One statistic is missing from the slew of data published about the state of the U.S. economy. It is the length of the commute between San Francisco and Silicon Valley. Since last fall, when the layoffs began in the valley, this journey, which I have been making twice a day for the past 15 years, has started to shorten.
There are plenty of signs of the shockingly sudden economic slowdown during my commute. The radio isn't filled with the hopeful jingles of Internet retailers, and I can almost always get a cell-phone circuit. Some of the signs are just that--vacancy signs dangling from buildings whose landlords until recently were demanding shares in the companies started by their tenants. And the blank billboards along Highway 101--the valley's main thoroughfare--mutely advertise the downturn. There are few tire kickers in the lots of the luxury-automobile dealers. Near my office, the people who sometimes paraded along the sidewalk bearing placards that said WILL WORK FOR EQUITY have mercifully disappeared.
All this is good news for those of us whose business is to help start and organize young companies. Today Silicon Valley is akin to Fort Lauderdale, Fla., after spring break. The tourists have abandoned us. Most of the people who came here in search of a quick buck during the past few years have gone. The foreign billionaires have scuttled back to Europe and Asia, the corporate parvenus have retreated, and Hollywood celebrities no longer swish through our office seeking a smattering of pixie dust.
Suddenly, starting a company is no longer a fashion statement. Now only the genuine believers want to leave large companies to create or join a new business. Everyone has become far more prudent about spending money. Unbridled optimism has been splattered with a large coating of reality. Today the climate for investments in tiny, unknown valley fledglings is the best it has been for more than 10 years.
I don't mean to belittle the human consequences of the recent convulsions. If it's any consolation, plenty of companies with which I've been involved have encountered their share of bad news and hard times. But this is the inevitable result of the excitement and chaos that surround any new industry. Think of all the dreams that were shattered, careers that were ruined and money that was lost as a result of the birth of the huge industries that developed around oil, telephones, movies, automobiles, airplanes, semiconductors and personal computers. Working with young companies can be dangerous for anyone. It doesn't matter whether that was in Akron, Ohio, in the 1870s, Detroit in the 1920s or Santa Clara, Calif., in the 1990s.