 High Tech News and Information for Southern California |
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This morning, we posted an article from Omid Rahmat — – former CEO of Tom’s Guide — speculating on the future of online content. It’s well worth a read. Omid writes:
The shark will have been jumped the day a blogger is valued at over $100 million (I wanted to say $50 million, but apparently, that has no shock value). That’s when the wall is going to hit hard. We’ll get through it, but it is going to hurt like hell.
One of the areas that does not get a lot of attention — at least on the business coverage side of the world — is the strong industry Southern California has in the business of consumer electronics.
So, just for kicks, I sat down and put together a list — if you were really into buying stuff from just Southern California — of a consumer computer setup based on products from companies stretching from Santa Barbara to San Diego.
Here’s the setup:
I’m sure I’ve missed dozens of companies…
We’ve made some changes to the front page of socalTECH, to improve usability of the site: I’d love to hear feedback on what you think.
First, we’ve moved summaries (and pictures) from the stories to the lefthand news column, instead of just featuring the titles and requiring a click into stories.
Second, we’ve added a number of “Channels” on the second column with the top headlines of stories broken down by topic - Venture Capital, Mergers & Acquisitions, Executive Moves, Media & Content, etc. We’ll be expanding these over the next few weeks.
Finally, we’ve renamed our “Startup” section for articles from the community to “Insights & Opinions” and will be adding regular contributions from folks here in Southern California’s high tech industry.
Let us know what you think!
I was greeted this morning by an email from a Silicon Valley group, promoting a event in Los Angeles, and was disappointed to read that they were looking to bring “Silicon Valley to the land of silicone.” It was most likely in jest, but I’ve recently been running into entrepreneurs, venture capitalists, and others from Silicon Valley who think the only thing happening in Southern California is Hollywood content startups.
We’re not just new media startups (which, in reality, are but a fraction of the companies started in this area). We’re Internet advertising; semiconductors; biotechnology, pharmaceuticals, and medical devices; Web 2.0 and SaaS; hardware and electronics; storage and communications; wireless; computer gaming; cleantech and energy; consumer Internet; ecommerce; and a hundred other kinds of companies. That’s part of the strength and the future of Southern California’s technology industry, the diversity of companies here.
Content is a natural strength, of course, because of Hollywood. But it’s far from a dominant part of the technology industry here. Part of the reason you’re seeing some attention in Silicon Valley to Southern California nowadays is they are enamored with digital media and Hollywood; what they’re missing is there’s a lot more depth to the industry and the folks here.
Quick notes
Here’s a great summary of why mainstream media is having so many problems, from an article today in the San Francisco Chronicle:
Mainstream media as a whole, the report found, isn’t losing its audience. It just doesn’t know how to get its new online customers - or anyone else who is reading what they’re producing through online aggregators - to pay.
Actually, in my opinion, it’s also getting all of those offline advertisers (everything from “Bob’s Pet Shop” to Walmart) to spend on online advertising. Unfortunately (for mainstream media) the technical know-how and acceptance of online advertising as a way to drum up customers is dismal. I’m constantly amazed at what kind of rates local businesses are willing to pay for not-so-effective, local paper ads; but, how little they will pay for online, if they’ll even put ads there. Anyone who doubts this should call up their local newspaper and ask for rates for a single full page or half page ad, and then compare those rates and reach with placing a banner ad or Google Adwords advertising. The problem is, rates for online advertising are way, way, way cheaper and usually performance (PPC) driven. For some businesses, you can get away with spending what you normally might for a week’s worth of local newspaper advertising to cover you for a year. That’s a lot of lost revenue to mainstream media.
Despite the strangely giddy startup and venture capital market, I’m hearing from a number of sources about one place the woes of Wall Street are hitting the startup market now: in the willingness of angel investors to invest in companies.
I’m hearing that some angel investors — who typically have a great deal of their wealth tied up in stocks, bonds, and similar investments – have been somewhat more conservative in their startup investments recently.
It’s not so much any reaction or response to the future prospects of the startups they are talking to, but more a function of how much disposable wealth they happen to have on hand at the moment.
Angel investors tend to make their investment decisions somewhat based on how much spare cash they might have from their other investments. On the other hand, I am hearing from some professional venture capital investors that they are encouraging and looking to inject larger rounds into the companies they do fund, to give them some cushion to glide over whatever kind of economic climate shakes out over the next couple of years.
As always, we’d like to publicly thank the many sponsors of socalTECH.com for their support of our efforts.
First, thanks to Clearstone Ventures, which is the VC sponsor for this blog.
We’d also like to thank our site sponsors: PricewaterhouseCoopers, Redpoint Ventures, SVB Silicon Valley Bank, Costello and Sons, CBRE, Stubbs Alderton & Markiles, Safire Partners, Binary Pulse Technology Marketing, Stradling Yocca Carlson & Rauth, and Fonality. Without these sponsors, we wouldn’t be able to provide the services we do.
I’d like to welcome Tom Taulli, author of The Complete M&A Handbook, and a frequent writer for Forbes and AOL Bloggingstocks, as a occasional contributor to socalTECH. Tom’s first article for us is The Gold Rush of Digital Media Funds, which we posted this morning. We’re planning on publishing regular contributions from Tom, who’s known for his insights and commentary on the market and high tech industry.
With as much talk (and evidence) of a slowdown in the economy, it’s surprising how many recruiters and companies I have run into recently who still have a lot of trouble finding technical staff to fill open positions at their companies. In particular, I find there are lots of companies who are desperate to fill software engineering positions for their companies. In fact, I’ve spoken to several companies who tell me that they’ve been forced–not by costs or pressure from investors–to look to offshore outsourcing because of the challenges of finding qualified software engineers. It appears the demand for technical talent is very strong.
The problem is an interesting dilemma–both for local companies, as well as for the nation’s overall competitiveness in technology–because when I talk to software engineers, it’s quite an opposite picture. Many software folks I talk to feel like the writing is on the wall, that even if there is demand for software engineers there’s a huge salary and wage pressure, and that the outlook–at least for some–is bleak. College students appear to be thinking the same thing: there’s been a huge enrollment drop in the number of undergraduate computer science majors which has been hitting engineering and computer science schools since 2000.
Why the disconnect? In part, I think it’s the realization there is intense competition, from very hard working, smart, and willing people in China, India, Czechoslovakia, Russia, Pakistan, and elsewhere who are willing to work hard and for less; and that the Friedman’s “flat” world is becoming a reality particularly in the software area. Even if there’s intense pressure here to fill positions, the truth is that there’s enormous downward wage pressure and job insecurity looming over software. This is particularly true of entry level computer science graduates, who do not have the advantage of experience which often counters those wage and job security issues.
I also think it’s a bit of the challenge inherent in technical degrees. Engineering and computer science are all very math-centric, difficult degrees to attain, and — whether due to the well documented lag of U.S. students in math, or just an unwillingness of the current generation of students to buckle down to a difficult major–students just aren’t as interested in the hard word it takes.
It’s a challenge, because without the local talent base, I think “high tech” companies will struggle to be competitive. There are no easy solutions; however, I think a focus on companies cultivating new graduates (we’ve got great raw material coming out of our local colleges and universities); a true committment to developing employees (not just window dressing); and providing a vested interest in a company’s success to engineers can do a lot. Companies absolutely have got to be willing to pay more, for their own, local talent, even if it may seem cheaper and easier to send off your core IP elsewhere. For software and other engineers, I think they need to realize there’s a lot of hungry folks just an Internet connection away who are willing to work their best to fill their jobs; the world today has no room for a mediocre, expensive software developer living in a high rent district when there’s someone with better training and skills who happens to live in the second world.
Benjamin Kuo is publisher of socalTECH.com, an online publication focused on high tech, venture capital, and startups in Southern California.
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