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It’s hard to give a definitive explanation for this trend, but among the reasons are a decline in innovation in the aftermath of the tech boom, leading to fewer

by mattyb 17y ago

It’s hard to give a definitive explanation for this trend, but among the reasons are a decline in innovation in the aftermath of the tech boom, leading to fewer new businesses... Was this just a decline in tech innovation? I wonder how much tech companies contribute to overall workforce numbers (in addition to IT departments of non-tech companies, I suppose). Also, was there really a decline in innovation, or just a decline in eagerness to start a business based on such innovation?

spamizbad 17y ago
I wouldn't exactly phrase it as a "decline in innovation" but post-tech boom innovation has gotten harder for numerous reasons. Off the top of my head, I can think of three culprits dragging this down in the tech industry specifically: First, the general malaise people feel about tech IPOs after the ultra-hyped tech bubble burst. This is a real shame because this wasn't necessarily something perpetrated by the tech industry itself; it just saw dollar signs and got played by Wall Street. Second is the decline of venture capitalists, who lost virtually all of their sex appeal with the dot-com bubble. They're now seen as "vulture capitalists", devious characters that tempt young entrepreneurs to sign away control of their start-ups for the small chance of seeing their dreams come to fruition. Is that reputation deserved? I don't know, but I've heard enough horror stories to be extremely apprehensive about taking the VC route. Third is Sarbanes Oxley, which has made it extremely costly for small operations to go public. SOX is fine for larger organizations, it just needs some tweaks and and certain exemptions for smaller organizations. Due to these factors it seems like the tech industry is taking smaller risks. Entrepreneurs are building companies to "flip" to Microsoft or Google rather than building the next Google or Microsoft. Sure, we're creating new businesses, but they never evolve past the 'start-up' phase; they merely get absorbed into a larger entities. You create significantly fewer jobs integrating start-ups into big organizations than you would by taking the growth route by building a medium and then large-sized business. So with the cost of growth and failure higher now than it was in the 1990s, is it any surprise we're not bolder, and witnessing a so-called decline in innovation?

by mattyb 17y ago

spamizbad 17y ago

I wouldn't exactly phrase it as a "decline in innovation" but post-tech boom innovation has gotten harder for numerous reasons. Off the top of my head, I can think of three culprits dragging this down in the tech industry specifically: First, the general malaise people feel about tech IPOs after the ultra-hyped tech bubble burst. This is a real shame because this wasn't necessarily something perpetrated by the tech industry itself; it just saw dollar signs and got played by Wall Street. Second is the decline of venture capitalists, who lost virtually all of their sex appeal with the dot-com bubble. They're now seen as "vulture capitalists", devious characters that tempt young entrepreneurs to sign away control of their start-ups for the small chance of seeing their dreams come to fruition. Is that reputation deserved? I don't know, but I've heard enough horror stories to be extremely apprehensive about taking the VC route. Third is Sarbanes Oxley, which has made it extremely costly for small operations to go public. SOX is fine for larger organizations, it just needs some tweaks and and certain exemptions for smaller organizations. Due to these factors it seems like the tech industry is taking smaller risks. Entrepreneurs are building companies to "flip" to Microsoft or Google rather than building the next Google or Microsoft. Sure, we're creating new businesses, but they never evolve past the 'start-up' phase; they merely get absorbed into a larger entities. You create significantly fewer jobs integrating start-ups into big organizations than you would by taking the growth route by building a medium and then large-sized business. So with the cost of growth and failure higher now than it was in the 1990s, is it any surprise we're not bolder, and witnessing a so-called decline in innovation?