UP FRONT

By Richard Mandel
Editor in Chief

A Soft Buzz from the Field

In March of 1853, on the 1,939 acre Rancho Potrero de Santa Clara south of San Francisco, botanist Christopher A. Shelton introduced the domesticated honeybee to California agriculture. Although he had acquired 12 hives in Panama, only enough bees to occupy a single hive survived the trip that went by rail, mule pack and ship.

How familiar that sounds, think I as I read this information from the front of a plinth at San Jose’s Mineta International Airport, which now stands where those bees first flew in the California sunshine. After 150 years, the cycle is still the same — a company starts up, struggles to make its place in the market, and occasionally even survives. It’s ironic that this lesson is displayed in San Jose, backdrop to one of the greatest boom-and-bust cycles since gold was found at Sutter’s Mill.

I came to San Jose to attend the southern half of Semicon West’s exposition, arriving in expectation of seeing clusters of engineers, gripping chipped 3Com coffee mugs and wearing khakis and white shirts, standing at freeway off-ramps and carrying signs that declare, “Will create new paradigms for food.” Not so, I found. Indications suggest that, only a short time after the Big Blow Out in Silicon Valley, the region may be regaining some footing. Only a few hours before I read the historical plaque, a story in USA Today trumpeted “Tiny signs of life bloom in Silicon Valley.” Emphasis on “tiny” — on one hand, the value of stocks of major area companies that survived the bubble are beginning to climb. On the other hand, venture-capitol investments in the region are lower and vacancy rates in area offices are climbing. Even at Semicon, where this year’s attendance remained slim compared to heights reached before 2000, exhibitors told me of a perceived improvement over the past several years. 

Beyond the walls of the convention center, new construction bustles everywhere, even though the many vacant offices of large, dead companies and smaller storefront operations beckon for new tenants. New housing and highways north of the city are being cemented and stucco’d, while the light rail line is receiving upgrades at many of the passenger stops. All signs of a potentially healthy community budget.

This area is not kind to the wallet, a holdover from the 90’s when affluence was easy. The USA Today article notes that the median cost of a house is $545,000 (down $33,000 from a year ago), a sum that could purchase several decent homes in other urban markets. The cost of a gallon of gasoline was 15 to 25 cents higher than what we’ve been paying in the Cleveland area. One could view Silicon Valley as the partner who was stiffed in a divorce — here, the lovers were legion, as companies sprang up, ripe with promise in new technology. But, when the dream was over, the Valley was left holding the tab, a bill transferred to remaining residents, as well as visitors.

Because it’s such a mixed message, any good news is being delivered with great caution. We want to believe in a recovery, just as children furiously beat their hands together because it most assuredly would bring Tinkerbell back to life. Then, we receive the news from Gartner Inc, at the end of July, that one in ten jobs in the US computer services and software industry will move to overseas emerging markets like India or Russia by the close of 2004. How will this development affect San Jose and the rest of Silicon Valley? I certainly have no answers, as I gaze into my Crystal (chilled, no ice, please). Industry is as cyclic today as beekeeping. Down periods are inevitable, and the troughs and peaks of cycles vary in intensity, but the market will demand a return. People are still buying cell phones, entertainment systems, PDAs and other silicon-fueled commodities — the trick is to be ready, and in the right place, for the next wave.