Co-founder & Managing Partner, STRe Solutions
At long last we are seeing signs of improvement in the economy. On April 30th Business Week reported that "green shoots" appear to be poking their way through the parched fields of the economy. Two weeks later, on May 14th, the Wall Street Journal surveyed 52 economists and declared that they see an end to the recession by autumn, but a long way to recovery. And the Dow Jones Index has been steadily growing since early March.
At STRe we are also seeing a few signs of spring: Our Research Manager tracks job postings in the bay area and we have definitely observed an increase since the beginning of the year. And, a week ago I saw a $3B+ technology company post a job for an HR Coordinator for 6 months. That tells me they must be planning some hiring. Hopefully this is just the beginning of more signs to come.
The Green Revolution is one area that is driving the economy
Venture capital investment in green technologies totaled $836.1 million in 59 deals in the first quarter of 2009. Software giant SAP announced the acquisition of Clear Standards, an early stage company, founded two years ago, that saw the need for sustainability tracking at the enterprise level.
One segment of the green sector that is definitely advancing is automotive battery manufacturing. A123, a private US battery manufacturer is building a plant in Detroit. Toyota and Panasonic have teamed up to construct plants in Japan. Ford and GM have announced plans to build batteries in the US. And, DaimlerAG, has acquired a 10% stake in Tesla Motors, a clear sign that energy efficiency is coming to the automotive industry.
Conversations with VCs and CEOs
Looking for further signs of spring, I polled several Silicon Valley venture capitals and C-level executives for this article. My first conversation was with David Blumberg, founder of Blumberg Capital, who recently closed a new fund. David has a very positive approach to the economic crisis. He said, "Entrepreneurship is continuing to accelerate. Costs are now lower -- rent, storage, higher bandwidths and higher computing power available. Money goes further. People who went through the crash of 2000 (Internet bubble burst) are now experienced, have some seasoning." He went on to say that "tough times force more effectiveness, efficiency."
My next conversation was with Michael Pliner, VC and Interim CEO. I knew the market was improving when Mike first told me he had so many VC meetings that we would need to talk over the weekend. He sees the market as status quo for the remainder of 2009, and expects to see improvement in 2010. Knowing I was interested in how all this affected recruiting he said, "A+ people are in demand, and always will be."
The IPO market is showing signs of spring with the recent IPOs of Solar Winds (SWI) and OpenTable (OPEN), both closing higher on their first day of trading. And, a recent comment from Paul Otellini, CEO of Intel is yet another sign of economic improvement on the horizon. In an interview with the Mercury News on May 12th, Otellini said that "the chip business has improved since April, when he declared that the personal-computer sales slump had 'bottomed out.'"
One more positive data point on the economy comes from Greg Ravenscroft, Industry Analyst and former President at LitePoint. Greg commented, "I saw that bookings of wireless chips were up in the past 4 weeks." It is especially interesting to see that the semiconductor industry is beginning to pick up. The chip sector is a major driver in the Silicon Valley economy and a sign of the future.
All in all there are signs of spring in the economy, and the companies who will survive are making changes, embracing new efficiencies and thinking differently. ARE YOU READY?