Where has the value gone?
On Fred Wilson’s A VC blog he talked about the Zero Billion Dollar Fund.
I left a long comment (repeated below) asking where the value previously attracted by startups and venture backed companies is going - both on the business and the consumer side - emphasizing not where investment dollars have gone, but where revenue from customers that previously purchased from these types of companies is not going.
A serious question - if many of the new companies today are requiring less capital and (in most cases) generating much smaller revenue streams than in the past - where is all the resources previously spent (spent, not invested) into the tech sector and other emerging companies going?
Are companies simply retaining it as additional profit?
Spending it on sectors where costs are rising (health insurance, legal costs, compliance efforts relating to Sarbanes-Oxley etc.) ?
Shifing a growing percentage of their dollars into fewer and fewer firms (IBM, Microsoft, Oracle, SAP, perhaps a number of big services firms?)
On the consumer side - has money just moved around from telcom spending at home to telcom spending on cell phones? On broadband access? On Cable TV? etc - or is it increasingly the case that entertainment and “gadget” dollars on mostly flowing to a relatively small number of pre-established companies (Apple, etc)
I’ve recently moved to Silicon Valley from Chicago. I’m helping co-host a monthly networking event for Web Innovators in San Francisco (SFWIN - google for the wiki page to register, next event March 23rd at Microsoft’s offices) - at these events I’ve met a large number of “web 2.0″ startups - many of whom are building pretty “cool” and engaging applications - but for the most they are focused on consumers and are nice-to-have efforts - not critical components to an ongoing value chain.
[when I’m not organizing conferences like MeshForum (May 7-9 in the Bay Area) and other events - I’m also writing a book on Economics as a Network - so I’m very interested in where all the resources previously flowing into the tech and general “startup” sectors are now flowing and/or will be flowing in the future]
Great topic (as usual)
Shannon