[HilbertSpace]

Also over the past 10 years, venture capital in Silicon Valley lost money.

Generally the venture partners do not know how to build significant businesses. Look at their backgrounds and see why. Compare with people doing significant work in technology for, say, the US DoD.

[hga]

While I don't agree with your general point those are things with have always been true. For the last 10 year period I can't exactly blame the venture partners for SarBox ending the IPO exit (as another article has noted, in the last ten years there have been fewer > $100 million exits than there are VC firms). Add in the dot.com crash which started a bit before SarBox and the Great Recession and it's no surprise the industry has lost money. Or that we have every expectation it will continue to as it radically shrinks. The great 1958-2002 VC experiment is over.

[hga]

Sorry, that should be "While I don't disagree with your general point...."

[HilbertSpace]

I can't judge the impact of SarbOx.

My guess is that the IPO market remains open for a solid company -- good market position, plenty of revenue and earnings, good record of earnings. But there have not been very many such companies built, even private where SarbOx doesn't apply.

My take is that we need to do better at building solid companies. I'm trying. I know some people I'd like to have on my Board, but I don't see any in a venture firm. Sorry 'bout that.

This should be "the best of times" due to a 1 TB Seagate drive for $60, an Asus mobo with a dual core AMD for $100, plenty of GbE, fantastic 'framework' software -- I'm using .NET and find Visual Basic .NET to be fine. I use the compiler just via command line and think it's fine.

The US just needs to do MUCH better at building significant new companies. I've heard that SarbOx costs about $1 million a year for a company to follow it. For a significant company, okay.

Just how VCs are going to get an exit with Facebook and Twitter I don't know.

There is a Great Recession out there, but I sense that there is also a LOT of cash 'on the sidelines'.

[hga]

SarBox is considered to be the last nail in the coffin, not the sole cause of seems to be the effective end of the US IPO. The numbers speak for themselves, although of course a return of more than a couple of handfuls or so of IPOs per year would change that (less than that when you just count tech firms).

I've heard it costs something more like $2.6 million, but it's going to be company specific and the cost might have come down as people and accounting firms got experience. However the pure $$$ cost is only a portion of its total expense, it's also a time and attention sink and it significantly increases the liability (including as I recall criminal) exposure of some of the company's officers. Plus it costs a LOT of time (a year or more), money and attention upfront to get your company SarBox compliant for an IPO, and too much of it is insane stuff that does nothing to improve your real business.

If you remember your chemistry, look at it as raising the activation energy needed for a reaction.

Agreed this should be "the best of times", but you're still talking about fairly small scale and limited domain areas. As I keep harping on, where's the next FPGA like thing going to come from? The only really big "new thing" hardware based startups I know about are Tesla and Space X and they were funded by a single angel. Who got his money from co-founding PayPal, which was a perfect fit for eBay to acquire, which is a prior to SarBox public company.

I don't really know about Twitter (but it's tiny in terms of people and revenue, all out of whack with its impact), but Facebook has clearly made a decision to stay private for whatever reasons. It could go public, investigating why they've decided not to might be worthwhile.

The cash on the sidelines is a good and big question. Some say it's not so much at net, i.e. companies are keeping it to make sure they can service their debt (unfortunately debt is massively tax advantaged compared to stock based capital), others say (and this is clearly related to the first point) that it's being held in reserve for the Dark Times To Come. Or at least fear of such.

There have been too damn many 2,500 page pieces of unread monster legislation passed with no end necessarily in sight (let's say that confidence in what the Republicans might try to accomplish when they get one or both houses of the Congress back is not exactly high) ... in times of colossal uncertainty keeping reserves can mean the difference between your company's survival and death.

E.g. will the insane file a 1099 for any corporate recipient of $600 or more per year insanity be repealed? If you're a small business (< 500 employees, half the economy), well, you best keep some reserves in case you have to do that (it will cost a lot of money and friction, and will likely cost a lot of companies business as everyone decreases the number of companies they do business with).

Etc.

At the furthest extreme, compare to 1937 when "capital went on strike"....