In A Recession, Who Wins, Who Loses In The Innovation Space?

Posted by: Bruce Nussbaum on September 20, 2007

We’ve had an amazing run for innovative startups in social networking, green tech and search over the past few years and that may come to an abrupt end if we slip into recession. In fact, Goldman Sachs just lowered its estimate for US economic growth to 1%-1 1/2% for the rest of 07 and the first half of 08. That means the chances of slipping into recession are rising pretty fast, despite the surprisingly large interest rate cut by the Federal Reserve this week.

Even if we don’t technically move into recession territory (which means two quarters of negative growth), a sharp slowdown may well hurt the valuations of lots of established new startups and dry up the angel investor flows to those in the borning stage.

For big innovative/tech companies with deep cash pockets, such as Microsoft, Google, Cisco and others, this could be a prime time to gobble up fresh ideas and talent for much less than what they would have paid just a few months ago. Microsoft has about $35 billion in cash on hand. Google has about $13 billion. Check out Henry Blodget at the Silicon Alley Insider for more analysis on the possible impact of recession on the innovation space.

Reader Comments

William Place

September 23, 2007 6:29 AM

WHO LOOSES! The American worker and consumer looses you IDIOT! Has there ever been a situation when the common working folk did not take the beating when something goes to crap, nope, not in my lifetime and not likely ever to change.

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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