- Will there be venture capital? This time, dotcoms are not the cause, but Silicon Valley could come to a halt if investors are too spooked, or have no money to invest. There have been no IPOs lately, and the pace of acquisitions has slowed. Are VCs still thinking with a long enough horizon to invest in good ideas and teams? Do they have enough money from limited partners? I read somewhere that funds raised in the harsh times of 2001-2004 all had great performance. Let's hope limited partners remember that and will put money into 2008+.
- Will there be layoffs? Are we about to see Microsoft, Google, and Yahoo shed thousands of workers? I think we are. I still remember Jerry Yang and David Filo teary-eyed, announcing Yahoo's layoffs in 2001. For great startups, this makes things easier: While great people won't get fired, they will be more poachable if you can offer a solid, productive environment free of drama.
- Will enterprises still make IT investments? If not, any enterprise software startup is hosed.
- Will consumers still have money to spend? If not, see point 3.
- Will there be regional differences? In contrast to the US, European economies look surprisingly healthy, if you look at things like personal savings rates, foreign account deficits, and so on. This will make these markets much more interesting than before.
- Will big companies reduce R&D expenditures? If Microsoft et al slow investments in new initiatives, this will be a great opportunity for startups to pull ahead, and just get bought when the down cycle ends.
- What will be the effects of new regulation? Last time there was a problem, Congress introduced Sarbanes-Oxley, with the unintended effect of shutting down the ability to IPO. Almost certainly, there will be new legislation this time around - what consequences will it have?
- How long will this take? I'd be surprised if this took decades, but it's entirely possible that this situation will take years to resolve.
On the plus side, I'm very happy that this is playing out while I'm on vacation. Instead of being caught up in the vortex, I can adjust my new company's strategy once there is a bit more clarity about what's going on. Also, I'm relieved to not be working for anyone right now. Nothing is more paralyzing than the fear of getting laid off.
Let's hope for the best.