ECONOMY, INTERRUPTED
We hardly need to recap what the tech bust wrought: thousands of
jobs lost, VC funding reduced to a trickle, tony office buildings
left vacant. Worst, though, was an indicator untracked by
economists - the "glass is half-empty" attitude. Silicon Valley's
collective, seemingly intractable optimism was replaced by a
region-wide funk.
"The Valley has gone through what I call a state of depression,"
says Gary Hooper, a former biotech CEO and 30-year veteran of the
technology industry.
"For a while, there was a lot of skepticism about how anybody could
possibly make money with technology ideas," adds Rob Lerner, the
former CEO of Vapore, a company that invented and manufactures an
M&M-size ceramic pump that can be used in everything from
camping stoves to, potentially, drug-delivery systems.
Slowly, cautiously, the region is shaking off this unnatural
pessimism and regaining its courage. The business community sees
lots of reasons for hope. Most important, companies once again are
buying what the Valley sells. "One of the main reasons we saw this
huge downturn was that major companies stopped buying [IT
equipment]," says Raffi Amit, the Robert B. Georgen Professor of
Entrepreneurship at the
Wharton School of the University of
Pennsylvania. "Now we see those sales are rising."
Venture-capital funding, both for start-ups and for more mature
companies, has also made a comeback. When Lerner needed additional
funding for Vapore last summer, he was received well. "The level of
interest is quite high," he says. "The general sense is that the
purse strings are loosening and the appetite for developing tech
companies is ramping up."
Also buoying the mood was
Google's successful launch onto the stock
market, an event many gleefully cited as proof that Silicon Valley
is on the upswing. From an initial offering price of $85 a share,
Google stock had climbed to $180 at press time.