Credit crisis hits Silicon Valley

The Silicon Valley is the heartland of technology innovation. New services and products are usually developed with venture capital funding. In news: credit crisis may be hitting start-up companies.

The heart of the Valley's success is, of course, its ecosystem of start-up companies. Many claim that ecosystem remains healthy, thanks to the lessons learned and prudence gained from the dot.com crash.

Nevertheless, a dense fog of anxiety has settled over the land.

"Funding will tighten up. We are certainly going to see some ripple effects," said Ron Conway, a prominent angel investor who has invested in hundreds of Web start-ups over the last decade.

Yet nonstop economic gloom in other parts of the economy seems to have frayed even the nerves of the Valley's sublimely confident denizens. The economic crisis dominates conversations. In the technology blogosphere, prescriptions for riding out the crisis - and what percentage of start-ups are destined to fail - are the subject of intense debates.

According to a quarterly survey by the University of San Francisco Entrepreneurship Program, the confidence of venture capitalists has plummeted to the lowest level since the survey began in 2004.

There is no doubt that the current economic crisis is serious. But, it's also naive to believe that all business and technology innovation will collapse. Not all investors are cash dry -- Warrent Buffet still has a lot of cash. Because technology innovation is important to the survival of human race, investors will find money to fund start-ups and create new business opportunities. The rules of the game haven't changed, just the competition for fundings is getting tougher.

Young, Fearless and Smart

One of the most rewarding experience that a young person can have is being an entrepreneur. A special report from the BusinessWeek online surveys the Best Entrepreneurs Under 25.

It seems that the success stories of Goolge, YouTube, Flickr, MySpace and Facebook have encourage many young people to become entrepreneurs.

In a 2006 poll of 1,474 middle and high school students, youth entrepreneurship organization Junior Achievement found that 70.9% would like to be self-employed at some point in their lives. That's up from 68.6% in 2005 and 64% in 2004. The National Association for the Self-Employed projects its ranks will increase to about 250,000 members by the end of 2006, up from 100,000 in 1988. While the number of members under 25 has only grown from 0.2% in 2000 to 1.6% in 2004, membership of 25- to 34-year-olds jumped from 3.6% to 12.3% in the same span.

Source: Young, Fearless, and Smarts

Know your worst case scenario

Many things in life we don't have full control over. This includes starting your own business and accepting a new job. While we can try to do everything right, but sometimes failures are inevitable. If success is the best case scenario, then failure is the worst case scenario.

Professor Cornwell writes the importance and the necessity for entrepreneurs to consider worse case scenarios in their business plans. There are two problems that entrepreneurs often don't aware. First, mistaken the meaning of a worst case scenario, and falsely believe that which is equivalent to a less optimistic variation of what the entrepreneur think will actually happen. Second, some others go to the extreme, and consider declaring bankruptcy as the ultimate worst case scenario. See the post for a detail explanation of these two points.

Entrepreneur Stories And Interviews

For those who are interested in entrepreneur stories and the key people behind the most successful start-ups, consider the following:

• The Entrepreneurial Thought Leaders lecture series by the Stanford Technology Ventures Program (vidoe and audio podcasts)


• Interviews with entrepreneurs and CEOs by nPost.com

The information presented in the above pages are not only useful to people who want to start their owns companies but also to those who simply curious about the less-known stories behind those companies. Behind every successful start-up, there are pain, joy and adventure.

Higher Education is a Niche Market

Since the boom days of the Internet, people have been focused on E-commerce, M-commerce and digtal media markets. One market that hasn't been fully explored is higher education (i.e., university and colleges).

iStrategy Solutions is one of the few companies that target the data management needs of universities and colleges. Their HigherEd Analytics Suite provides higher education analytic reporting and data warehouse solutions. In a nutshell, it's a tool that solves common problems that are created by PeopleSoft software (read more).

When building a startup company, finding a niche in the market is a key to success.

Web 2.0: Rebooting the DotCom Boom

My memory of the last DotCom boom is fading. But, I think a new DotCom boom is about to begin. The new boom, I think, will evolve around the idea of Web 2.0 and perhaps some mix of the Semantic Web.

America's Oldest Business Heirlooms

As baby boomers gray, hundreds of thousands of family-owned businesses are facing a major decision: What will they do with the business? BusinessWeek's top story of the week is "The Bommer Handoff".

Part of this week's special is a presentation of America's Oldest Business Heirlooms -- from bells and brews to canvas and food, here are 10 of the longest-lived family businesses in the country.

Learn to Love Google AdSense

I used to abhor ads on the Web. Now todays content ads don't bother me as much as before. As you can see I have Google ads on my site, you know I don't hate them. :-)

So the question is what has changed my mind about ads? Google AdSense. In the past, a lot of ads on the Web are pop-up ads with flashy images and logos. Most of the time, those ads are completely unrelated to the site that I was visiting. Remember those days when you visit a news site, an X10 ads would pop up right in front of your face...

That was then. With Google AdSense, ads have been a lot more polite and less intrusive. I even hear my friends saying that sometimes Google ads are useful in finding services that they are looking for.

Here is something that you might not know. Google AdSense is fueling is a growing market of entrepreneurs that profit displaying Google ads. According to this IHT article, it's not usual for a site with 15,000 user base to profit $10,000 a month from Google AdSense.

Five to tens years ago, it was almost impossible for a person to make that much money just by working in a small office with a laptop (except day traders). If you think about it, Google AdSense has created a completely new occupation. The sole function of this occupation is to increase site traffic and serve more ads.

If you think you have missed out on Google's stock bonanza, perhaps you can start with Google AdSense. Make some money and then go buy its stocks.

If you want to learn more about how Google AdSense has changed people's life, read Trickledown payoff from Google

Garage maybe the first place to start a business

Many Silicon Valley companies started their business in a garage -- HP, Google, Apple. I wonder if garage really has some kind of mythic power in helping technology business to be successful.

Golden rules from 49 business leaders

Warran Buffett:

When you get out of bed in the morning and think about what you want to do that day, ask yourself whether you'd like others to read about it on the front page of tomorrow's newspaper. You'll probably do things a little differently if you keep that in mind.

Eliot Spitzer:

Never write when you can talk. Never talk when you can nod. And never put anything in an e-mail.

Po Broson:

Check with the wife

More golden rules.

Why Apple makes money is a matter of basic economics

After Apple had announced that its iPod nano was a top-selling on Amazon.com, its stock climbed 3.3 percent on Nov. 26, 2005, hitting a 4-1/2 year closing high. Why do people believe that the selling of iPod has anything to do with the sustainable profit growth of the company?

The answer to this question lies in the understanding of some basic economic concepts -- complementary goods and substitute goods. The idea is as the follows. In life, some things just go together. For example, hot dogs and hot dog buns; hamburgers and ketchup; shoes and shoelaces. Typically it's more pleasing to purchase and consume these things along with the other member of the pair. An interesting thing about complementary goods is that changes in the price of one complement affect the other complement. For example, if hot dogs are on sale, not only people buy more hot dogs, they also buy more hot dog buns.

In the context of Apple, it's hot-selling iPod complements many of its own products. These include iTune Music Store (MP3 song downloads) and Apple computers (iMac, Powerbooks). Because iPods are cool, more and more people buy iPod. As an result, iPod owners are likely to purchase other Apple's product to complement their favorite gadgets -- purchase more MP3 songs from the iTune Music Store, buy more Apple computers to go with their iPods.

There is no magic in running a profitable business. Sometimes basic understanding of economics can help us to decipher the business model of a company.