Will something good come from the dotcom debacle?

The bursting of the dotcom bubble created a boom for San Francisco's recycling vagrants.

The bursting of the dotcom bubble created a boom for San Francisco's recycling vagrants.

Andrew Orlowski

Silicon valley blues

Arriving in the midst of Silicon Valley's dotcom boom, it's startling to see effects of the collapse at first hand. Being cynical and British, we ex-pats prided ourselves in confidence that the bubble would soon burst. How long could seven firms compete to deliver pet food around the US?

The dotcoms' young, swaggering, bawling "bizdev" (business development) and marketing executives who were loathed for their arrogance in a small city proud of intimate neighbourhoods, were to be humbled.

How long would it be before sound business plans would again be given consideration over delusional marketing gimmicks?

But when the crash came, it was, for even the toughest of cynics, strangely unsatisfying.

In the first place, the start-up closures take their toll on the fabric of the city. San Francisco's former docks and textile hinterland in its South of Market (SOMA) region which had been deserted and empty for many years, were rejuvenated as venture capital arrived like a sunburst. Now, they're empty again.

On my way to visit an infrastructure provider deep in the SOMA warehouses from the city's smart downtown area, I passed a tramp whose supermarket trolley was piled high in marketing material and promotional beanies for a just-expired dotcom.

And then Isaw another tramp - with different, useless material. California state law specifies a small premium for used aluminium and paper, and the city's vagrants provide a largely invisible scavaging service delivering this to recycling businesses. For these guys, the dotcom boom meant a different kind of bounty.

Out of five animation companies clustered around Potrero Hill - the crotch of San Francisco's former docklands - four firms have closed, and the fifth is urgently drawing up a new business plan in time for Christmas.

For the carefree Californian technical staff who work at these dotcoms, fear gradually took hold. That their company was in trouble was soon apparent, but not troubling. Typically promiscuous with their associations (nine months in a job gave a Web developer veteran status), they simply moved on, usually with friends. Then they discovered that all their friends found it harder to get work, and the extent of the collapse took hold.

It turned out to be a fragile network. Many employees, like many businesses, found themselves competing on merit for the first time.

This is most troubling or satisfying, depending on how you look at it. And if you're a traditional honest business - it is where the next big thing is coming from. Venture money moved from retailers to B2B, and now leaps to fashionable disruptive computing models such as P2P.

But what Silicon Valley's brash money-lenders don't know, and what bricks and mortar do, is the chemistry of trust that goes into a transaction. How communities tick - and how deals are made - are essentially human qualities and are only just codified into electronic business models. It's common sense. "trust metrics" is finding its way into digital conversation and every transaction.

But quiet now, you knew that was going to happen all along.

Andrew Orlowski is a San Francisco-based editor for The Register, an online IT newspaper at theregister.co.uk

This was last published in November 2000

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