Has Silicon Valley Jumped the Shark Again?

Posted by: Rob Hof on May 22, 2007

“Times are good, money is flowing, and Silicon Valley sucks.” So says Mike Arrington at TechCrunch, and I think he’s latching onto something that has been building for awhile: Despite constant protestations that “this time is different,” there’s an unmistakable air of bubbliness right now. This time, the source is not so much a plethora of IPOs, but massive buyouts, from Google’s $3.1 billion purchase of DoubleClick to Microsoft’s $6 billion acquisition of aQuantive. (I know, neither Doubleclick nor aQuantive are Valley companies, but they’re valuable because of the massive new ad market created by Valley Internet companies, whose coattails innumerable startups are all trying to ride.)

Money’s money, whether it’s from venture capital, public investors, or corporate M&A budgets. And I see a lot of it getting spent on blizzards of press releases, pitches, and parties, not to mention people (those with technical knowledge who can now name their salary, it seems). Not as much is getting spent on each company as in the late 1990s, maybe. And I doubt that if and when the current bubblet deflates, it will be anything approaching the level of the dot-com crash. But my Outlook inbox knows there are too many companies going for the Google gold ring, and that just doesn’t seem all that healthy.

Maybe I’m just weary of trying to keep track of everything—which would be my problem, not the Valley’s. Indeed, some folks, like Paul Kedrosky, think Mike’s making too much of the current Web 2.0 frenzy in the Valley. BoomTown’s Kara Swisher think he needs to just say no to all the pitches and learn to love the boom. And she does have a point that many of these startups are offering useful services. (Then again, I found Pets.com useful—who the heck enjoys shopping for a bag of cat food at Petco, anyway?—and it vanished after it became the poster child for dot-com excess.)

Nonetheless, I think Mike’s on to something. Maybe we’re not headed for another dot-com crash, but there’s clearly excess, and I’m not entirely convinced that’s just the way innovation has to work. As Dave Winer notes:

I think it’s totally avoidable, that it’s a simple bug that the great minds of the valley could cure, by rethinking and then tweaking how capital works, but in the boom times they’re too lusty for quick returns, instead of funding technology companies, they fund TV sitcoms.

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Reader Comments

Tyler

May 22, 2007 05:41 PM

Maybe he should move to Columbus, Ohio (http://www.gobignetwork.com/wil/2007/5/22/what-silicon-valley-could-learn-from-columbus-ohio/10158/view.aspx)?

Jesse Ciccone

May 23, 2007 09:41 AM

Having lived in the Valley during the first bubble/bust cycle, I can tell you...everything you/Mike are saying rings true. The thing is, it did the first time, too. Many of us were saying "this is ridiculous and cannot, will not last" while we were waiting in a line around the corner to get into The Industry Standard rooftop party.

Solving this problem has to start with wanting to. And, let's face it, for as much as the busts/letdowns suck, the bubbles are really fun.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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