My reason for moving San Francisco almost three weeks ago was to pursue investment for AffinityLive, and with that money grow the R&D team in Wollongong as well as establish a sales and marketing team here in the US.
Of course, implicit in this is the assumption that if I can’t raise investment, I’ll move back to Australia. But, the reality is that I’m going to stick it out here and make it work. If I can’t raise VC, it will slow things down and make it harder, but I’m not going to be giving up and coming back to Australia with my tail between my legs.
Unless something extraordinary happens.
There’s a lot of talk at the moment that the tech industry here in Silicon Valley is in a bubble.
I’m actually a bet each way in the financial sense of a bubble – irrational exuberance that leads to unsustainable asset price growth (read: valuations) which keeps expanding rapidly as everyone piles in speculatively until – POP – the bubble bursts, leaving destruction, depressed valuations, shattered dreams and penniless investors in its wake.
But what is 100% true is that Silicon Valley is in an economic bubble.
The wider US economy is about to go into another recession. Unemployment remains high, people are still losing their homes, and the sharemarket is going nuts, with a “correction” of more than 12% in the last month and crazy levels of volatility. But here in Silicon Valley, the good times keep on rolling. Sure, people look out on the markets and the wider economy with concern, but as Marc Andreessen (founder of Netscape) wrote in the Wall Street Journal this week, technology and software world is on the right side of some tectonic shifts; they’re eating the business models of many of the companies on the S&P500, and there’s a strong sense that froth and some foolishness aside, the fundamentals of this industry and this part of the world are strong and will be for decades to come.
There’s really only one thing I see as potentially threatening this situation. And the key word is in the previous paragraph – tectonic.
As almost everyone knows, San Francisco and the “silicon valley” area of California sits on top of one of the most geologically active regions of the world.
The place was pretty much destoyed in 1906, and in 1989 they had another big quake (measuring 6.9) which caused a lot of destruction throughout the Bay area. The picture to the right was taken in the Marina where I’m going to be living (although, mum, don’t worry, I’ve got the liquefaction maps and I won’t be living in a place that is built on landfill).
We had a small quake here – I didn’t feel it – on Tuesday night, and it got me thinking – probably the only thing that would cause the music to stop here would be a big earthquake that bought this place to a halt.
The consequences of a big earthquake would of course be dire for the city and its population, but for our industry it would probably be the equivalent of what 9/11 was for world share markets. It was something no-one could predict, and the destruction, the loss of people and their knowledge proved to have long lived epic consequences for the global financial system.
But if we’re honest, the finance system doesn’t really “create” much, and when they do, we’re reminded that it would be better if they didn’t. They facilitate and enable things, which is why the world economy felt such a shock, but with so many other actors and the big players being truly international, the rebound to “business as usual” (and the run up to the sub-prime fiasco) didn’t take so long.
Thinking about the consequences for the technology sector if there was wanton destruction in San Francisco, I can’t help but think that things would be different. Almost every major tech company in the world has their main presence here, their main people here, their advisers and their partners. The consequences of “the big one” would be epic for our industry, and unlike terrorism, there’s one thing that is for sure – over the long term, you can count on there being another big earthquake down the San Andres fault.
Let’s just hope that is isn’t any time soon.