No More Dog Days?

Usually there are a few things you can absolutely count on in August – the ocean temperature in southern New Jersey is warm and inviting to jellyfish, the Phillies are out of the pennant race, and the French and Venture Capitalists are all on vacation, leaving their country and fiefdoms (respectively) to be run by their office administrators; in other words with unusual efficiency and precision.

But this has been a wacky summer.  The ocean temperature dipped into the upper 50s in Stone Harbor, the Phillies are actually playing games that matter (to them), and I’ve been getting lots of calls and having lots of meetings with VCs in places other than their country clubs. 

What does this mean?  Maybe nothing.  Inevitably, the ocean will warm up, the Phillies will cool down, and the French will return to the sophisticated lifestyle that they call work.  But what of the VCs?  Does all this activity represent a sustainable up tick in investing activity?   It’s probably too soon to say that for sure.  But I am certain that the VC community in general has shifted through the “Oh shit!” phase to the “Let’s buy hurting companies real cheap!” phase to the present “Hmm, are there any ideas out there of possible value?” phase.  The bar is high, as it should be, but my observation is at least there is a bar for the first time in a while and good teams with worthy ideas that address real needs in potentially large markets have a chance of getting VC funding to help launch their company.   Halleluiah.

That doesn’t mean that a large number of new companies will get launched, or that the ones that do will be successful.  But it does mean that the entrepreneurial spirit seems to be back in Silicon Valley. 

Another clear metric of some kind of change underfoot in the Silicon Valley is the traffic. It wasn’t too bad in early-to-mid August.  But as soon as school started, the traffic has gotten bad – as bad as I remember it ever being during the peak times.  It is regularly taking me over an hour to get from my home in southern San Jose to meeting locations in Santa Clara or Mountain View, and even more to Palo Alto.  I don’t even want to talk about Brisbane.  Just getting to Los Gatos, for a breakfast meeting - a 10-15 minute jaunt on a Saturday morning - took me almost 40 minutes the other day.  I’ve stopped apologizing for being late for a very simple reason – most of the time others are even later than I am. 

What is going on here?  As far as I know there hasn’t been a rash of hiring and job generation.  According to what I read in the paper, there are still something like 200,000 fewer jobs in the Valley than there were a couple of years ago.  Are all of these unemployed people getting on the road every morning and evening just to piss off those of us lucky enough to still have jobs?  Is everybody conspiring to get on the road just ahead of me?  Are cell phones or other distractions causing more accidents?  Are people carpooling less?  I can’t figure it out.  But maybe it means that statistics lie and that there is actually an up tick in employment in the Valley.  I’d like to hope that is the case.  If it is, it helps explain another phenomena that is otherwise difficult to explain – the fact that the housing market in Silicon Valley is still strong and remains (in my humble opinion) severely inflated.  For awhile I explained this away as the effect of low interest rates.  But when interest rates ticked up recently, it didn’t seem to have much of an impact.   Maybe interest rates just need to go up more before having an effect or maybe more time is needed for the economic downturn to impact housing.  But maybe not.  It could be that the fact there are so many people on the road with me now, leisurely heading to work at 5-30 mph, is evidence that the local economy is healthy and thriving in spite of all the press stating otherwise.  If so, that would be great.  I don’t see how the US economy can be strong without a strong Silicon Valley and the industries it represents.  

(volume 6, number 8)