is this: in order for the successes to occur, there have to be failures. In a lottery, it is the unsuccessful tickets that fund the winner. I'm not saying that running a business has as much to do with chance as a lottery (although there is certainly a strong element of chance) but the way I see it is that I'm taking part in an exercise and just because I don't end up the "winner" doesn't make my part less important to the exercise as a whole. I think this can be re-applied to one's whole life: you start to feel less a sense of individualism and victimisation and more like "shit just happens, let's have some fun in the meantime".
j_baker 15y ago
I think it's important to realize that leaders of these kinds of companies are no different from the leaders of any other company: they need to be upbeat about the company's prospects to a certain degree. The part that makes them unique is that they can't talk up their business without talking down another part of the economy. I'm not saying that Pichinson's prediction about there being a Social Media fallout is wrong so much as I'm saying that you should take it with a grain of salt. He has financial incentive to talk the Silicon Valley economy down.
vitalysh 15y ago
10 megs for that tiny cemetery picture? peHub needs to learn how to resize pictures. Resizing in browser is the worst idea ever. http://morningjoy.files.wordpress.com/2009/08/mountain-cemetary.jpg http://morningjoy.files.wordpress.com/2009/08/mountain-cemet...
- rbanffy 15y ago
  Bandwidth consumed must be one of their traffic metrics. or That's what you get when you give an 8-core, 16 GB RAM box to your interns.
eric-hu 15y ago
"In terms of the younger companies, what do you have to unwind exactly? What sorts of assets do they have to sell off? Things have definitely changed. I remember in 1999, 2000, I would sell a used server for $35,000 and I had a line of people wanting it. Today, a server is $5,000 and you can get an okay server for less than $2,000. [In the meantime], we’ve probably become one of the largest sellers of [intellectual property] in the country. We sell tons of IP, and as you know, the IP wars have started, so we play with the big guys, the little guys, and the in-between guys. During the last bubble, there weren’t as many patents. It was more ideas and URLs. So the business has matured." I hope this means that tech patents will prove to be a fad.
- sp332 15y ago
  It reminds me a little of trading baseball cards. The cards were mostly worthless. But "Tops" published a book that basically defined what the cars were worth, and speculation was done based on what Tops might publish in the next edition. The market eventually collapsed. The same thing might happen with software patents, when people realize that there is no inherent value to owning a patent.
Triumvark 15y ago
I wish we knew more details on which "clean tech" firms were going under... sounds buzzwordy.
- tatsuke95 15y ago
  My guess would be over-funding. When the government incentivizes an industry through grants or tax-breaks, you get an oversupply . "Clean Tech" is a hot area right now; as cities try to attract business to dig themselves out of red-ink, it's just the type of industry they'd like to see (as opposed to, say, pork rendering) coming to their area. So it gets subsidized. Hence there are more borderline sustainable businesses in the space. Here in Canada we witnessed this with tax incentives for installing solar panels.

82 points by jamesjyu 15y ago

On the one hand, the article can be depressing - each fallout is a dream that died. On the other hand, one of the things that makes the Valley succeed is it's capacity to celebrate failure. A mistake? What did you learn? Now move on! Companies that facilitate this are part of what makes for such a healthy eco-system. Compare this to Japan - much of their lost decade(s?) was caused by an inability to accept failure, and shut down unproductive firms.

grimen 15y ago
Yep, I've learned a lot by failing - I don't regret those failures (the paradox), I think I've ended up in a better position now as a cause of those failures too. Trial-n-error is the best way to learn as they say. I mentioned previous failures in a startup competition and we still won, I think it's important to mention failures.
- mathattack 15y ago
  I had two folks re-interview with me who in the past 6 months had declined offers from my firm. They both went to other firms, and massively failed. In my eyes they are now more valuable to me, not less. More maturity, humility, sense of boundaries, etc... In both cases we re-extended the initial offers.
  - svmegatron 15y ago
    You sound like a good person to work for.
jpdoctor 15y ago
> much of their lost decade(s?) was caused by an inability to accept failure, and shut down unproductive firms. Unfortunately, the systemic Japanese malaise was a failure to shut down insolvent financial firms. Kinda like the US today. (Let's face it, the VC ecosystem is mice nuts compared to the greater economy.)
- mathattack 15y ago
  In Japan it was a 2 tier issue. Insolvent (Zombie) banks were allowed to stay open. They in turn kept many insolvent companies alive. It's a testament to the strength of the Japanese that they kept the game going on for as long as they did. Of course it's not an exact analogy, but I share your concern that in the US we are trending towards a "Keep them open" mentality, rather than a "Try and try again". A recent quote from Michael Jordan has been making the rounds: (& I believe the real @ is much higher than 9000) "I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed."
rbanffy 15y ago
> each fallout is a dream that died Don't think like that. Consider them lessons learned. People learn how not to run businesses all the time.
- StavrosK 15y ago
  Isn't that the second half of that sentence?
  - rbanffy 15y ago
    Yeah, but don't get too attached to dreams. Or, at least, dont't confuse them with businesses. Confusing dreams and businesses lead to emotional decisions and using the word "dream" and the concept of dreams dying won't help you detach.
dools 15y ago
"On the one hand, the article can be depressing - each fallout is a dream that died. On the other hand, one of the things that makes the Valley succeed is it's capacity to celebrate failure. A mistake? What did you learn? Now move on!" The way I think about it is this: in order for the successes to occur, there have to be failures. In a lottery, it is the unsuccessful tickets that fund the winner. I'm not saying that running a business has as much to do with chance as a lottery (although there is certainly a strong element of chance) but the way I see it is that I'm taking part in an exercise and just because I don't end up the "winner" doesn't make my part less important to the exercise as a whole. I think this can be re-applied to one's whole life: you start to feel less a sense of individualism and victimisation and more like "shit just happens, let's have some fun in the meantime".

j_baker 15y ago

I think it's important to realize that leaders of these kinds of companies are no different from the leaders of any other company: they need to be upbeat about the company's prospects to a certain degree. The part that makes them unique is that they can't talk up their business without talking down another part of the economy. I'm not saying that Pichinson's prediction about there being a Social Media fallout is wrong so much as I'm saying that you should take it with a grain of salt. He has financial incentive to talk the Silicon Valley economy down.

vitalysh 15y ago

10 megs for that tiny cemetery picture? peHub needs to learn how to resize pictures. Resizing in browser is the worst idea ever. http://morningjoy.files.wordpress.com/2009/08/mountain-cemetary.jpg http://morningjoy.files.wordpress.com/2009/08/mountain-cemet...

rbanffy 15y ago
Bandwidth consumed must be one of their traffic metrics. or That's what you get when you give an 8-core, 16 GB RAM box to your interns.

eric-hu 15y ago

"In terms of the younger companies, what do you have to unwind exactly? What sorts of assets do they have to sell off? Things have definitely changed. I remember in 1999, 2000, I would sell a used server for $35,000 and I had a line of people wanting it. Today, a server is $5,000 and you can get an okay server for less than $2,000. [In the meantime], we’ve probably become one of the largest sellers of [intellectual property] in the country. We sell tons of IP, and as you know, the IP wars have started, so we play with the big guys, the little guys, and the in-between guys. During the last bubble, there weren’t as many patents. It was more ideas and URLs. So the business has matured." I hope this means that tech patents will prove to be a fad.

sp332 15y ago
It reminds me a little of trading baseball cards. The cards were mostly worthless. But "Tops" published a book that basically defined what the cars were worth, and speculation was done based on what Tops might publish in the next edition. The market eventually collapsed. The same thing might happen with software patents, when people realize that there is no inherent value to owning a patent.

Triumvark 15y ago

I wish we knew more details on which "clean tech" firms were going under... sounds buzzwordy.

tatsuke95 15y ago
My guess would be over-funding. When the government incentivizes an industry through grants or tax-breaks, you get an oversupply . "Clean Tech" is a hot area right now; as cities try to attract business to dig themselves out of red-ink, it's just the type of industry they'd like to see (as opposed to, say, pork rendering) coming to their area. So it gets subsidized. Hence there are more borderline sustainable businesses in the space. Here in Canada we witnessed this with tax incentives for installing solar panels.