Fortune magazine compares the Web 1.0 and Web 2.0 bubbles. And wonders if Silicon Valley is headed for another bust: Storm clouds over the valley. Again
Signs of weakness extend beyond the company level. Employment dropped by more than 33,000 jobs in the five-county Bay Area in January, as measured by the California state government.
Commercial real estate, a rare bright spot in much of the country, is showing strains as well. After years of gains, occupancy for offices, R&D facilities, and industrial tenants declined by 1.5 million square feet in Silicon Valley in the fourth quarter, according to CB Richard Ellis.
VC Jim Breyer is not optimistic.
“Silicon Valley is often very delusional,” he continues. “So one of the challenges is to step back and say, ‘If there is a recession, why won’t advertising spending be cut dramatically? And if advertising spending is cut dramatically, why doesn’t that deeply affect our consumer Internet companies?’ It’s always my view that it does. We don’t expect there to be as much of an impact, perhaps, on great companies in the Valley such as Google. But we expect there to be a significant effect.”