Wednesday, January 28, 2009

Time For A New Name?

San Jose, Capital of Silicon Valley. Photo by SCUMATT

Silicon Valley became so-named because it was ground zero for the semiconductor industry explosion ignited back in the 1970s. Striking the matches were household names like National Semiconductor, Fairchild and, of course Intel. That era is now officially over.

The last-remaining production fab in the Valley will soon close, drawing to an end a quite remarkable period of unbridled technological change in an area that previously was best known for soft-fruit orchards and nut trees.

That brings me back to the question posed above: if not Silicon Valley, then what? IP Valley? While perhaps accurate, it's hardly catchy. Of course, Software Valley would cover at least the basic skill set that dominates activities today, but wouldn't itself be a catch-all for how the Valley sees itself. VC Valley scans better, but no one - except the VCs, of course - would ever swallow that one. Doubtless, you can all come up with better examples than I, but in these tougher economic times I have a better solution: sponsorship.

Let's sell naming right to the highest bidder, with the proceeds going into the coffers of Santa Clara County for educational purposes. Think of it: "Oracle Valley", or if that doesn't take you fancy, how about "HP Homeland" or just "Google Land"? Possibilities are endless, though heaven preserve us from "Twitter Town", "AOL Alley" or "eBay Bay"!

You heard it here first, folks.

Tuesday, January 27, 2009

Canon To Employees: "Go Forth And Multiply"

"So remind me, what goes where again?"

Here's change we can vote for: cure the recession by having sex. This is the uniquely Japanese solution adopted by Canon as a way of fixing both the economic slowdown and the problem of a fast aging workforce.

It seems that two days a week the doors to Canon's HQ are now firmly closed at 5:30 pm so the massed ranks of salary workers can all head off home to make babies. The article doesn't say if Canon's management checks up to make sure that this is indeed what their staff do with all these extra hours, but it does make you wonder. I mean, this is Canon after all, who makes all manner of interesting video recording devices in surprisingly compact form factors ...

Regardless, you have to give Brownie points to their spokesperson who says, "It's great we can all go home early and not feel ashamed". Fair brings a tear to my evil CEO eye ...

Monday, January 26, 2009

Trouble At Mill

The latest Silicon Valley unemployment numbers are out and, as might be expected, the news is far from good. The rate has now climbed to 7.8%, with more bad news yet to come as all the post-Christmas layoffs get added-in.

In this part of California, the most recent jobless high-water mark came after the technology bubble burst in 2001 when 9.3% of the Valley workforce was out on its ear. We therefore have a ways to go in order to reach the same mathematical level, but to me things actually seem worse this time around, and here's why.

By the start of 2001, the white-hot demand for technical resources required to meet the "growth by any means" rallying cry pulled hundreds of thousands of workers into the Valley as we all tried hard to create a tech version of the California gold rush. The roads were packed, real estate prices - commercial and residential - went through the roof and in December 2000 the unemployment rate was a quite remarkably minuscule 1.7%.

Of course, when it inevitably came, the bust was lightning fast and incredibly deep. But in this instance, many of those impacted were temporary imports, lured into the Valley by promises of IPO gold cladding the walls of high-tech companies; they came, they saw, they left.

This time around, however, the fast-rising unemployment levels are being borne much more by long-term employees at Valley blue-chips: Yahoo, HP, Microsoft, Intel, Sun, eBay, and even now Google are shedding faster than your aunt's mangy Persian cat does all over your favourite cashmere woolly at Christmas.

With fewer temporary workers to cull, therefore, there's only the long-serving full-timers to let go this time around. With across-the-board growth being a thing of the past, weak performing product lines are getting culled, regardless of how strategic or innovative they once may have looked.

Clearly, we are in the midst of another Valley shift. With quite remarkable speed, the once-lauded shooting stars in fields like software, silicon and even the Internet are now finding themselves transformed into old-style cyclical businesses operating in mature industry segments. In many instances, real market growth has now stalled, with progress coming instead through taking market share from the competition. IT is no longer the "spend at all costs" differentiator it once was; Wall Street has consolidated down to a mere handful of players and have other things to worry about than finding new products to use; the Internet is maturing out and web-vertising is no longer the gift that keeps on promising to give.

Don't get me wrong, I'm not here predicting the end of Silicon Valley, nor am I saying that all of its innovation and disruption are at an end. What I am saying though is that the land grab is over, the rich veins are now being mined by the big boys and that much of the fever-pitch excitement and energy has been spent. Bad for start-ups, good for the blue-chips.

I guess we all just grew up.

Friday, January 23, 2009

Slip-Sliding Away

One of the things you expect to happen in a recession is that money gets up and flees to safe haven currencies, typically the U.S. dollar. Despite all of the economic woes over here, the US greenback still looks to be a much safer place to stash cash than, say, the Zimbabwean dollar, Albania lek or, it appears, the Great British pound.

12 months ago, one pound would get you two dollars (to be exact, 1.98 on the 25th January, 2008.) Fast-forward 12 months and the pound has plunged by 30% so that today the exchange rate stands at 1.37 and falling. Clearly, the UK economy is viewed as services heavy - always bad news in tough times - and way too dependent on the health of the banking and finance sector, which isn't healthy at all. In fact, there's some evidence that UK banks are in even worse shape than their American counterparts, and that's quite an impressively horrid record.

Still and all, there are some upsides. For us, we have more expenses sitting in Europe than we do income, so things are easier than was the case in January last year. Travel and living expenses to visit le Continent are now much easier to swallow and of course there's a lot of downward pressure on the dollar-denominated air fares so jetting off for some arduous foreign travel hasn't been this attractive for years.

What with the 30% currency drop, combined with fast-falling house prices in the UK, anyone from overseas who fancies shopping for a flat in London or a country estate (in the country, presumably), now would be the time to do it. Alas, that takes cash, something else that seems to be a dwindling commodity around these parts these days!

But if you are to believe the graphic reproduced above (from here) the opportunity may be short lived. IF you believe it, of course! Nope, I've no idea, but will be watching with interest (though not from any cash I may have lying around ...)

Wednesday, January 21, 2009

Fiat Hearts Chrysler? Yeah, Right.

"Hmm, Dodge Neon, 3 Series or a Lexus? Tough Choice .."

Fiat and Chrysler have apparently signed an agreement committing to form the classic "strategic alliance" deal so beloved of car companies over these long 20 years past. "Oh goody", you cry, "salvation". However, before we crack open the Asti Spumante to celebrate all those bailout tax dollars being put to good work, let's take a reality check because I somehow doubt that this will go quite as well as the PR machines would have you believe.

If consummated, the deal will immediately deliver 35% of Chrysler into the hands of Fiat, with options to increase that holding in the future. In return, Fiat ships large amounts of cash to Cerberus .... whoa, hang on, maybe not. In reality, Fiat's exposure is merely agreeing to share its small car platforms and engine technology. That's it. Oh, and to provide assistance to Chrysler in making a case for further bailout funds, required in order to get this deal done at all, to us, the taxpayers.

For those of us with short memories, it's worth remembering that it was just such an alliance that accelerated Chrysler's descent into the pit of nothingness in the first place. Remember "Daimler Chrysler", anyone? Net result of that particular liaison was endless divisional wrangling between German and US management teams, Chrysler getting access to platforms and technologies only once they were long past their prime and duly discarded by Daimler, and bugger all incremental sales from the much vaunted access to Daimler's European car dealer network. In short, they got nothing from it whatsoever, other than being royally screwed when Daimler finally admitted defeat and decided to file for divorce.

Of course, all that gets forgotten in a wave of happy-clappy statements from Nardelli around how Chrysler will gain access to new dealer networks, be able to compete in the small car segment and generally cure world hunger at a stroke.

Let's be realistic. Cerberus is done with Chrysler. They have declared defeat, and Fiat are only willing to take the remaining assets off their hands so long as we, the American taxpayers, foot the bill. Check this out for the inside track and then do the maths. This deal puts a maximum value on Chrysler Co. of $125 million. For the whole shooting match. Lock, stock and totally-drained barrel.

How much have we already thrown into the bailout pot for these guys again? Oh yeah, $4 billion, and that's against the $7 billion Nardelli said in December would suffice to turn this thing completely around. Be interesting, therefore, to see what they have to say for themselves when Chrysler reports back to Congress on "what we did with your money" in February. "Hand it to the Italians", now appears to be a large part of the answer .... talk about an Italian Job style robbery.

Tuesday, January 20, 2009

IBM: The Elephant's Still Dancing

Both the market and Silicon Valley held their collective breaths today, waiting for IBM to announce their 4th quarter and FY08 results.

Thankfully, they were actually surprisingly good, even allowing for some clever positioning by IBM's - doubtless extensive - finance department. Although revenues were down relative to 2007, IBM included an analysis showing the effects of the extreme currency exchange shifts we've seen over the past months as a way of explaining away the lion's share of the decline. (Just check out the current USD Sterling exchange rate. It's now 1GBP = $1.38. Earlier in 2008 it was more like 1 GBP = $2. Good for expenses; bad for repatriated revenues!)

Mitigating the marginal fall in revenues, profitability actually beat Wall Street's consensus expectations. Net income in 4Q08 grew 12% over 4Q07, a result that's impressive for a business of that size operating in the worst quarters worth of economic data we've seen in many a long year. IBM reiterated that they are on course to further strengthen margins through 2009 and into 2010.

This has to be hugely stabilizing, not just for the tech. sector but for industry as a whole here in the USA. Frankly, it's also testament to the quality of the senior management team at IBM that they can react so quickly to circumstances that have other blue-chip companies heading for the bunker and blaming the economic fall-out raining down on them on "circumstances beyond our control".

Too soon to declare that the fabled green shoots of recovery are springing up all around us, but at least it might be an early sign that the future prospects for 2009 aren't as bleak as we may have feared.

Friday, January 16, 2009

Tough Old Bird That Fits The Bill.

No, not a review of Christmas dinners past, but rather a short-form summary of what the Valley has been saying about Carol Bartz, the newly-minted replacement for Jerry Yang at Yahoo! (Here and here for just two examples.)

Ms. Bartz is most well known for her turn-around marathon at Autodesk, where she took a floundering also-ran and dragged them kicking-and-screaming into the brave new world of Windows (and yes, that was indeed the state-of-play in the industry a mere 16 years ago.) Oh, and all this off the back of finding out on day 2 of her tenure that she had breast cancer. Add to that stints at Sun and her board seats at Cisco (with Yang) and Intel (with now ex-president Decker) and she's clearly demonstrated tenacity, dedication and a sustained level of energy that's very impressive, all good characteristics for CEO taking over a faded web queen like Yahoo!

There has been much heated discussion around whether or not her lack of Internet experience will be a handicap. Without having an insider's perspective on what the real problems are that Yahoo! is suffering from it's frankly very hard to say, but my feeling is that it's actually a net positive. After all, the board has tried bringing in a media type to fix things on the basis that it was a content problem and that failed, then they fell back to a deeply technical Internet insider and that failed even more spectacularly. Therefore, focusing instead on straightforward "adult supervision", applied liberally and with force, is the medicine most likely to have the greatest immediate restorative benefits, and she seems to fit that particular bill perfectly.

Downsides? Cost. If this is a full and accurate summary, Bartz has clearly negotiated a very rich compensation package. In 2009, salary plus bonus is targeted at $3m with an additional $2.5m in cash to come from 25% of the value of the forfeiture payment; add to that $15.5m in stock grants plus an additional 5 million shares (though with an extended, performance-based vesting schedule.) Even allowing for the size and position Yahoo! holds in the market, this is a generous set of terms. Of course, if she delivers significant shareholder value then no one will complain. However, if this turns out to be a mistake then it will be one that Yahoo! pays for through the nose.

Getting back to the basics, my own theory is that great CEOs share one common characteristic, even across all of the broad swathe of skills, backgrounds and temperaments from which they are drawn, and that's acute self-awareness. "Know what you are good at, and hire wisely to back-fill the gaps", in short. Seems to me she's just that kind of executive and that Yahoo! might well have found themselves a safe pair of hands to hold the tiller for the new few years. And that will be good for everyone. Competition is important, even in the brave new world of Webiness. Leaving it all in the hands of Google won't benefit them or us in the long run; ditto Microsoft.

Ah yes, and speaking of Redmond. Bet Balmer is currently wondering whether or not Microsft may have mised a trick here. By not bailing Yahoo! out of the hole they've been in these past couple of months, have they offered a wounded competitor the chance to now regroup and come back even stronger? Time will tell, but they may just have been a bit too clever for their own good. Again.

Thursday, January 15, 2009

Weapons-Grade Geekdom

A Likely-Inaccurate Model of Fat Man (

Ever try making those Airfix Spitfire models* when you were a kid? Even with all the bits nicely stamped and stuck on those interconnected square plastic branches, the net result never quite seemed to come out looking like the picture on the box. Partly, that's because you always ended-up with this collection of leftover bits that somehow never seemed to fit anywhere, and partly because what did result looked like it had been painted by an arthritic, color-blind monkey with the attention span of, well, a monkey.

Spare a thought then for this guy. He decided to build a complete, one-to-one scale replica of the first atomic bomb. Yes, like the one used at Hiroshima in 1945. Yes, the one still covered by the official secrets act*. Oh, and he's a truck driver from the Mid-West, not some furloughed rocket scientist with privileged access to information denied to yer average Joe six-pack.

Over the course of 10 painstaking years of research, John Coster-Mullen was able to back-calculate all manner of key dimensions, shapes and forms as he wrestled with the precise mechanics of not just how the bomb must have looked, but more importantly how it must have worked. To get there, he variously interviewed retied scientists and machinists; scrutinised archive materials and photographs; visited museums where pieces of the original might be housed; and generally bugged the living daylights out of anyone and everyone who might provide even the merest clue as to the size, weight, design or purpose of the next piece in this quite astonishing puzzle. To cite but one example of quite how obsessive Mr. Coster-Mullen actually is, there's a photograph somewhere of a box containing the plutonium core of the weapon being carried past a car in New Mexico in 1945. Once he had figured out the make and model of the car in the background, Coster-Mullen then hunted down an exact vehicular match in order to measure, to the millimetre, the precise height of the doors, figuring out that this would reveal the size of the box and hence set an upper limit on how big the thing inside could be. All that just to prove that other estimates of the length of what's inside were wrong! Please, read the article, I can't even begin to do this guy justice merely with a few extracts.

John, Silicon Valley salutes you as one of their own. Clearly, the passion that drove you do do this rages no less fiercely in Wisconsin than it does in garages the length and breadth of Santa Clara county. While you toiled on recreating an atomic weapon, geeks here were crafting Google, Yahoo!, eBay and They made millions, while you did it purely for the intellectual challenge. In fact, let me restate things: Silicon Valley should worship you as a new god. At least our garage-dwelling brethren could argue that there was a chance of fame, fortune and hot babes at the end of their journeys (and particularly in the case of benefit number three this would be their only path to such riches) whereas your passion, burning just as bright but with a flame far more pure, was most unlikely to bring you any of those three gifts. And nothing - but nothing - earns you more street cred than that, at least round these here zip codes. Therefore, I hearby induct you into the SV Hall of Ultimate Geekdom. It's not a complex process, in fact I need only speak the sacred words, passed down from generation (X) to generation (Y), to reflect your joining at the highest level of membership.

"Dude. Awesome."


(*Insert American equivalents where appropriate!)

Wednesday, January 14, 2009

Fine (Detail) Art

Sit down, fire up a browser, generate some CO2 and via Google go here. Voila, a Gigapixel view of treasures from the Prado museum. For the first time, you can now get microscopically close to some of the finest works of the art on public display anywhere in the world today.

The example I liked to above (given that it works, of course. As you can see from the video, you'll need Google Earth installed to get there, otherwise start from here for more information) should take you to a detail from the perfect test case, Hieronymus Bosch's Garden Of Earthly Delights. This incredibly complex triptych, surely the artist's most well known work, depicts the perils of straying into earthly temptation, particularly of the fleshy kind, and what will happen to you in the afterlife should the pull indeed be too strong for a mere 16th century mortal to resist.

I've seen the work in person, on a long-ago visit to Madrid, and found it to be mesmerising. However, as with all modern museums these days, there's a limit to how close you can get. Most particularly in the case of this work, that leaves you craning forwards trying to take in the massive amount of detail, something that doubtless drove huge book and poster sales in the museum shop right up until, ooh, roughly yesterday.

No more, dear art lover. Now, from the comfort of you own arm chair and with a price of but a few grams of CO2, you can drill right into each and every facet of this hugely significant piece. The capture above is way closer than you can get in the museum, but nowhere near what Google Earth will offer you. Really, it is that good.

I for one can't wait until they get more of this done. The technology is pretty basic by all accounts: a standard DSLR with a long lens, plus some fancy software to figure out distortions, stitching points etc., and a tripod-mounted mechanism to move the camera over the piece in question. From the video you can see that it just requires after hours access and nothing that gets in the way of photographing the work. You don't have to take it down; you don't have to remove it from display for weeks on end; you don't need any fancy laboratory set-up.

Here's hoping that Google donates the necessary equipment, software and storage space to every major museum around the world on the basis that, in return, they'd progressively digitize all their major works. Just think of all the plane flights it would save: call this Google's approach to carbon offsets! Even at a cost of just 7 grams of carbon dioxide, viewing it online is a lot more carbon friendly than flying there!

Tuesday, January 13, 2009

Closed Door To Open Source

Perhaps if I recompiled the tool source code and tried again?

For those of you who are interested in chip design software and all things EDA, there's a very good new blog at the Electronics Design News site. (Disclosure: I know the author; we worked together for a couple of years.)

Today, it raises the question of why there are no real commercial instances of open source software taking the EDA world by storm? A lot of very reasonable explanations are posited, but in essence they all come down to one thing: "the market is too small". (In the comments, another answer, "there's no extant base of code with which to kick-start the process like there was in the operating system world" is, I think, just another consequence of the same problem.)

Whilst I agree with the notion that EDA is a small market (see below), it's actually quite a lucrative one. Roughly speaking, the EDA tools business is in the $4billion range, a not inconsiderable sum by any means. In comparison, the embedded software world, a sector that also gets a mention in the post, is less that half that size. And it's worth noting of course that open source is playing a significant role in that space, albeit a fairly static one; the word "spoiler" comes to mind ...

Although the scope of the EDA market is indeed a factor, it's not the dollar size that matters as much as the number of active projects using those tools that's the problem. Perceived wisdom is that the number of new chip starts is declining, a state of affairs made worse, at least for the tools vendors, by the fact that the complexity of those that are underway is actually increasing. It's also the case that EDA suffers from a very Balkanised work-flow, each stage of which has it's own discrete set of tools (synthesis, place-and-route, verification, etc.) meaning that a vendor wanting to offer a complete solution has to invest in multiple areas at once. Even so, and given the costs of these tools, you would have thought that some open-source effort would have gained real traction somewhere along the line, but it hasn't and, I'd contend, it likely won't.

Regardless of whether it's open- or closed-source, the quality of the end result of any significant software development project is still largely determined by how much testing can be done. The reality of the situation though is that this is almost all done after the event, when the project is largely complete or, worse, by the customer when the solution has been fielded. (Early releases of Vista for example??)

In the open source world, this basic methodological approach means you throw something out there and wait for it to be applied to real projects. they find the problems and the community provides the fixes. This is a fine and noble approach if we are talking about an operating system or a network stack; it would be an unmitigated disaster if we're talking silicon design.

Taping -out a new chip these days runs in the $3m to $5m range. Not only is each design very costly to create, it also has a very long initial testing cycle time, often in the order of months. Oh, and just to cap it all, what you are working on is likely leading edge, highly proprietary IP that's guarded more jealously than a junk yard dog protects his bone. Net-net? As a user, there's no way on earth in which you can mature an open-source initiative without risking a) millions of dollars, b) losing a key market window, or c) exposing your latest highly-secret chip designs to all and sundry.

Where does this leave us? On the plus side, EDA is unlikely the find itself threatened by open-source offerings anytime soon, if ever; it's a large market, at least when judged by the standards of tool offerings in other markets; EDA tools are a must-have, not a nice-to-have, so you have lock-in like you wouldn't believe; And there are very few competitors, so once you have set up your tent then it should be plain sailing until you reach happy-ever-after land all fat, dumb and happy, right?

Not so fast. Remember what we've already covered. R&D costs are extremely high in order to keep pace with the underlying physical advances that are driving ever-shrinking mask sizes. Roughly speaking, two generations of smaller node sizes equals one complete re-spin of EDA technology required in order to complete the necessary design work. We've already seen that design starts are declining, therefore the active players are chasing an ever dwindling number of fish in the overall EDA barrel. Oh, and the Valley hates you like there is no tomorrow.

EDA used to be a great market within which start-ups could get founded, develop innovative solutions and then get acquired by the handful of active players such as Cadence, Synopsys, Mentor, etc. But then it stopped. Those same companies said "enough", and switched instead to trying to develop organically. This left the VCs carrying a whole bunch of EDA start-ups that had been funded on the basis that the gravy train would roll-along forever and for which, all of a sudden, there was now no way out. (Sound familiar? Social networking clones anyone? Sequoia's Web 2.0 meltdown message?) The Valley hath no fury like a bunch of VCs scorned and, all elephant like, they have very long memories. Consequently, getting a new start-up -either semiconductor or EDA based - funded in 2009 will be next to impossible unless something dramatically changes.

"No market" ultimately impacts much more than whether or not open-source solutions arise, it fundamentally prohibits innovation. Even if you don't buy this premise one iota, it's nevertheless a self-fulfilling prophecy: just a perception of there being no market is enough to cause this state of affairs to come into being, and that's exactly where EDA sits today.

Thursday, January 8, 2009

Toy Town

Decided to a couple of hours off today and head off with a co-conspirator (say "hi", B!) to the San Jose Autoshow.

Given the Valley demographic you would hope that high-end cars would get pride of place, that geek-friendly, scantily-clad girls would be draped all over the good stuff, and the luxury manufacturers would pull out all the stops like an over-achieving organist on steroids.

Err, "no" on all accounts. Looking around, it was clear that this was more a collection of cars from local auto-dealers than a show sponsored by the major manufacturers. Try this as a way of setting the scene: take Steven's Creek Boulevard, compress it, and then add carpet and a roof. Oh, but along the way delete the Audi, Porsche and Mercedes dealers, leaving just the mass-market stuff (which, in this day and age, might usefully be renamed the "a few people out window shopping and allowing their kids to climb all over the huge stock piles of unsold cars market") that you can basically see every day of the week in your local multi-story car park. Starting to get the picture?

Still and all, if you are looking to compare the mainstream offerings from Nissan, Honda, Toyota, Ford, GM and others then at least here you can do so all in one place, under cover and with very few actual sales "consultants" around to bug the living daylights out of you. And that's frankly worth something, to me at least, because I hate people hovering over me while I wander around pawing over expensive, shiny, metal things.

Highlights? Check out the Bugatti Veyron, albeit in a horrible two-tone colour scheme. Not often you see 1,000+ HP conveniently stuffed into one, very low-slung package, so go and dream. Worth a look too is the Rolls Royce with a paint-free alloy bonnet (hood). Actually, indoors it looks quite cool but I hate to think what it would be like driving that thing in California with what must be laser-like reflections from strong sunlight blinding you mile-after-mile. (Should have checked to see if it was called the "Buyer's Remorse Special Edition". "It looked great in the showroom, and $400k really isn't too bad to own something so exclusive now is it?")

Lowlights? Pretty much anything built down to a price, and yes, that means you, GM, along with all tinny econoboxes regardless of race, color or creed.

I think we agreed that the San Francisco show was better, but really it would take a trip to Paris or Frankfurt to really see the good stuff. So maybe next year ....

Wednesday, January 7, 2009

How Green Is The Valley?

If you believe the National Venture Capital Association's predictions for 2009, the answer is more-or-less "more-or-less". I'd better explain that.

In the sense that clean tech is one of the the few predicted growth areas for VC investing, the Valley is greening-up. Even with a reversal in the seemingly relentless climb in oil prices, green is still seen as good when it comes to spotting new opportunities to make money.

It's now perceived wisdom that Silicon Valley missed a trick a few years back when it ignored the fast growing need to have battery technology progress by leaps and bounds in order to fuel product advancements across a range of industries. After all, where would the iPhone be if you had to stick 4 D-cells into it to make it work? ("Nowhere", in case you need a clue.) Well, not this time, Bud, The Valley's got it covered. Or rather, will have it covered next year once VC's arm up with people who understand this stuff and who have enough operational experience to sort the wheat from the chaff. Regardless, clean tech is still hot, and we like hot.

However, the Valley is less green in the metaphorical sense that a) fewer overall bucks will be available to VCs to go out and invest with, and b) there is absolutely no sign that the IPO window will open any time soon, that corporate buyers will suddenly discover deep M&A pockets or that magic Web 2.0 dollars will ever again fall from the sky in a relentless rain of optimism. "Less money in at the front end as well as less money at the back end", in short. Unhappiness all round.

Other morsels, served here merely in the spirit of saving you the pain of downloading the .PDF, include:
- Semiconductor investing is dead. For.Get.It.
- Dollars will move from seed-stage to late-stage as everyone chases higher-quality combined with lower-risk investment strategies. It's that herd thing again. Most will do too little, too late.
- No one wants to travel so forget Europe, India and even China. Local is good. And by local I mean "can spit from the window and hit the CEO in question". Which is itself anyway likely to be another 2009 trend because ...
- Even current companies that are funded today are still going to find it much harder to get more money tomorrow. Companies will go from being teacher's pet to curse-of-the-class overnight. And then they will go out of business. Darwin is about to get proved right all over again.

Add it all up and where should you be targeting? The answer seems to be: at a late stage clean tech. company, focused here in the Valley, and doing well enough to not really need venture funding this year thanks very much.

Sort of hard to build an investing thesis out of that conclusion .... which means that the other sort of green that might be seen in these parts is around the gills of the junior partners in middle-league firms, or even lower-rung funds in their entirety, that suddenly find for them the VC business is no more; in short, it's time to dig out the copious weeds that have grown round here in the past 10 years so the whole Valley can be more verdant again sometime in the future.

Got a roto-tiller anyone?

Tuesday, January 6, 2009

A Bit Chilly

We're not talking the economy here or even the weather in California, but rather the current cold snap in Europe. I heard on the BBC that last night the U.K. was, in places, colder than Antarctica. Even allowing for global warming, that's still a rare occurrence, so I thought I'd post something in solidarity!

The picture above comes from Belarus (and is part of a set of images on the theme of "Icy Days & Nights" featured in the Boston Globe) where they are used to this sort of thing, but it's perhaps a warning that continued exposure to cold weather seems to do bad things to the brain.

Roll on summer. Round these parts the forecasters are promising us temperatures in the 68 to 70 degrees F range by Sunday. Now that's more like it!

(Oh, and I think I did very well to avoid any "man with his chopper in his hand" jokes, don't you? Bit of a struggle, mind ... )

Monday, January 5, 2009

Glimmer Of Hope?

A Sight Not Seen For A Long Time

It may just be new year fever, but there are signs of things stating to improve in the Silicon Valley housing market according to the SJ Mercury News today. Although prices are down 40%, year-on-year sales in Santa Clara county, November '07 to November '08, were up 14%.

Obviously there are a couple of effects at work here: inventory and affordability. Back in November '07, low-end houses, where there's always been an imbalance between supply and demand, were few and far between, and let's be honest you really didn't get much for your dollar. Fast forward 12 months and now you have a lot more choice within a given price band and you get significantly more house for your money.

If you are employed, solvent and can get a mortgage, life is clearly pretty good for house buyers just now. If prices are truly down 40% in your chosen area and you are still making what you made 12 months ago then it's hard to see any reason to sit on the sidelines much longer, unless of course you think you may get laid off sometime soon ... which alas is still a fear for a lot of SV workers. So apart from the solidly employed, who else is buying?

It seems Silicon Valley is luring real-estate investors back to its bosom. From a year ago, sales to absentee or investor buyers rose 38% to now account for 11% overall. Which is a lot. And interestingly, those investors are spreading their dollars across a broad church of property districts from the relentlessly up-market (Los Altos Hills, Atherton etc.) to the more Blue Collar(San Jose, Alviso, etc.)

Does all of this signal that we have reached a bottom and that things are now starting to turn around? From a real-estate perspective then ... perhaps, especially at the low end of the market and particularly once Spring arrives, by which time post-Christmas layoffs will be over, any businesses who couldn't scrape past the new year sales will be gone and company budgets will be set for '09. Add to that the chance for a "new president dividend" in terms of optimism & consumer sentiment and things might be looking brighter than they have done for quite a while.

The real signal for a broader upturn will likely be when Wall Street stops reacting negatively to further bad news. That's been a leading indicator of recovery in at least the last two significant recessions and no reason to think it won't be so once again. Wall Street is basically a forward-looking discounting mechanism and hence a leading indicator of corporate recovery. Therefore, it will be very interesting indeed to see how the markets react in these early weeks of January to new economic or political data that's perceived to be negative. If there's a floor found over that period then we may well have found a base for the much-mooted second-half recovery.

Happy days are here again? Not quite, but perhaps we might at least cancel the suicide watch.

Sunday, January 4, 2009

Back To The Fray

F-4U Corsair & F/A-18

Here we go again: another year, another plan, another mountain to climb. The Christmas break seemed all too brief, interrupted as it was by having to close out the last minute Chinese deal, and before you know it Silicon Valley is back to life and ready to rumble.

I did though manage to find time to work on processing some older images, such as the one above. Recipe roughly as follows:

1. B&W conversion layer

2. S-curve to boost contrast slightly, but mostly to pull down darker tones

3. Tinting done via a gradient map that's set up just to affect mid- and upper-tones whilst leaving darks and highlights unaffected. Blend mode set to "color" and opacity at around 50% in this case.

4. Bit of dodging and burning, mostly to brighten the skull-and-crossbones.

Here's to 2009, whatever it may bring. However, given the on-going Israeli incursion into Gaza, starting the year with a picture of two warplanes doesn't seen wholly inappropriate. After all, it's hard to see that this year will be the one in which peace on earth finally arrives ...