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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (26141)	12/15/2002 2:45:07 PM
From: maceng2	Read Replies (1) \| Respond to of 74559

The chips are down By Richard Waters Published: December 13 2002 19:08 \| Last Updated: December 13 2002 19:08 news.ft.com A walk down into the basement of Peter Allen's cramped Palo Alto home is as good a way as any to check the faltering pulse of Silicon Valley these days. Amongst the usual clutter - the beer-making kit, the dog-eared LP covers, the electric Stratocaster guitar on the wall - sits a drab little box. It's the sort of characterless slab of dun-coloured plastic that makes you yearn for the cabinet-sized computers in aging movies, with all their flashing lights and spooled tapes. Down here in the corner, a fiber-optic line dumps enough data to run a fair-sized business. Allen is working on building his next company from the ground up. He is off on an extended riff, too excited to stand still as he almost wills the outline of his software company into existence. "It's sort of AvantGo meets Napster," he says, unable to resist dropping the names of tech companies that once flashed brightly, if briefly, on the technology landscape. The energetic promoters who turned Silicon Valley into a paradise of capitalist endeavour during the 1990s are still going strong. Only, the moneymen are no longer listening. And it is not clear how long Allen, who needs $2m for his basement start-up going, will be able to keep this performance up. The computer programmers he employs have to work for nothing. An impish man with impressive reserves of energy, he is showing the strain. Like a lightbulb on an overloaded circuit, he cannot keep his enthusiasm at maximum wattage indefinitely. Allen once worked at companies like Napster and Yipes!, a broadband company which raised hundreds of millions of dollars before succumbing to bankruptcy. But the merry-go round of jobs and companies has come to a stop. His start-up company notwithstanding, Allen wouldn't mind a regular job. "I've never been unemployed for eight months before," he says, his wattage dimming noticeably. "This sucks. Really." Unemployment in Silicon Valley does not feel like unemployment anywhere else. For a start, a fair number of the unemployed people you meet are really much better off than you are. Many of them, like Peter Allen, are also tinkering with new ideas for businesses, or they're doing some consulting work or have a couple of projects on the go. But there is also an air of barely suppressed, quiet desperation. Starbucks and smaller coffee-shop chains like Peet's have become the meeting places of the Valley's new dispossessed. To pass a day in the home of the tech industry doing meetings is to sit through one long round of cappuccinos and lattes. The hardened regulars seem to thrive on this caffein diet, but by midday I get too wired and have to switch to the decaf. The coffee-shop dispossessed can be seen, laptops and papers to hand, diligently trying to piece their lives back together. "Anybody who sits there for longer than 15 minutes is probably looking for work," says Andrew Hyde, a General Electric-trained executive who has held down jobs as chief financial officer at a couple of dotcom and software companies. Hyde, who has been out of work himself since the Spring, can take afford to take time over his job search. He drives a large silver Mercedes and lives in the sort of unself-assuming little house in the peaceful enclave of Belmont that would set you back well over $1m. The wave of money that passed through this area during the technology bubble has left its mark. But the enforced leisure is clearly eating at him. The product of Maine and a Connecticut prep school, he is anxious to get back to the sort of serious business that GE finance people were trained to handle. He still smiles with amazement at some of the unlikely bedfellows he made during the brief rise of the dotcoms - "the guys with the tattoos and ear-piercings," all of them thrown together by the whirlwind of the boom.