Global Themes

On Globalization & Venture Capital

You know there’s a tech bubble when…

the BBC makes it one of their top stories!

From the BBC story, “Inside the Silicon Valley tech bubble“…well written and entertaining, albeit with a sobering tone towards the end.

Below are some excerpts (emphasis mine):

“…Each month in San Francisco an audience of technology lovers, bloggers, journalists and potential investors gathers at the headquarters of technology news firm Cnet to hear four firms pitch their ideas.

Called the New Tech Meet Up, it is a networking event in which the “next big thing” in web developments meets the audience looking out for the hot new tip.

…In the audience is well-known west coast trend spotter Michael Tchong.

He tells the crowd: “There’s a huge amount of cash floating out there and it’s chasing too few good ideas.” This is what the audience wants to hear – that they don’t have to chase fortune with their plans, the money will chase them.

Across San Francisco and down into the Valley people believe the boom times – known as the bubble – are back.

…A year ago, the San Francisco New Tech Meet Up was eight people in a bar discussing technology; now there are more than 1,000 registered members.

…Mike Shroepfer, vice president of engineering for Firefox developers Mozilla, says the best way to work out if Silicon Valley is booming is to look at the traffic on Highway 101 which snakes down from San Francisco.

“If the traffic is a killer then you know times are good. “When the commute is pain free then that’s a signal that the bubble has burst.”

On that basis alone, times must be good in the Valley, for the journey on the 101 is painful indeed.

March 27th, 2007 Posted by | Entrepreneurship, Venture Capital in US | 7 comments

7 Comments »

  1. I am driving my kids to work 237 W to 101N. Used to take me 17 min from the edge of the golf course to the school. Now, its 29 min.

    My formula. Take the difference in time, multiply by 25 (average age of the person starting companies at this bubble, versus 31 for the previous bubble) and you will get the number of new startups in that are started. 🙂

    BTW Shantanu can you comment on why India is increasing newspaper readership vs. the doom and gloom here in US? Why do you think that is?

    Comment by Mukund Mohan | March 27, 2007

  2. Mukund,

    Nice formula!!

    Re. your question on increasing readership of newspapers in India, I think there are a number of reasons….

    First, with increasing incomes, several millions of Indians now have a real discretionary part of their salary that they can spend on things like newspapers and magazines (demographics and intense competition for jobs/ need to stay abreas helps too)

    Other reasons for increasing redership of newspapers:

    1] Online is not really an option: I think one reason for what you see is clearly the under-penetration of broadband (and internet in general) in India which means that online news is not really an option for the vast majority of Indians (at least not a convenient option).

    2] Poor quality of content: Second, online content in India still does not compare in terms of breadth and coverage to offline content (esp. when it comes to local/regional issues)…

    3] Language barrier: Third is that most of the online content is still in English – which again inhibits mass scale migration to the net…

    I think what you are seeing in US will eventually happen in India – but my guess is that we are looking at a wait of at least a decade or two for that to happen…

    What do you think?

    Comment by Shantanu | March 28, 2007

  3. I am puzzled by the fact that in India readership has increased for english and well as other language newspapers, even with the explosion of 24 hour news channels. Lets assume for a moment that Internet or broadband has nothing to do with this.

    A lot of indians still prefer good old newspapers is the impression I get. Its like a ritual thing – early morning coffee with newspaper. When I ask most of my friends in Bangalore where Internet access is mostly ubiqutous, they still like newspapers for their information. Even when online versions of their favorite newspaper had the latest greatest, they still bought Times of India, etc.

    If I look at the reasons why people dont like newspapers here, including no personalization (who really cares about a cat that got its tail cut off in Santa Cruz), cubersome to handle and stale, the same problems exist in India.

    I dont know the answer really but I smell an opportunity and am trying to figure out what it is.

    Comment by Mukund Mohan | March 28, 2007

  4. “..where Internet access is mostly ubiqutous..”

    This may be true but there are three other factors at play:

    1. This ubiquity of fat-pipe access is still more of an office phenomenon than a home phenomenon. From what I know of my friends’ and family’s work pressures in present times, reading news at work is almost impossible, because there is so much work to do. In most BPO situations, there is also active monitoring of web usage which means that access does not mean laissez-faire usage. Combine all these – the option is a cup of tea and the newspaper at home before people leave for work.

    2. Still a larger (A and B class) city phenomenon, than a B& C town phenomenon, where newspapers are delivered at home by a trusted newsagent just as you are waking up – beats booting the PC I think.. Radio news does a similar thing and many in India do listen to radio news, which is another comparison category that your inquiry might benefit from. (In my opinion, radio journalism at the moment is the best kind in India; newspapers are very poor quality and many mainstream political magazines are heavy on ideology/ rhetoric and thin on analysis.)

    3. Additionally electricity failures for long periods of time are equally ubiquitous, but newspapers remain unaffected by it.

    4. Another possibility is that many households get more than 2 or 3 papers, sometimes multiple languages. This might esp be true in Bangalore/ around Bangalore, where there is a massive Tamil-speaking population, which also speaks Kannada and Marathi (possibly, in some areas) and works in an English-dominant environment. Which goes back to Shantanu’s point re discretionary income.

    Comment by Shefaly Yogendra | March 28, 2007

  5. Shefaly
    Very good arguments. So your point is that newspapers will continue to see readership grow in India for the “next” few years or closer to a decade or two that Shantanu suggest?

    Radio has to do well, with bombay and bangalore at an average of 1.2hour commutes. In fact I wont be surprised if ipod use in India is 3rd highest after US and Japan.

    My wife says its also because the number of people getting educated in India is increasing over the years.

    Maybe the opportunity is to buy older printing equipment (pennies on the dollar) here in the US and start a ton of regional newspapers with that equipment in India. Take an already fragmented market and fragment it further. 🙂

    What do you think?

    Comment by Mukund Mohan | March 29, 2007

  6. Mukund,

    Not sure if you are aware of the nexus between politics, local power equations and big business when it comes to regional print media in India.

    To the best of my knowledge, newsprint in India is still imported )hence regulated) and is under an extensive quota regime – which is cynically exploited by the powers that be to “moderate” views and opinions that are in danger of running ahead of their times (I am sure you know what I mean).

    So you can buy the presses and do all that but you will find it hard to differentiate yourself in any significant way as long as you are reliant on the government for the newsprint quota and on business for the ads….(You may tweak the business model to get rid of the dependence on ads but you still need paper to print)

    Which is why innovation in media is happening more on radio (FM), electronic medium (Tehelka) and of course all the TV news channels…

    The other problem is content…regional (news) content quality is average at best and it is hard to see how you can have a chain of regional newspapers (running profitably) without having extensive reporting resources on the ground…

    Having said that, I know of at least two approaches that turn this problem on its head…but not clear if the business model works (still too early to say).

    Finally, outside of the metros, incomes (and literacy/ interest in current affairs) has not risen to the point that people will spend their extra rupee on a newspaper rather than a cup of tea (or a film gossip mag) – especially when they beleive they can all the “news” from TV/radio anyways…

    What do you think? Looking forward to comments from both you and Shefaly.

    P.S. My first job (while still in University) was as a journalist and I almost became one…and this topic is very very close to my heart…

    Comment by Shantanu Bhagwat | March 29, 2007

  7. I was not aware of the newsprint issue. Somehow I think a business model around citizen journalism should pay off better in highly heterogenous, fragmented & local economies especially in India.

    If we had news (highly local) say within a village (or locality within a big city – (e.g. Bandra news instead of Bombay News) etc. supplemented that with pinpoint classifieds (I would rather buy from the guy down my street than the guy in the next town).

    The trick is to get some of these into print so the guy drinking chai in the morning or the lady getting kids back from home in the evening can read and act on.

    Comment by Mukund Mohan | March 29, 2007

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