Things get overblown in the Valley. As the obituaries are currently being penned, those are overstated, too. Last time I checked Stanford hasn't stopped producing wonderful 23-year-old graduates. And Silicon Valley houses many companies with frustrated engineers. Good ideas and brilliant people will find us very willing to step out into the cold with them.
So what has changed?
What has changed is that there are more smart people elsewhere. Good ideas spread more quickly.
Are there any benefits to building a business in a downturn?
There's less frenzied money. There's more time to think. The hiring environment is a lot easier and the money goes a lot further.
Do you still do seed-stage deals?
We do seed stage. Thirty percent of the companies we finance were incubated here. We are very selective. We are doing it with a few rather than a lot. My guess is more of it happens over the next few years because of the dearth of financing.
What about Google? Didn't they crack their business model during the downturn?
The chilly aftermath of the Internet bubble was a big benefit to Google. It helped with hiring. It made it difficult for startups to get financed. Its larger competition had to tend to the home fires. There was not a clamor to go public so it helped them stay out of the crosshairs of the competition."