

22 years of job creation wiped out in a day - brlewis
http://www.avc.com/a_vc/2009/01/twenty-two-years-of-job-creation-wiped-out-in-one-day.html

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aaronblohowiak
The crux of the article is this: "So the bottom line for me is that the
venture capital business is not going to solve this problem we are in. We are
going to play a role, possibly an important role, but we'll need more forms of
job creation to get everyone back to work."

That, I wholeheartedly agree with. Unfortunately, it seems that it will take a
while for housing prices to deflate enough and for people's wage expectation
to decrease enough that utilizing American workers becomes cost effective
again. Will there be enough capital around to finance the shift of production
back home? Will other countries continue to underbid domestic goods? Are we in
fact heading to a more "normal" level of unemployment (we have usually had a
comparatively low rate, globally speaking) ?

~~~
alecco
IMHO, solving the problem will be much harder than that. US is highly based on
a plan of idealized life through media. A typical lifestyle of the suburbs:

    
    
      * Multiple cars per family and doing heavy commuting.
      * Huge houses with high bills and maintenance.
      * Consumerism based on filling those houses and cars with non-essential disposable items.
    

All those millions living with that mindset apply those same rules at work.
There are great exceptions, but their size is not relevant to the national
bottom-line.

Now apply that to venture and you get what doesn't work. PG is on this problem
_often_. Perhaps a bit too Socratic-style for my taste.
(<http://en.wikipedia.org/wiki/Socratic_method>)

I never understood how the economy worked in the US with so much waste. Now
with this crisis I get it, it never did. US needs a culture shock urgently. (A
bailout is more of the same, IMHO.)

~~~
aaronblohowiak
It also isn't globally scalable -- consider the acres per person that the
American lifestyle requires.

~~~
gravitycop
_consider the acres per person that the American lifestyle requires._

Progressively less over time.
[http://www.juliansimon.com/writings/Ultimate_Resource/TCHAR2...](http://www.juliansimon.com/writings/Ultimate_Resource/TCHAR29.txt)

If Americans, engaged in their current lifestyles, constituted the entire 6.7
billion head population of the world, less land would be required than is
required today.

~~~
alecco
That is just personal space, not the whole system to support it.

~~~
gravitycop
_That is just personal space_

No, it is _all_ of the required space. Most of the linked page regards farming
space. Did you read it?

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barbie17
Um, according to standard economic theory in the long-run equilibrium the
unemployment rate is the rate of frictional unemployment and that is more-or-
less of a constant. What we have is cyclical unemployment, which is temporary.
<http://en.wikipedia.org/wiki/Unemployment_types>

Look, someone who doesn't have a job will lower his/her price until he/she
gets a job. If you are really on the verge of starvation you will become
willing to work for $1, and someone will probably become willing to hire you
for that little. Just like any other market, price will fluctuate and
equilibrate supply and demand, clearing the market. It's just that in the
short run there is price inflexibility, so the market temporarily goes out of
whack. In the long-run wage is only determined by worker productivity (which
is function of amount of capital and technology level), and anyone who wants a
job can have one, though it may not be as high paying as she wants.

~~~
aaronblohowiak
The price inflexibility is deeply ingrained in housing prices, and the
regulation by the state. No matter how desperate you are, you cannot legally
work for as little as someone in many foreign lands.

~~~
barbie17
We are not even close to there yet. If that does become a problem, if min-wage
causes 30%+ of the workforce to be unemployed, the government will lower it.
They are stupid, but not that stupid. Besides, housing prices are also shaped
by supply and demand. If unemployment becomes very high, housing prices will
drop. Essentially what you are talking about _is_ short-run price
inflexibility.

~~~
lgriffith
"They are stupid [ the government] , but not that stupid."

Don't count on it. There is something about government that attracts and
concentrates stupidity. They discount reality, blank out unintended
consequences, operate with stolen wealth, and shift blame AND cost for its
failure onto its victims. In that environment its almost impossible not to be
terminally stupid.

~~~
aaronblohowiak
Stupid or negligent?

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pg
Fred is probably underestimating the number of jobs created by companies he
funded. Companies always also create jobs in peripheral industries-- in their
suppliers, for example, and in industries that use whatever tools they're
building. The latter was particularly obvious to us at Viaweb. Lots of people
based businesses on our software.

~~~
byrneseyeview
You can't inflate one number that way one without doing the same for the
other. I suspect there are more peripheral jobs created per startup-job than
are destroyed per manufacturing-layoff, though.

~~~
ahoyhere
One of the beauties of startups, as labeled by pg, is that they can be begun
with almost no capital but time -- because they don't require almost anything
in the way of external equipment & services. They can be very self-contained,
rather than interdependent; no supply chain needed, etc.

So I suspect that your suspicion is wrong.

~~~
byrneseyeview
You're thinking about the demand side (to be able to do X, you must do the
following job-creating activities), but I'm talking about the supply side
(once you've done X, it enables people to do the following job-creating
activities). So a company like Wufoo or Weebly can make it cheaper for _other_
companies to grow, adding more jobs.

In fact, I'm certain Wufoo has helped create jobs, in the sense that I've
filled out job applications built on Wufoo forms. The fact that Wufoo was
chosen over other solutions means that, in at least some cases, the existence
of Wufoo will lead to job applications being created that otherwise would not
have been.

This is the point PG was making. He didn't talk about how Viaweb created lots
of jobs because they bought a bunch of servers and had to pay their rent; he's
talking about how they let other people cheaply start stores that otherwise
wouldn't have started, connect to customers they otherwise wouldn't have
found, sell products that otherwise would have sat on a shelf, and make wealth
that otherwise would not have existed.

~~~
ahoyhere
That may be true because Viaweb was the first, and for a long time, only thing
that fit that description.

Wufoo, on the other hand, is just one of about 20-30 choices for online forms.
Including, of course, paying a lackey on elance $15 to do it. (Now elance,
they haven't created jobs, but they did do a lot to move labor around.)

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jamesfoster
This post is way off base.

The VC industry is at the heart of creative destruction. And the job creation
that results goes well beyond the jobs created in the VC companies themselves.
There is a trickle down effect.

~~~
jrockway
Care to explain in more detail?

~~~
jamesfoster
The most sucessful VC companies are the most innovative. They produce a
product or service more competitively than the alternative at a cheaper cost.

Companies which consume these products or services save money. As a result
they can offer their products/services more competitively, which results in
hiring (or at the very least fewer layoffs).

The bottom line is that innovation acts as a stimulus in times of recession.
During times of expansion (when the economy is at full employment) it simply
results in increased standards of living. I agree with barbie17 that the
unemployment rate is more or less constant in the long term.

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noonespecial
It should at least be mentioned that an out of work wal-mart greeter is not
equal to an out of work surgeon. This never seems to be brought in in the
"lost x jobs" debate.

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dmh2000
>Well, what if there are no openings come this May--literally none. No job
postings. No on campus interviews. No job fairs. This isn't a fantasy. It's
happening right now.

Been there when I was in school in the late 70's and early 80's. it sucks but
it didn't last forever (that time anyway).

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brlewis
He suggests at the end that we need a lot more entrepreneurship. This is
similar to what PG has been saying for a long time. PG says we need startups
so hackers can reach their potential. Fred says the economy needs
entrepreneurship. We've talked a lot about PG's ideas, but is Fred right?

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michaelneale
On the flip side, that is one guy that created 40 000 jobs in his career so
far? that is really quite amazing. If that was me I would sleep very soundly
with a smile on my face. He should just get up, and do it again.

~~~
fredwilson
i did not creat 40,000 jobs. i was at venture firms that financed roughly 200
companies over the past 22 years that created that many jobs. it's a big
difference and i want to make sure people understand that

~~~
michaelneale
but there are a fair chunk of jobs that were created due to your involvement.
I would feel pretty good and walk pretty tall if I was you.

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mynameishere
That's the least accurate headline ever written.

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fredwilson
that's doubtful. it's sensational and that's not ideal. but sensational
headlines are used all the time and many are at least equally inaccurate

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helveticaman
What about the jobs VCs destroy? VCs fire 2/3 of founding CEOs.

~~~
ryanwaggoner
They're not destroying jobs, as there's still a CEO position that someone has
to fill.

