The Valley is waking up quickly now: job postings have jumped on local Web sites, tech stocks are climbing, exotic new cars are starting to show up on the local roads, and, beneath everything, there is a growing sense of optimism about the future................the United States, especially Silicon Valley, remains the target location for high tech corporate headquarters, advanced research labs, venture capital, cutting edge new start-ups (including biotech) and, most especially, as the home for top executives. More than ever, the avowed goal of many entrepreneurs around the world is to get to the Valley................This bit of wisdom was underscored by a run of recent articles in everything from the Pittsburgh Post-Gazette to Nature describing how the "brain drain" of top scientific and technical talent from Europe to the United States continues unabated. I need only look around me here in the Valley at the thousands of Indian, Chinese, Pakistani and Japanese engineers to appreciate that the same brain drain is still going on from the Far East as well..................what we're really seeing is a kind of circular motion: mature industries and jobs are flowing out of the United States; talent and high-end innovation are flowing in. The challenge is not to impede this process, which will only make things worse, but to manage it, in some cases even accelerate it.
abcnews.go.com
Feet Don't Fail Me Now
To Gauge a Company's Future, Follow the Feet of Its Workers
Commentary
By Michael S. Malone
Special to ABCNEWS.com
Oct. 23— First, I look at their feet.
As I've mentioned before in this column, every veteran reporter carries a collection of subjective, analytical tools to help pierce the muck of publicity and hype and see the real story beneath. This is as true in tech as it is in politics or sports or Hollywood.
I've written about a number of these tools, from the cosmic power of cheap folding tables to the law governing companies opening new global headquarters. But, by far, the most powerful tool is this: "If you want to know an organization's long-term prospects ignore what it says — be it in press interviews, quarterly numbers, or new product announcements — and just watch the movement of its key people. That, more than anything, will tell you about its morale, financial health, and competitiveness."
In other words, don't let the smooth talk or flashy clothes fool you. Watch their feet.
This is true not only for companies, but industries, even entire regions. I've been reminded of this rule at least a dozen times in the last two weeks as I've read the newspapers, surfed the Net and attended various Silicon Valley functions.
The Valley is waking up quickly now: job postings have jumped on local Web sites, tech stocks are climbing, exotic new cars are starting to show up on the local roads, and, beneath everything, there is a growing sense of optimism about the future.
That means we are entering a dangerous, slippery period. Established companies that are in deep trouble may be able to temporarily put on a good face before they collapse. New start-ups may look appealing, but they still die before the venture capital industry loosens up. And the first glut of new products may hide stinkers: not just bad technologies, but doomed companies behind them.
This is the time to be wary. Anxious to finally land a job, you can wind up in a dog company, and miss the benefits of the next boom. By the same token, you can invest your new windfall into a blue chip loser, and find yourself illiquid when the real opportunities come along.
Not Everyone Is Going Overseas
So, how do you protect yourself? Keep watching those feet.
For example, the press, as well as on-line bulletin boards, has lately been filled with stories about the outsourcing of tech jobs to places like India and China. The numbers are pretty stunning. There are nearly 1,000 tech companies in Bangalore alone, producing $2 billion in software exports last year alone. Meanwhile, Taiwan now builds 90 percent of the world's PCs. And most amazing, China has become the world's No. 1 exporter of technology goods.
But to my mind, the most telling piece of data is a poll that found that 76 percent of Indian and 73 percent of Chinese immigrants would consider starting a business in their native country. That isn't proof of moving feet, but it certainly suggests its potential.
So what do these numbers mean? First, they are undeniable evidence that the tech revolution is going global — and taking thousands of U.S. jobs with it. Those jobs are not coming back, mainly because the technologies they serve — personal computers, low-end consumer products, certain types of software — are going too.
The feet are moving, and no government fiat, domestic content legislation or trade war are going to stop them. In other words, both sides on the question of offshore outsourcing are largely wrong: Yes, there is a job drain, but no, you can't stop it. In fact, if we do try to halt the migration of tech jobs out of the country, entrepreneurs will just start companies in their own countries.
But, all the news isn't gloomy. On the contrary. The feet are also moving in another direction. What I learned at another SCU conference, this one on venture capital, is that the United States, especially Silicon Valley, remains the target location for high tech corporate headquarters, advanced research labs, venture capital, cutting edge new start-ups (including biotech) and, most especially, as the home for top executives. More than ever, the avowed goal of many entrepreneurs around the world is to get to the Valley.
This bit of wisdom was underscored by a run of recent articles in everything from the Pittsburgh Post-Gazette to Nature describing how the "brain drain" of top scientific and technical talent from Europe to the United States continues unabated. I need only look around me here in the Valley at the thousands of Indian, Chinese, Pakistani and Japanese engineers to appreciate that the same brain drain is still going on from the Far East as well.
Sure, the survey says that many of them might "consider" starting a company back home but — again, look at their feet — not many folks are leaving. Not when Deng just got named quarterback for his Pop Warner team and Sandeepa has a ballet recital next month. And especially not when your venture capitalist is in Menlo Park.
Jobs Flowing Out; Talent Floating In
Put these two trends together and what we're really seeing is a kind of circular motion: mature industries and jobs are flowing out of the United States; talent and high-end innovation are flowing in. The challenge is not to impede this process, which will only make things worse, but to manage it, in some cases even accelerate it.
That means more basic research, more infrastructure investment, and most of all, better support systems for entrepreneurs. It means not trying to save industries that are doomed to emigrate, but instead maintaining a perpetual quest for new technologies, new products and new markets. And most of all, it means maintaining the strongest, most stable and most rewarding economy on the planet as a draw to the best and the brightest.
America, especially its tech enclaves, has too much overhead to compete in mature technologies against its global counterparts, especially those countries just emerging out of the developing world. Nor would we want to: any of you readers care to duplicate the hours, work conditions and salary of a programmer in Bangalore? I didn't think so. No, our only choice is to stay out front of the pack — and that means an endless procession of hot new companies with exciting new products.
But who will run these new companies? The immigrants for one thing, a phenomenon we're already seeing here in the Valley. Who else? Another likely possibility is the dot.com veterans — they ran off after the bust two years ago to hide in B-school or the Peace Corps or the Enid, Oklahoma McDonald's. But as the economy revives I can already hear their footsteps as they begin to return to the most exciting game they've ever known.
Invest In Their Feet
Finally, there's one last source of talent to fill the leadership slots in this next generation of start-ups: the big companies.
Here too, if you are an investor, you must now start watching the movement of feet. A lot of high tech's biggest companies have survived this most recent recession, despite being filled with unhappy, disgruntled workers and managers, because in the dead job market those people had no place other place to go. Very soon they will, and for some companies, the exit of talent is about to become a stampede.
Many don't even know it's coming, how much their employees hate them. But they will. These firms will bleed intellectual capital out of every doorway, as their employees race to join young, dynamic and humane competitors.
Which companies will suffer the most? I have my own ideas, notably those firms that are still trying to compete in old industries or that have already conducted extensive outsourcing. Add to that list the companies that have always treated their employees like cattle — and during the bust acted like slaughterhouses.
Read the news, follow the trail of press releases. If an awful lot of talented people are suddenly leaving a firm — no matter how reasonable their explanations ("I want to spend more time with my kids") — short the stock. If the company's rising star or hot technologist leaves, not only short the stock of the former employer, but invest in the company he or she goes to.
Ignore the shouts and cheers from the crowds as they pass back and forth. Just keep watching their feet.
Michael S. Malone, once called “the Boswell of Silicon Valley,” most recently was editor-at-large of Forbes ASAP magazine. His work as the nation’s first daily high-tech reporter at the San Jose Mercury-News sparked the writing of his critically acclaimed The Big Score: The Billion Dollar Story of Silicon Valley, which went on to become a public TV series. He has written several other highly praised business books and a novel about Silicon Valley, where he was raised. |
