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Tech Industry

Mother of Invention says get a job

CNET News.com's Michael Kanellos explains how recessions aren't nearly as terrifying as the media make them out to be.

During the last economic downturn, nearly every one of my acquaintances struggled to make ends meet.

It was a typical situation in the early '90s. An engineering graduate from the University of California at Berkeley alphabetized discs at Tower Records. Another friend, an attorney specializing in trusts, served drinks at a sports bar. One budding commercial artist/programmer scampered around downtown San Francisco wearing a foam-rubber pizza slice outfit while handing out coupons for lunch specials.

The attorney and I would often compare notes over which state unemployment office had the most efficient staff.

By 1992, however, life became sunny again. One friend hit it big in real estate. Another got a marketing job that later led to an early spot at Internet service provider EarthLink. And the programmer who worked with hypertext before anyone had heard of it? He ended up as a temp in an insurance conglomerate.

OK, not the most upbeat of anecdotes, but it still contains a grain of truth. Recessions aren't nearly as terrifying as the media make them out to be. A typical scenario: The country's gross national product falls, and Wall Street nuts and other alarmists predict that 30 percent of working-age Americans will have to toil at boat shows on the weekend to survive.

This could be your fate--but keep in mind that a hairnet economy does have an interesting ambience all its own.

Perversely, the technology industry actually seems to thrive on, or at least is somewhat indifferent to, recessions. Think of a major household technology name--chances are it started off during difficult financial times.

Microsoft, for instance, was born in 1975--months after Gerald Ford unveiled his Whip Inflation Now (WIN) campaign in October 1974. His was an economic strategy predicated on the assumption that double-digit inflation would fall if people wore more buttons.

Jimmy Carter's administration followed in 1977. Interest rates rose from 6 percent in 1976 to about 20 percent by 1980. Unemployment remained high around 7.5 percent. High-income families faced 70 percent tax brackets, and European supergroup ABBA seemed invincible. Yet Oracle and Apple Computer were founded during Carter's inaugural year--and Apple held an astounding initial public offering during the height of the so-called misery index (inflation plus unemployment) in 1980.

The recession of 1982 coincided with the birth of Compaq Computer and Sun Microsystems.

Hewlett-Packard churned out its first product, a resistance capacity audio oscillator, for Disney in 1938 during the Great Depression. Geophysical Service got its start in 1930, specializing in the detection of oil deposits through seismic techniques. Later, the company became Texas Instruments.

IBM started off as the Computing-Tabulating-Recording Company in 1911 while the country was suffering from a lingering hangover from earlier bank panics (not to mention the Portuguese revolution of 1910).

Then, of course, there is Drkoop.com and the rest of the New Economy boom-and-bust companies formed between 1997 and March 2000.

Some companies timed things a bit better. Quantum Computer Services, now known as AOL Time Warner, started in 1985, and Cisco Systems shipped its first product later in 1986. TSMC hit the scene around 1987.

Still, many companies formed at optimistic peaks seem to have their greatest moments during periods of deep economic gloom. Intel was formed in 1968, a fairly strong economic year. (The late-'60s influence also may explain why Andy Grove and other old-time Intel executives have a thing for gold jewelry.)

Intel researchers, however, didn't invent the microprocessor until 1971, the year Nixon imposed a 90-day freeze on wages and prices to curb a growing trade imbalance. Dell Computer started in 1984 but prepared for its IPO in late 1987, right after the market crash.

The disconnect between success and economic environment comes down to the unpredictable nature of inspiration. Ideas don't simply emerge because of wealth: They just occur. It's not like Gutenberg sat on the concept for the printing press until guild dues got reduced.

More importantly, wealth breeds complacency, which leads ultimately to doom. Did anyone really work that hard during the late '90s? Companies claimed to be hiring brilliant, cutting-edge thinkers bent on transforming the very nature of communication. My memory is a bit vague, but I recall a bunch of guys in blue shirts eating take-out food.

If the past is any guide, a few lean years of unemployment checks, midweek movie matinees, and trying out exciting careers in party planning are exactly what this country needs.