Not All Doom & Gloom

Silicon Valley is still reverberating from the [doom and gloom slide show]( making the rounds leaked from a company presentation by uber tech investment firm [Sequoia Capital]( Sequoia has helped fund such hits as Google, Oracle and Apple,

Among the highlights — or low lights depending on your perspective — of Sequoia’s message was speculation the economic downturn could last as long as 15-years and a warning to its client companies to keep costs low, employ a heavily commissioned sales staff, review salaries and “spend every dollar as if it were your last.”

Not so fast said Sequoia’s Silicon Valley neighbor and sometime investing partner [Garage Technology Ventures]( In an email to its partners and associates in the venture community titled: “Why Innovation and Entrepreneurship Trump Fear and Uncertainty,” Garage posited a much more upbeat perspective.

“… contrary to what some think, it appears that scrappy, innovative startup companies can do quite well, thank you very much, despite very real macroeconomic challenges. ” the email began.

I recently met with Garage’s CEO Bill Reichert who elaborated a bit on the email.

“Anyone who thinks the good times are gone, clearly has a misunderstanding of what it’s like to be an entrepreneur,” he said. “It’s still a brutally difficult process to build a successful company in good times. The more experienced entrepreneurs have been through these ‘the world’s coming to an end’ times before. But there are always countercyclical opportunities.” .

Reichert concedes there are a lot of unknowns as to what opportunities the current downturn might present. He argues an obvious outgrowth of 9/11 was increased investments in security. But another, more unexpected result, was the boom in clean tech investment. By his reckoning, there would never be as much interest in clean tech had it not been for the energy crisis which was spurred on by the Iraq war, which was largely a response to 9/11.

He argues that today, there’s plenty of money available to invest in the next big thing to come along in response to the financial crisis. “The amount of cash balance in brokerage accounts and corporate balance sheets is unprecedented.”

It’s unclear what that next big thing will be, but as Garage notes in its email:

“Economic change is usually good for innovative technology companies. Latent demand for a better mousetrap sometimes turns into a desperate need to catch mice cheaper and faster.”

News Around the Web