[FoRK] Joyce Park & Mary Hodder in USA Today
Rohit Khare <
khare at alumni.caltech.edu
> on >
Wed Sep 13 12:47:44 PDT 2006
for the archives...
> Budgets are also tight at Redwood City, Calif., start-up Renkoo. Co-
> founder Joyce Park has strong memories of being unemployed during
> the bust, "sitting in front of Palo Alto City Hall, drinking triple
> espressos, going, 'Man, this is depressing,' " she says.
> She started her company, which offers an online service to help
> people plan casual gatherings, with longtime friend and co-worker
> Adam Rifkin in her kitchen. She carefully sought out venture
> capitalists that offered advice, not just money. (Renkoo closed a
> $3 million round in March.) And she has made a habit of hiring
> engineers and other technical workers who are inexperienced but
> have potential to grow.
> "People are having fun, but less fun than you'd think," Renkoo's
> Park says. "Because the way it works in the Valley is: When things
> are good, you work 24/7. When you get laid off — when everything
> tanks — is when you have time to spend with your friends."
Does this mean that Renkoo's market is the un(der)employed seeking to
catch up with their friends? :) :) :)
See the rest of this article for some great color on Dabble, too...
Silicon Valley starts to party like it's 1999
Posted 9/11/2006 10:33 PM ET
By Michelle Kessler, USA TODAY
SANTA CLARA, Calif. — The eight employees of digital media start-up
Dabble work out of a cheap office, decorated mainly with sticky
notes, not far from San Francisco.
They work long hours for below-market rates. Their boss, CEO Mary
Hodder, is a 39-year-old Internet expert who has never started or run
a company before.
Dabble has received funding from angel investors. But it must fight
dozens of other start-ups for attention. And when they finally get
off work, the Dabble team grapples with heavy traffic, crowded
restaurants and outrageous housing prices.
But it's all OK, because Hodder and her crew are convinced that their
company offers a compelling online service that will be a huge
success — and will make their stock options pay off.
Sound a lot like 1999? Silicon Valley and the San Francisco Bay Area,
the world's technology hub, is starting to buzz again for the first
time since the dot-com bust. The Valley's infamous start-up community
is coming back, thanks to Dabble and its contemporaries. New
powerhouses such as Google, eBay and Yahoo are driving growth and
hiring workers. Stalwarts such as Hewlett-Packard and Oracle are
reporting stronger sales and posting higher stock prices.
Evidence of an uptick is everywhere. The amount of venture capital
invested in Internet companies has jumped almost 75% since hitting
bottom in 2003. The Valley unemployment rate has dropped to 5%, down
from 9.3% during the darkest days. The median home price is $700,000
and rising. Party invitations are going out — and the buffets once
again include shrimp.
It's a welcome change after five tough years of layoffs, bankruptcies
and empty office parks.
"Bubbly things started happening three, four months ago," says
Hodder. "It's exciting." This round of growth will be based on real,
useful products without the excesses of the dot-com boom, she says.
Many other Valley technorati agree. But critics, especially those
outside California, say that the Valley is once again getting caught
up in its own hype.
Nicholas Carr, the Massachusetts-based author of the book Does IT
Matter?, says he expects the tech industry to grow but at an
increasingly slower pace. The current frenzy is a "miniboom" that
will soon peter out, he says. "There isn't any sign that this new
wave of entrepreneurial activity is capturing the imagination of the
public the way it did before."
That hasn't stopped John Chambers, CEO of San Jose, Calif.-based
networking giant Cisco Systems, from predicting that his already-huge
company could see its revenue rise as much as 20% this fiscal year.
(An acquisition accounts for part of the increase.)
Chambers and Cisco were badly burned by the bust. Cisco shares trade
at about one-fourth their boom-era high. But Chambers believes Cisco
and the industry can grow without a crash. This time, "The
circumstances are dramatically different," he says. "There were a lot
of lessons learned."
Many tech entrepreneurs insist that they, too, will not make the same
mistakes. Hodder started Dabble — a site that allows people to
search, organize and bookmark videos — with $350,000 in seed money.
Future funding proposals are modest. "We're not going to go crazy,"
Budgets are also tight at Redwood City, Calif., start-up Renkoo. Co-
founder Joyce Park has strong memories of being unemployed during the
bust, "sitting in front of Palo Alto City Hall, drinking triple
espressos, going, 'Man, this is depressing,' " she says.
She started her company, which offers an online service to help
people plan casual gatherings, with longtime friend and co-worker
Adam Rifkin in her kitchen. She carefully sought out venture
capitalists that offered advice, not just money. (Renkoo closed a $3
million round in March.) And she has made a habit of hiring engineers
and other technical workers who are inexperienced but have potential
Playing it safe, mostly
Some of the Valley's biggest companies are also being cautious. No. 1
chipmaker Intel last week said it is cutting 10,500 jobs in a bid to
save money and make the company more nimble. Hewlett-Packard is
cutting about 15,000 jobs as part of a restructuring. (The No. 2 PC
maker is also embroiled in a boardroom scandal related to the
aggressive way the board hunted for the source of news leaks to the
press. Story, 1B.)
Caution is wise, says Kevin Wagner, an equity analyst at Baring Asset
Management. New technologies such as advanced cellphone networks and
state-of-the-art video game systems should help keep tech growing, he
says. But the growth will be more modest than before, with small
busts in limited areas, he says.
Still, the Valley isn't playing it completely safe. Video site
YouTube has received $11.5 million from venture capitalists, despite
the thorny issue of thousands of copyrighted videos that are uploaded
by users. Staffers maintain a chatty blog about the site's inner
workings, including a recent video of them goofing around with a dead
rat caught in the office.
Venture capitalists gave more than $38 million to Facebook, a college
community site run by a 22-year-old CEO, Mark Zuckerberg. When a USA
TODAY reporter recently called Zuckerberg a businessman, he burst out
laughing. "I don't think anyone's ever said that to me before," he said.
And Valley darling Google has more than 600 types of jobs open at its
Mountain View, Calif., headquarters. The search giant, which
officially launched in 1999, also offers bubble-like perks such as
free meals prepared by a high-end chef, a staff doctor and onsite car
wash. (The company also has a market capitalization of about $116
billion, which is higher than that of PepsiCo, Home Depot or Genentech.)
The largesse is starting to spill into the local economy. "We see a
whole lot of money flowing out here right now," says Ginny Cain
McMurtrie, a vice president at Saratoga, Calif.-based Alain Pinel
In the first quarter of 2006, 82 homes were sold for more than $2.5
million in Santa Clara and San Mateo counties, the real estate firm
"I hear the agents talking about the Googlers and eBayers looking at
$3 million houses," Cain McMurtrie says. A home in the tech-executive
hamlet of Woodside recently sold for $10.3 million.
That's a striking contrast to the rest of the country, where a
softening market has caused the median home price to nearly flatten
at about $230,000, says the National Association of Realtors.
Commercial real estate is seeing growth, too. Real estate firm
Brandenburg Properties recently offered to rent a 55,000-square-foot
office building in Santa Clara to one or more start-ups in exchange
for an equity position in the companies. Brandenburg received several
proposals but pulled the offer when Yahoo began buying up office
space in the neighborhood.
"I wouldn't say there's stellar demand (for office space), but
there's unquestionably growing demand," says partner Bill Baron.
Intel CEO Paul Otellini, speaking at a recent party thrown by the No.
1 chipmaker, said he, too, has noticed an upturn in the economy. But
he's not worried, because boom and bust cycles are a natural part of
tech, he said. The industry will be fine "unless there's a major
economic change," he said. Then he wandered off to sample the party's
swanky Asian cuisine.
One reason for the economic swings is that some fundamental tech
products require huge upfront investments.
A semiconductor factory requires billions of dollars and several
years to build. Thus, a factory planned during good times often isn't
ready until the economy softens. Then it floods the market with new
chips, causing prices and profits to fall.
Yet even seasoned veterans such as Cisco's Chambers were stunned by
the dot-com bust, which caused the tech-heavy Nasdaq stock exchange
to lose 78% of its value in just over two years.
Janet Yellen, president of the San Francisco Federal Reserve Bank,
says she doesn't believe that type of collapse looms. "I'm not so
concerned about a bubble," she says. "Some venture-capital money is
coming back into the tech sector ... (but) nothing like the amount
that we had during the dot-com phase."
Indeed, it seems as if most of the excitement is limited to the tech-
centric area around San Francisco.
J.P. Auffret, a professor at George Mason University in Virginia,
says the only tech buzz he's noticed recently is an increase in
Silicon Valley job postings. Few of his colleagues are interested, he
says. "There's a more rational view on opportunity and risks. And
there's the perception that it's quite expensive to live there."
Author Carr says the Valley's highs and lows will level out as the
tech industry matures. After all, the PC is 25 years old, and the
Internet is 13. "The really rapid growth stage of the tech industry
is behind us," he says. "It's beginning to look like any other
Stability in maturity
And it's easy to forget that the tech industry has grown steadily
since hitting bottom in 2001. While the industry is still far below
its dot-com-era highs, a five-year growth spurt is a kind of quiet boom.
"Before you know it, the glory days will have already happened," says
Su-Ming Wong, managing director of Champ Ventures in Sydney.
But Wong says tech will always bounce back, and Silicon Valley will
likely remain at the heart of the industry. "Despite every country's
best efforts, no one ... has successfully replicated the Valley, and
I doubt it can ever be done," he says.
That's what Valley entrepreneurs want to hear. Most of the time.
"People are having fun, but less fun than you'd think," Renkoo's Park
says. "Because the way it works in the Valley is: When things are
good, you work 24/7. When you get laid off — when everything tanks —
is when you have time to spend with your friends."
Contributing: Janet Kornblum
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