Silicon Valley venture capitalist Ron Conway sent a sobering e-mail on Tuesday to the 130 start-up companies he's invested in: now is the time to hunker down.
"In 2000 and 2001, the companies that hunkered the fastest were the companies that survived," said Conway in an interview with CNET News. "Get costs under control; make sure you have plenty of runway."
While that admonition from Conway, a noted investor who over the years has put early money into tech giants like Google and up-and-comers like Digg, was timely, it's hard to imagine that any tech executive who's been paying attention to the news needs to be reminded that rough economic conditions are most definitely ahead.
How bad those conditions will be and how long they'll last is anyone's guess. The CNET Technology Index, which tracks 66 publicly traded tech companies, dropped for the third straight day Wednesday to hit its lowest level in more than three years. Even the healthiest of companies are seeing their stocks being sold en masse. Google, for example, finished trading Wednesday down 2.28 percent to $338.11 per share; that's a new 52-week low and less than half the asking price for a Google share in November 2007
Bad news persists in the overall economy as well, despite continued attempts at government intervention. The Dow, Nasdaq, and S&P 500 indexes all continued to slide Wednesday; the Dow has now dropped 35 percent from its high a year ago.
CNET contacted more than 20 tech executives, venture capitalists, and industry gurus Wednesday to ask "How long and how bad this will be for the tech industry, and what should companies do about it?" Not so surprisingly, there was no consensus. While nearly everyone interviewed is concerned about the economy, their reaction to it and their plans to deal with it are across the map. Experienced investors like Conway and venture capitalist Larry Augustin of Azure Capital Partners are cautious, while some executives (at least in their public comments) are downplaying the risks to their businesses.
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