Silicon Valley after the financial crisis

I am often surprised how negative people see the economic crisis that we are in right now. Yes, for sure it is a major downturn and many people are affected, loosing their job – or worse. But, especially when I am in Europe, people almost seem to dump all their problems on the crisis. I think we have to ask ourselves if some of the problems that many countries face have been there even before the crisis – maybe people were just not noticing them that much. The real estate bubble in the UK and in Spain? Well, finally real estate prices tend towards more reasonable prices.

However, I believe what people should be discussing is: “what is the best way to get out of this crisis?”, “which strategic decisions needs to take my company today to survive this crisis?” and especially “which products and services should we develop today that will thrive as soon as this crisis is over?”. I believe that smart companies right now are putting innovative products together which they will launch as soon as the general mood is clearing up and people start to buy again. Do I need to wait for Apple’s netbook/tablet PC therefore that long (the Kindle killer)? The way to go for many companies is certainly to calm down, get the survival strategy out, streamline the organization and especially fine-tune (potentially adjust) the product roadmap. This also goes for early-stage start-ups. Develop new products now and launch when the time is right. Aren’t we always saying: the best companies got founded in economic downturns?

I think it is very dangerous to assume that certain parts of the world will not thrive anymore as they have been doing over the past decades. I recently read an article in the German magazine Der Spiegel about Silicon Valley fading out of ideas (http://bit.ly/uHZs in German). The author believes to detect a downturn in innovation in the Valley and quotes several articles, like the Silicon Valley Venture Capitalist Confidence Index (http://bit.ly/MDXwX) which certainly does not look very well. The author however then points out himself that a long-lasting conservative approach by investors in the Valley would be highly contra-productive. In this point I certainly agree with Stefan Schultz, however I would like to stress that I do not believe that there is a long-lasting crisis in the venture capital community in the Valley. I think other regions in the world should rather see the Valley as a role model – connecting capital with innovation and creating companies which is unmatched in the world.

People in the Valley often think back to the famous bubble in 2000/2001 and long dry spell thereafter. But this time it is different. The epicenter of the crisis is New York and not Silicon Valley. Yes, you can feel the crisis in the Valley as well, VC funding has slowed down, companies go bankrupt, people get laid-off… But there are tons of companies just getting ready to make a significant difference, now – and as soon as the economy gets back their confidence again.

Watch out for companies that survive the crisis and then thrive!