Some soundings from the Valley
Many Bay Area entrepreneurs portray the pandemic as incomparably worse than any previous crisis. Even the global financial meltdown of 2007-8 was to some extent limited to the financial sector, whereas COVID-19 has been omnipresent, especially in travel, tourism, and entertainment.
The judgements reported here stem from responses from 119 entrepreneurs, investors and executives of big companies in Silicon Valley between April and May 2020, during the first COVID-19 lockdown, when the pandemic was still perceived as new. The changes have happened quite as experts expected earlier. While the pandemic is not perceived as new anymore, it remains highly instructive to see how entrepreneurs reacted to the outbreak.
While replies differed widely, common themes emerged. All stressed that times were tough, but most expressed cautious optimism about the future. That is partly because the Bay Area was less touched by the pandemic compared with other parts of the US,. Moreover, the severity of the situation was quickly understood. “This is a place that understands the concept and danger of exponential growth”, noted one respondent.
Locals acknowledged their relative safety and defence from the most acute disruption. Silicon Valley companies are old hands at digital transformation. Most underwent the change years ago, and many were born digital. So working from home, to take one example, was no revolution. If anything, respondents lauded the advantage of no longer wasting time commuting and the greater sense of agency that came with people and companies deciding more for themselves.
Admittedly, virtually all local employers suffered big falls in sales. But start-ups and early stage companies generally rely on funding from investors, rather than sales, offering some protection at the outset. Moreover, instability is the name of their game here. Creating a business involves overcoming obstacles by pivoting business models dynamically to catch opportunities. Emotional volatility is a fact of life: many Valley entrepreneurs have already experienced at least one existential corporate crisis. COVID-19 has been just one more.
Furthermore, many local entrepreneurs have seen a silver lining in the disruption. A start-up must be agile to compete against incumbents with stronger market positions. That means seeing – and ideally anticipating – the new needs of customers. When the pandemic hit the Valley, local entrepreneurs quickly created dozens of new products and business models.
“Good technologies, great teams, continue to attract funding”, noted on local venture capitalist.