7 Wise Men Speak
upside.com
<<...page 4: Predictions...
Borrell: What’s the single most important prediction for next year?
Kramlich: I’d say the return of capex [capital expenditure] for the telecom companies. That’s a big deal. I think we will have used up a lot of the capacity by the end of this year.
Golden: Well, in the investment banking business, my prediction is that the way and the influence of traditional Wall Street research will be very different 12 months from now. The inherent conflict that exists in all professional-services firms, in my judgment, exists in investment banks as well. The way we navigate that and sanitize it will be the focus of considerable regulation.
Wendell: I would hope that by the latter half of 2003, we’ll see more normal capital purchases, not only by the telecom sector but also broadly across IT infrastructure, and that the excesses of a year or two ago will be well worked off. And we’ll see healthy rates of procurement and healthy year-over-year growth rates. You know, in the near term, having year-over-year improvement isn’t too hard, because the base we’ll be working off of is modest. But as we come into the latter part of ’03, I hope there’s some return of normalcy in IT and telecom capital expenditure.
Kramlich: I think that costs have been so contained that when we get any kind of resurgence of revenues, there’s going to be an unusual explosion in earnings. That’s a little underestimated, I think.
Draper: I predict that the year 2003 will be a very upbeat year for Silicon Valley and all of us. I think things will settle down, but between now and the end of 2003, there will be a great reduction in the number of companies. I think these young Nasdaq companies that are struggling are going to get bought up, merged, or closed down.
Hambrecht: I would guess that, over the next year and a half, you will see significant questions into investment decisions surrounding VC in early-stage investments. It’s going to be difficult for venture capitalists to show any kind of good numbers as long as they don’t have a flow of companies heading toward liquidity events. It’s going to take time for VCs to sort themselves out and get their own P&Ls in line, and I think capital markets are going to be under tremendous pressure. I think that the meltdown was severe, and the aftermath of it now will bring fresh looks at how the equity markets ought to be conducted. If you don’t have equity markets that are responsive to smaller emerging companies, you’re going to clog up venture capital-a real slowing of the technology-development side.
Jorgensen: I agree with the changes that will most likely come about with more intense regulation of the securities industry. I think that will yield a more balanced capital market, back to the days of the earlier ’90s, where we see a cleaner distinction between types of investors, gross stock investors versus value investors. That will, in turn, yield better opportunities for venture capitalists to get access into the marketplace and more scrutiny of certain sectors and certain stages of financing.
Bell: I’d like to see something emerge that’s really fundamental, whether it’s going to come out of the Sept. 11 stuff so that there’s a big business of implanting chips in everybody’s body or whether it’s going to be .NET and places like GM [General Motors] and Ford [Motor]. There’s got to be something behind these periods where you identified growth. I stood up in a management-consultant meeting where somebody claimed they had gotten Ford, GM, DaimlerChrysler, Microsoft, and IBM together to make this big exchange and said, "This won’t even classify as a train wreck, because you’ll never get it started." I think that we’re getting these fundamentals in place, and we’ll gradually see more efficiency there.
Draper: I think in [the next] year, there will be a lot of political discussion about our immigration policies. And I think Silicon Valley has a big stake in it, and Upside readers should recognize that and go to bat or continue to fight for open immigration-as open as possible [while] still maintaining security.
Bell: Because the value really is built on the immigrants.
Kramlich: At UCSF [the University of California, San Francisco], when the edict came down about limiting stem-cell research, one of our best researchers left and went to the United Kingdom. He said, "I don’t want to come to work every day feeling like a criminal." It’s incredible; that has a reverberation on very fundamental kinds of research.
Bell: He’ll wait another four years before he comes back, even though I don’t think he’ll realize the potential of what he could be doing here.
Jorgensen: People are still holding on to capital tightly, and that’s in all stages of investors. Late-stage guys are afraid of getting into early-stage deals because they got burned. They’re focused on their own portfolio companies. I think capital will continue to be a tight commodity for every company, and it’s going to get doled out much more rigorously than it has in the past.
Wendell: There’s probably somewhere between $30 [billion] and $60 billion of capital that has been contractually committed to venture funds that venture capitalists have not yet invested, aka overhang. And it’s going to take its time getting into deals for the reasons [Jorgensen] just mentioned. That capital has been committed for about one and a half years, and it’s melting away.
Kramlich: Bill [Hambrecht’s] comment about opening up the IPO market-that’s the gating factor. If we don’t have an IPO market, we’re actually going to run out of money.
Hambrecht: And I’ll bet you that happens within a year or two.
Draper: Another area that will probably be more significant and keep building up is privacy versus interference over the Net and the regulation potential for some of those issues. The U.S. Supreme Court just made the right decision on virtual pornography, a very delicate issue, but you’ve got to have openness. Yet the interference in one’s life with spam and pushing and the ugliness that we all see is a real problem that may be a regulatory issue in 2003...>> |
