Economic Suckitude: Pessimists Unleashed

November 12th, 2008

Things are definitely crappy out there when I read articles that I’d consider over-pessminstic. I consider myself walking the line between pessimism and optimism. But even from my standpoint, I recently read one article that is so pessimistic I think it’s off base.

Trip Chowdhry claims to have the pulse of Silicon Valley, predicting all sorts of doom and gloom hitting the Bay Area soon:

Almost every Silicon Valley company is facing deteriorating business conditions and will cut their workforce by 3%-10% by year end.
“almost every” VC funded open-source company is struggling and will run out of funds within the next 6 months. He also says that “many VC funded Web 2.0 companies are shutting down…the Web 2.0 fad is now coming to an end.”
Apple, he says, is going to start selling iPhones via Costco at $149 starting in January.

I’m unclear on what “almost every” means. Is that 90%? 60%? Even 60% sounds too high to me, even if it’s limited to tech companies. The key part of that first prediction that is unquestionably wrong is “by year end.” I don’t think the majority of companies are organized enough to manage huge layoff in that amount of time – the end of the year is only a month and a half away.

That same term “almost every” is applied to VC backed companies. Again, what percentage is he talking about? Second, certainly the tens of millions many of these companies have raised would enable them to outlast a mere six months.

The last prediction is just flat out wrong. Again, that’s only a month and a half away. If that’s Job’s big announcement come MacWorld I’ll eat my wife’s purple iPod Mini.

I think the problem with Chowdhry’s list of predictions is the time frame. I’d be much more apt to believe the entire list if he extended it out over a long, deep, painful recession that lasted through 2009 and beyond – which is looking increasingly likely. Almost every SV company cutting their workforce by 2011? Yeah, I could almost buy that. But year’s end? That’s ridiculous.

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