Over 150 years ago, the Gold Rush began in California. It made some people very rich, but most people who were a part of it were only enriched by the experience.
Today, the state is making people dream again — but this time it’s silicon, not gold, that’s making them see big. The half-metal is used to make computer chips and is not to be confused with the silicone of breast implants — although there’s plenty of that out here, too.
South of San Francisco, Silicon Valley draws men and women from all over the world — all of them hoping to get rich. Since a certain Hewlett and David Packard took $538 starting capital in 1939 and set up a semiconductor business in a Palo Alto garage, the place has possessed a kind of magic.
In the decades that followed, businesses such as Intel, AMD, Google and Yahoo were born in the Valley, and since 2004, the new millennium turned the enthusiasm into real hype when a young man named Mark Zuckerberg started making headlines there.
Zuckerberg, now 28 years-old, had the chutzpa to turn down offers to buy his social network called Facebook for several hundred million dollars and then, on May 18, 2012, to go public with a $100 billion IPO.
But May 18 could also turn out to be a breaking point, because since that day there has been something damped about the company’s aura. Nobody wants to say it out loud, but the fact is that since going public the value of Facebook shares has been heading south. They are now worth about 50 per cent less.
Since then some other high profile stock exchange newbies have bitten the dust. And the uncomfortable questions are starting to surface. Is social media hype going to turn out to be another bubble? Are billions of dollars of “silly money” going to disappear into thin air again?
Facebook itself doesn’t see things that way and has enlarged its premises by taking over offices once occupied by Sun Microsystems, which it is in the process of converting. The new offices have the feel of shoes several sizes too big — Sun had 29,000 employees before its takeover by Oracle, and Facebook currently has 3,500, albeit with the intention of growing that number.
The magic number: one billion members. Mark Zuckerberg, despite the setbacks is still considered something of a saint. The offices may be different, but he still has a Q&A session with employees every Friday, many of whom became millionaires after the company went public. But now they’re worried about their money. There’s a feeling that Facebook has been unfairly treated by the market. After all, the numbers are good, they’ve met expectations — and 955 million people worldwide use the social network.
Some say that maybe the market wanted the magic figure of one billion members. But the reason the stocks fell was actually the lack of future perspectives — because despite the large number of users, Facebook has yet to demonstrate how it intends to bring in advertising revenues as more and more users migrate to smart phones and tablets. “We have the strategy, we just can’t talk about it yet,” says Facebook VP for marketing, David Fischer. And there’s another thing – the market hates secrets.
Despite or maybe because of the worries about Facebook, investors with large amounts of money continue to look for Silicon Valley vehicles to sink it into. They don’t care whether they put it into one or five companies: the goal is to find that rare pearl, maybe the next Facebook, a future Zuckerberg.
The fever also affects recent graduates: “Hardly anybody goes for employment,” says Lucas Artusi of Stanford d.school (Institute of Design). “Everybody’s a founder, an entrepreneur.” The big money and ideas have also led to new recruitment styles: “aqui-hire” is the new buzzword for turbo-charged success — you don’t hire individual employees, you buy whole teams or start-ups. And global investors are throwing even more money at companies just before they go public.
And that’s an area where expertise is required — something that seems to escape investors struck blind and dumb in their frenzy over cloud and mobile, virtual reality, e-commerce. They prefer to spend money on quick success. Just how sustainable that strategy is, remains to be seen.
For now though the new ideas out of Silicon Valley continue to amaze and delight. Something about the place and the money seems to bring out the creativity in people. So you end up sitting near a young entrepreneur at Starbucks who’ll tell you that so far the link between social media and regular media hasn’t worked: “Nobody’s been buying movies off of Facebook,” says Andrew over a caramel Frappuccino. He claims to have figured out how to make regular and social media mesh. But it’s a business secret. And he’s not about to let anybody steal his idea.
'Look' how the Sheena Bora case has taken a toll on Indrani Mukerjea
Photos: Katrina Kaif, Parineeti Chopra, Shilpa Shetty's movie outing in Juhu
Birthday special: 14 Bollywood actors who made it big on TV
Photos: Vaani Kapoor, Poonam Pandey, Sana Khan at fashion event
Photos: Rishi Kapoor, wife Neetu, daughter Riddhima at book launch