Dropped Like A Box Of Hammers

I had an interesting conversation a few weeks back with someone who is quite the “techie.” i.e., Not only is their business world based in tech, so too seemed to be their worldview meaning – what is said in and around “The Valley” is their only viewpoint, everyone else: “Just doesn’t get tech.”

This is important from my perspective for many reasons. First: Facebook™ is slated to build a brand new facility (slated to open 2019) in my area of New Albany at a price-tag of $10’s of millions, along with creating many supposed high-end tech jobs, as well as elevating the Columbus Ohio area into the “tech” region for growth. I already see the influx of this in my day-to-day activities. i.e., I’m as easy to be run over crossing an intersection on my daily run by someone texting while driving their Ferrari®, Porsche®, Lamborghini®, or other exotic. And yes, all in the same run!

(Side note: I was at the gas station last year when the person in the Bentley® next to me asked me for help to open the gas door. When I asked “Didn’t they explain this to you when you bought it?” He answered, “Oh, this is just a loaner, my Porsche is in the shop.” i.e., This ain’t your grandfather’s cowtown any more.)

So as we talked it was obvious any similarity related to the prior upheaval known as “the dot-com bust” was falling on deaf ears. The reason was obvious: If they questioned what was happening today with any true reflection and contemplation – their “world” along with “worldview” may come crashing down. And that seems to be a road that will not be traveled, let alone, less, along with a bridge too far.

One of the issues that we discussed was the current “Unicorn – IPO” debacle. I made my points and pointed to past commentary and this was met with the usual “Yeah, but the VC environment, and funding rounds are still blah, blah, blah….” This took place a few weeks back.

I’m not going to list the entire conversation, but I will post a portion of an article I wrote back in April of this year “As goes Facebook So Goes The Entire Fallacy” that sums up pretty much what our conversation revolved around, and where I was coming from. To wit:

Although that is precisely what happened via the mainstream business/financial media. i.e., They ignored exactly what these platforms were actually selling.

Trust me, they knew, they just turned the ultimate blind-eye to it all. For it just didn’t fit the narrative. In other words, headlines like: “Silicon Valley Trep creates platform that connects users around the world and makes $Billions for himself in the process.” makes for much better news stories than: “Silicon Valley harvests and sells all its users data online to the highest bidder, to the tune of $Billions, making themselves filthy rich. All at the cost, and naivety, of their users privacy.” If you think I’m off base? I’ll just remind you of SnapChat’s CEO press coverage and let you make up your own mind.

For a time this all worked like magic, for it was. With the wholesale adoption and implementation of Quantitative Easing (QE) back in 2010 came another form of implementation and adoption for magical thinking. i.e., The “Unicorn for IPO riches” As long as there was QE – there was magic.

Then QE ended, and with it so to went they. The real issue here for all of this was, that if the world of unicorn riches and IPO dreams was now defunct? That meant only one thing.

Facebook would be the last bastion to make (or keep) all those “magical riches” alive. But more importantly: Safe. Hint (paraphrasing the line from Van Halen’s “And the cradle will rock“) “Have you seen Facebook’s stock?” (Cue, Eddie)

Think about it, when was the last time you heard about an IPO? Did you know Dropbox™ had one about a week ago? If you only glanced the headlines during that week, maybe. But as soon as the price fell below the IPO debut? let’s just say – they fell from the headlines and bylines also. To be fair, they have recovered marginally, but there’s no more fanfare for days and weeks on end, any more. “Decacorns?” I’ll just ask “Hows that Uber™ thing working out?” Sorry, too soon? And I won’t even mention Snap™, well, sorry there too.

But Facebook has been the last bastion, as well as last man standing, for the entire “it’s different this time” mentality. After all, if you took your cues from the Silicon Valley aficionado set, coupled with the next-in-rotation fund-manager cabal, peppered with some illustrative “insight” displayed via many of the financial shows, the obvious group-think consensus was, FB, for all intents and purposes, was the obvious winner take all of the social media paradigm.

Or said differently, they tried (and continue) to sweep-under-the-rug all their prior “insights” which resulted in abysmal failures in a quick slight-of-hand move meaning, it’s not that we were wrong per se, it’s just that there can only be one. i.e., FB is social. Period. After all, “Just look at their stock price!”

The reason why I thought the above was needed was, as always, for context. Because, as stated by Rod Stewart, “Every picture tells a story, don’t it?”

Which brings us to today.

Remember how the Dropbox IPO and its initial subsequent losses were completely erased in such a manner as to prove once-and-for-all that all the naysayers were wrong? i.e., “IPO’s are back!”, “Tech is back!”, Silicon Valley riches are back!”, and on and on. Here’s the evidence as far back as just last month (e.g., mid June) to back up their claims. To wit:

(Source)

And here’s the evidence that maybe it ain’t all that. Remember, just one month later Again, to wit:

As I’ve stated ad nauseam, “Isn’t it funny how you don’t hear about any IPO darlings any longer via the mainstream business/financial media?”

There’s also another reason why I’m putting this out, and it’s for this reason:

During our conversation I tried to make a case where caution should be paramount and take nothing for granted. i.e., current market size, building of new offices, whether they’ve already broke ground or not, fully or near complete etc., etc., should not be taken as any surety that it will either be finished, opened, or even be occupied by the ones whom built it in the end.

This argument was received at first as something, “laughable.”

That is – until I told the story of something similar that I watched happen in real-time during the fallout of the first “tech boom bust.” The example was called “Genuity™”

From my article, “When New Headquarters Turn Into Real Headaches”

People talk today as if Silicon Valley is, and was, the only place on the planet where technology as well as innovative companies start or started. I would like those of that ilk to remember the Boston area had its own high tech catch phrase such as “America’s Technology Highway” (aka Rte.128/U.S.Rte. 95). Within a 50 mile radius of Boston you had firms such as Wang™, and DEC™, and a host of others. All with new buildings (more like towers) that garnered enough real estate and blacktop to make one think “Silicon who?”  So for some to think “well unless you’re in Silicon Valley – you just don’t get technology.” I would say: “Au contraire!” So much so we here just might see what many there refuse to even consider. Let alone see. i.e., It can all come to a screeching halt faster than one can contemplate kale vs arugula for their corporate catered lunch.

As soon as it seemed the Genuity Campus opened it was learned it was closing being put up for lease as well as for sale. In the blink of an eye of what was deemed “won’t happen” did happen. Suddenly a deal that was thought to be as solid as the foundations built for the new campus complex crumbled. Here’s 2 short paragraphs from an article  “Genuity Faces Bankruptcy As Verizon Ignores an Option” by Seth Schiesel and Simon Romero NYT™ 7/26/02 (funny how this date is also today’s) that shows just how fast things can change:

The campus, as it was known then, was composed of buildings and office towers that were, in many ways, more massive and overarching than almost all the other office parks around it. It’s was staggering. Just the construction (let alone costs) to build entirely new exit and entrance ramps that bridged over it then subsequently connecting to it alone (e.g., a U.S. Interstate highway) was reason enough for pause when watching this park being built.

And before it opened, the company that was to occupy it, was all but gone. They went from supposedly needing the equivalent of millions of square feet of office space – to occupying the corner of one floor, in the back.

I remember empathetic thinking back then about all those people they hired and lured from other companies, all the people who relocated from elsewhere to work in this brand new gleaming “campus” suddenly found they were all unemployed before they even began. Near overnight, something else dropped like a “box of hammers” when the dot-com version of “It’s different this time” fell.

It’s called, “Reality.” And when it drops, many find it’s far heavier than it looked originally.

© 2018 Mark St.Cyr