Is Silicon Valley seeing an economic turnaround?

Michael Malone wrote a post that caught my eye this morning saying he’s seeing an economic turnaround in Silicon Valley.

He might have a point. I’m seeing a bit more optimism in the valley. Yes, January was bloody. Yes, we’re still seeing layoffs, and probably will see a few more. Yes, our houses are under water (there are three houses on sale on just my small street and one of them is a foreclosure, so I owe more on my house than it’s now worth in the marketplace).

But I’ve been feeling more optimistic lately. At least about the Valley. After I got back from Davos I was really depressed. Why? Because I heard very few ideas about how to get people working again. But then I got back to the valley and met with companies like Playfish, which has been seeing great growth lately (they are the most popular games company on Facebook).

Also, this week we saw Intel invest billions of dollars in its US plants.

Oh, and some companies, like Craig’s List and Etsy, are seeing increased activity because of the recession. Above is a video I shot on Sunday of Craig Newmark, founder of Craig’s List.

Some other interviews you should check out:
Playfish’s CEO talking about how they are building games for Facebook, part I and part II.
Etsy’s founder, in Davos, talking about the success he’s seeing in selling handmade goods.

Oh, and Twitter just closed another round of funding.

Have we hit bottom? It’s too early to say, but it sure is nice to see even a little optimism around.

Welcome to Black January: Microsoft, Intel, IBM and others lay off tons

I’m tracking the dismal news on all the various blogs. This is the worst month the tech industry has ever seen. The bad news from Microsoft, Intel, IBM is all over TechMeme and TechFuga.

Wake me up when it ends. More later, but today there is some good news, just not enough to stop the tide of bad. A new startup, Plinky, will come out of stealth mode at 1 p.m. (we’ll have a video of that up on FastCompanyTV) and I’m getting around Silicon Valley and San Francisco starting at 9 a.m. at Seesmic, with stops in Mountain View to see something secret, and Sunnyvale. Back to San Francisco tonight for a Fast Company dinner event. Whew!

My heart goes out to all the people who’ve lost their jobs this month. What’s worse is it isn’t over.

Solution? Next week at the World Economic Summit my “Davos Question” is how can we create one million new startups with a failing/failed VC system?

That’s what it will take to repair the damage this month has done to the tech industry and our economy. Yes, the depths of our problems ARE that deep. Got any ideas?

The view of economy from Palo Alto's socialtext

Socialtext is one of those companies that got started during the last downturn and has played an important role in the valley’s startup culture for the past few years (they hosted the first BarCamp, for instance). So yesterday I went over to have a chat with founder Ross Mayfield and CEO Eugene Lee. We discussed mostly the economy, but a little bit about the enterprise software and services that socialtext sells. Socialtext started as a company that sold wikis to enterprises, but has expanded that into a social collaboration and productivity suite that’s doing very well. While I was in the office two sizeable sales came in from two big companies.

Eugene Lee was an executive at Cisco when Cisco had to lay a lot of people off during the last downturn, so he talks about that too. I split the interview up into three pieces:

Part I. What will happen to both large and small companies during downturn? What are they seeing from their enterprise customers? (Hint: record sales so far this quarter but great uncertainty for next year).
Part II. Discussion of corporate pain of email.
Part III. Ross tells me about socialtext’s alumni network and how that can help both companies and workers who are laid off.

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FastCompanyTV moves to China (for a visit)

No, we’re not outsourcing, next Wednesday we’ll be going to China for a sizeable trip to hear from entrepreneurs and venture capitalists there and get some tours around factories. I’m telling you this so we can arrange some fun dinners and other impromptu events. It’s Rocky’s first time there, and I haven’t been to China in 10 years, so it’ll be interesting to see the differences.

November 5. Travel day.
November 6. We arrive in Shanghai in early evening.
November 7. Going to Wuxi to see Seagate’s factory and possibly others there.
November 8. Travel back from Wuxi, we’d like to have a dinner in Shanghai — any ideas where we could do that? I remember having fun at the Peace Hotel, but looking for other ideas.
November 9. Meeting with VC’s and entrepreneurs in Shanghai.
November 10. Travel to Shenzhen.
November 11. In Shenzhen. Meet with Phil Baker and Liam Casey, “Mr. China.”
November 12. In Shenzhen. Anyone want to meet up? Let us know.
November 13. In Shenzhen. There’s a Blogger Dinner planned that evening that I’ll attend.
November 14. Travel to Guangzhou to join up with the also happening China 2.0 blogger tour.
November 15. In Guangzhou for the Chinese Bloggercon.
November 16. In Guangzhou for the Chinese Bloggercon.
November 17. Travel to Hong Kong. Any bloggers want to get together in Hong Kong? We’re looking for a fun dinner or something to do.
November 18. Travel home.

We’re also planning out some trips to factories and other things but will try to fit other things in. Hope to see you there!

CEO of Healthline talks economy, politics, and privacy

A couple of weeks ago I wrote that one of the ways to build a recession-resistant company is to be in the healthcare market since people will still need their healthcare. Yesterday I ran into the CEO of Healthline, West Shell, and had a 15-minute conversation with him. This is a dramatically big web company. Crunchbase says it has 4.2 million unique visitors a month. So, getting his point of view on anything is interesting, but hearing his view on the economy at this time is even more interesting (he is seeing an effect even on his company, so my advice that healthcare will be recession resistant might not have been that good, although he says they are setup very well to thrive long term).

By the way, this is a video I did on Maryam’s new Flip camera. Nice quality for a low-price camcorder.

He also tells me about the recent Health 2.0 conference, the efforts of Google and Microsoft in the healthcare market, privacy of your health records, among other things, including what he thinks Barack Obama will be able to get done in healthcare if he’s elected President.

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"Sky isn't falling" blogger says

Steven Hodson, over at the Inquistr blog, says “the sky isn’t falling” and “What do we get instead? We get people like Robert Scoble who have for the last few days done nothing more than highlight everything bad going on.”

Ahh, yes, ye olde blame the messenger post.

See, all week long I’ve been saying we’re in a death spiral. They argued with me last weekend and on Monday before the market had its worst week ever. Ever.

They are still fighting with me after I’ve been talking with CEOs, investors, normal people, and reading thousands of feeds and watching CNBC nearly around the clock.

Funny that even the experts are wrong. CNBC’s Fast Money show has been calling for the market to go up on every show this week. It, instead, went down down down.

I prefer to tell people the truth as I’m hearing it, even if that truth is tough and nasty.

That said, if you’re watching my posts here I’m looking at this like a hurricane moving across our economy.

It hit New York three weeks ago. Then it moved onto other parts of our economy (auto industry is getting hammered right now, for instance).

My radar screen shows its full effects have not yet been felt in the tech industry for a variety of reasons. But it is headed here.

Now, what happens in a storm? Some trees topple. Some stand tall.

But right now to try to smile and say everything is going great and you should be optimistic is wrong. Sorry, it’s wrong.

It’s time to take steps to make sure your businesses are strong and can withstand the storm. If they aren’t strong, it’s time to fix that and fix that fast.

As the storm passes over us in the next quarter (financial results are still to come, so there’s still a couple of bad quarters to come, particularly with consumer electronics companies and retailers as they get a full sense of how bad the Christmas buying season will be) we’ll certainly see winners and losers.

Last weekend I was really freaked out. I was right to be freaked out.

Today I’m a lot more calm and am “working the problem.”

So, Steven is right too. The truth is often in between two extremes. But I won’t apologize for losing my head on Monday. If you had listened to the optimists and had bought on Monday you would have lost another 18% of your wealth. If you had listened to me and sold you’d have a lot more to buy back in or to use to keep paying your bills over the next year or two.

It’s why I keep asking questions here, too. I don’t have all the answers. Heck, I don’t have many answers at all. But the neat thing about this is you can share your opinions and views of what’s going on and give us ideas for how to ride out the coming storm.

Post a URL if you have some good ones, we’ll all appreciate it.

The customers are gone, now what? Tent sale!

Google Tents at Where Camp

My brother’s bar has gone from $15,000 a week in sales to $9,000. Almost every business I’ve been talking to has seen drops. Some less, some more. But it’s like a new kind of bomb just hit our economy: one that didn’t do anything except remove customers from our streets.

So, what do you do? When I used to help run a store in the late 1980s in Silicon Valley I saw the same thing happen. What did we do? We held a tent sale. Sent out mail to all of our customers. Made handmade signs that we put up along Saratoga Ave. Put a big tent outside. Moved all of our inventory into the sidewalk. Lowered our prices. And sales went up that weekend quite a bit.

See, the customers are there, they just are hiding in the shadows preparing for the worst and trying to avoid getting killed too as this big storm moves across our economy.

It’s going to be tough to think “outside the box” the next couple of weeks. The shock of this economy and watching the stock market go down, down, down is too fresh and too nasty.

But coming soon are lots of conferences that are still doing well. I remember in 2000 when the bust started happening that we still had thousands of attendees at our conferences. It was the sponsors that disappeared first. That gives you an opportunity to hold a tent sale out in the street.

Yesterday I was talking with Gary Vaynerchuk of Wine Library TV. He’s already thinking along those lines for visits to CES and SXSW — doing something low cost that shakes out customers. He knows attendance is going to be down, people will be depressed, budgets are already getting slashed, etc. So, we’re all putting on our thinking cap about how to do something low cost that’s metaphorically like the tent sale that gets us through the tough times by encouraging customers to come out of their holes and visit our businesses.

Got any ideas?

Hey, I have two of those Google tents. Maybe we can meet on the beach by the Half Moon Bay Ritz on Tuesday night, setup two of these tents, share some cheap wine and cheeze, and brainstorm about how to get customers over the next couple of months? I’ll meet you at the Ritz Fire Ring at 6 p.m. (on the Ocean Side) on Tuesday night and we’ll do just that.