Silicon Insider: Signs of Life in the Economy

So why did I tell them that? And why, in the face of more bad economic news by the day, am I suddenly so certain that good times, especially in Silicon Valley, are just ahead? Because of something I try to teach my students: that sometimes you find your story not from official documents or formal interviews, but from the tiniest of clues — from the quality of furniture in the company lobby and that unexpected departure of a beloved veteran employee.

It is those little indicators that are pointing upwards for me right now.

For example, did anyone else notice that the semiconductor industry grew 1.4 percent this year? That may not seem much compared to the industry's go-go growth of a few years back, but it's one heck of an improvement over its 32 percent revenue decline last year.

Even that little growth suggests not just a point of inflection but the beginning (despite tech research firm Gartner's prediction of slow growth next year) of an upward trajectory. The history of the chip industry is one long sine wave, so if things are turning, they will turn big. I suspect that's what industry pioneer Wilf Corrigan of LSI Logic means when he predicts chips will grow 30 percent next year.

Meanwhile, more good news has popped up from the most unlikely sources. Yahoo, whose meltdown set off the dot-com bust, out of the blue last week announced that it will end the year ahead of its 2 million subscriber target and expects another 20 percent growth next year. That certainly doesn't fit with the dreary scenario for next year painted by AOL Time Warner.

And Adobe Systems, that bellwether of health in the corporate office, saw its sales not only jump for the first time in more than a year, but even beat analyst estimates. And the hottest company around, Google, inaugurated a new shopping site, Froogle, to cleverly bring its search algorithm to retail.

As a sign of a return to rational financial reporting, Coca-Cola announced that it would stop making quarterly earnings forecasts. Thank God. If more firms will follow Coke's lead, we'll go back to a world in which companies focus on their core businesses and analysts actually do some real work.

The Old Entrepreneurial Excitement

But to my mind, the best indicator of good times to come was a visit by a neighbor of mine. He arrived in the middle of the giant storm last weekend, his laptop in hand, and asked if he could show me something.

It proved to be the third draft of a business plan for a new company. I won't tell you who he is, because he's got an employer; and I won't tell you what his plan is about, but it's a humdinger. It'll take him two years and $30 million to realize his vision, and he's going for it, despite a tight venture capital market and a bad economy.

As I listened, I felt that old entrepreneurial excitement rising up in me all over again. It struck me that there must be a guy like my neighbor right now on every block in Sunnyvale and in the rest of Silicon Valley, and in every town and city in America and most the rest of the industrialized world.

They've been dreaming for two years, and now, sensing that the doors are slowly opening, they're ready to bust out. Me too. Nothing — not war, not a bad stock market, not even stupid new regulations — can stop the surge now.

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