Globe: MIT Students Bring Optimism to Silicon ValleyBy Chris Gaither
THE BOSTON GLOBE
ATHERTON, Calif., JAN. 12
During the Internet’s heady days, entrepreneur David Yuan G knocked down a house and erected a mansion. Featuring burbling fountains, immature palm trees, cherry floors, and heated toilet seats, the six-bedroom home sprang from the ground in this ritzy Silicon Valley town.
The Massachusetts Institute of Technology students munching on Chinese food in Yuan’s living room last Sunday would soon see signs that the Silicon Valley soil, which has birthed and taken back so many companies in the region’s legendary booms and busts, has more growth left in it.
Seventy MBAs from the MIT Sloan School of Management descended on the high-tech mecca last week during the school’s 11th annual Silicon Valley Tech Trek. In addition to job leads and business advice from seasoned executives, they sought evidence of a recovery from the depths of the high-tech crash.
They found it. The naturally optimistic Silicon Valley’s spirit of opportunity has returned after three crushing years.
“Everyone believes it’s coming back,” said Yuan, a fellow in Sloan’s midcareer executive program who hosted the visiting MBA students.
But while the region is slowly rebounding from the downturn that drove thousands from the area, it is far from a bonanza.
The Nasdaq has risen 67 percent in the last 10 months, but the tech-heavy stock index is still at less than half of its peak, which it hit in March 2000. Google Inc. and Salesforce.com Inc., two red-hot software companies, are preparing big IPOs, but not many other companies are talking about going public. Earnings from high-tech firms are up, but their customers are still slow to open their wallets. And while the mass layoffs have slowed, hiring is still at a trickle.
The contrasts are sharp from last year, according to students who attended both trips. “We have a month left of cash,” one software CEO told them last year. Another began his presentation by saying he had been hired not to expand the company, but to find a quick acquisition to rescue it. Few companies asked for resumes. “Less traffic and lots of empty parking lots,” is how Andrew Kvaal, 29, a second-year student from Lexington, remembers the 2003 visit.
This year Kvaal and the others said they saw fewer empty cubicles and encountered more aggressive corporate recruiters than they had anticipated during their visits to 35 Silicon Valley companies. Giants and start-ups trumpeted their ability to survive the high-tech slump, wooed students, and asked the best and brightest to apply for jobs that didn’t exist in 2003.
“Last year large companies were in a lot of pain,” said Mark Williamson G, 27, a marketing student from Chicago making his second Tech Trek. This year, “Unequivocally they’re optimistic. I don’t think many people are worried about a false start anymore.”
That sentiment became clear the first morning of the Trek. Sloan students, who paid for their own airfare and hotel rooms to make the trip, crowded into a conference room at the Four Points Sheraton Sunnyvale to hear venture capitalist Mark Gorenberg ’76 proclaim “the start of a new era of optimism.”
As ducks quacked outside the hotel window, Gorenberg, a partner with Hummer Winblad Venture Partners and an MIT trustee, recounted some of the carnage of the previous three years: 87 percent less venture-capital money invested from the peak, 90 percent less investing in early-stage companies, the longest stretch of declining technology spending since 1946. But VC funding seems to be coming back, he said, and tech spending has now risen for five straight quarters.
“You’re coming here at a very good time. There’s a new sense of renewal,” he said. He asked them to send their business plans so he could consider funding them.
Hailing from MIT is a boost in hunting for Silicon Valley jobs -- a geek’s stamp of approval in a land where the geeks rule. But in an industry in which Bill Gates can go from Harvard University dropout to chairman of the world’s largest software company, the masters in business administration degree sometimes clashes with the valley’s freewheeling culture. Even a prestigious MBA does not ensure a cakewalk into a high-tech company.
Randy Nelson, a founding member of the Flying Karamazov Brothers juggling troupe and an instructor at Pixar Animation Studios Inc., escorted Sloan students through the company’s headquarters as skateboarders zipped past “Finding Nemo” displays in the lobby. An investor relations executive then spent an hour in a film-screening room detailing Pixar’s financial position -- before announcing that the company typically hires only one MBA a year.
High-tech companies like Siebel Systems Inc. and Intuit Inc., however, recruit heavily among management students. Although they are keeping a lid on new hires, Cisco Systems Inc. employees collected resumes and told students that they planned to modestly expand the company’s internship program this summer. At a cocktail reception for Sloan and Harvard Business School students at Google, the Internet search company, recruiters raced through the room, peering at name tags in a hunt for students who graduate this spring.
When a university recruiting manager at Network Appliance Inc., a data storage provider, welcomed students to her office, Williamson turned and whispered, “They wouldn’t have brought her out last year, because she wouldn’t have had anything for us.”
Customers of Network Appliance, whose stock has more than doubled in the last nine months, now ask about buying a few hundred storage systems instead of just one, and a new wave of start-ups is approaching the company about partnerships, said Amit Pandey SM ’92, a Network Appliance general manager and Sloan graduate.
“Is it a good time to start a career in tech? Well, it’s better than last year,” he told students. One trend sweeping through companies and often discussed in management courses casts an ominous shadow over the students’ prospects: “offshoring.” That’s the increasingly common practice of sending clerical work, software programming, and other jobs to workers overseas. Tavant Technologies Inc., a start-up that writes software for transactions between businesses, was created in Silicon Valley, but it now employs three times as many people in India.
Manager jobs are also heading overseas, but the Sloan students seemed to view the trend as more of an opportunity to advise companies than a threat. “I can either sit on the sidelines and whine about it, or I can jump in and make money off it,” said Amit Jaisingh, a second-year Sloan student.
Exchanging their business-casual attire for suits and dresses, the Sloan MBAs braved another sign of the recovery -- the crawling rush-hour traffic on Highway 101 -- to attend a party for MIT’s San Francisco Bay area alumni at Menlo Circus Club, an exclusive horse and tennis facility. They fanned out across the room, nibbling on smoked salmon and chatting up well-connected alumni from banks, consulting firms, and tech companies.
Christina Pan, 26, a first-year student from Houston, arrived in Silicon Valley shortly after the tech bubble burst in 2000 and worked here until the beginning of school last August. She likes that risk and failure is part of the valley ethos, but said she has seen little evidence of the recovery cited by others. She prefers it that way.
“You want to be here before it’s too hot and hyped up,” she said. Local economists predict that high-tech companies will begin hiring in earnest again this year if corporations continue to spend more money on technology. Until then, some Silicon Valley veterans are careful not to proclaim their optimism too loudly.
“The lights are on again in Silicon Valley,” Jerry Burnett ’64, a software executive and MIT alumnus who sponsored the Menlo Circus Club party, told the crowd. But he quickly added, “I wouldn’t say they’re fully bright.”