A survey of C-level technology executives revealed Oct. 20 that a substantial majority believe that the industry is currently being hit-and will continue to be hit-especially hard by the downturn in the U.S. macroeconomy and that it is not a short-term situation.
DLA Piper, an international law firm that does venture capital and intellectual property work in the tech sector, released results of the survey a day ahead of its annual tech summit in East Palo Alto, Calif.
“Like just about anything else, people looked at this survey as the glass as either being half-full or half-empty,” DLA Piper’s Peter Astiz, coordinator of the survey, told me. “Responses varied on the perspective of the individual, and that’s to be expected.”
DLA Piper distributed the survey questions in late September and early October 2008 to senior executives at a broad cross-section of technology and venture capital companies.
Thirty-seven percent of respondents identified themselves as a CEO, president or managing director. Forty-four percent work for companies with fewer than 1,000 employees, and 28 percent work for companies with 5,000 to 10,000 employees.
The current financial crisis is not the only major driver in some of the responses in the survey, Astiz said.
“Increasing regulation, such as Sarbanes-Oxley and HIPAA [Health Insurance Portability and Accountability Act]-which are very costly to enterprises-and the stagnation in IPO activity are also factors to be reckoned with,” Astiz said.
Some highlights of the DLA Piper survey:
- About 85 percent of respondents think we are in for another year or more of the current economic conditions, signaling a collective view that the present financial challenges are not a short-term phenomenon.
- More than 75 percent of respondents said they have been adversely affected by the economic slowdown, but 21 percent have seen no impact yet, indicating that it is “business as usual” for some respondents (at least at the time of the survey).
- While respondents noted the considerable toll that the financial crisis is expected to have on the technology industry, only 32 percent of tech execs believe its impact will eclipse the 2000 tech crash.
- About half of venture capital-related respondents believe the current crisis will be worse than 2000.
““This isn’t terribly unexpected,” Astiz said. “Corporations have a different, longer-term view of this, businesswise. VCs are focused on exit opportunities, such as initial public offerings [IPOs] and mergers and acquisitions [M&As].”“
- Only 15 percent of respondents think the U.S. economy is likely to rebound in the first half of 2009.
- More than half of respondents (55 percent) believe the stagnant IPO market will not begin to rebound until 2010 or later.
- Nearly 60 percent of respondents think that if elected president on Nov. 4, Barack Obama will have a more positive impact on the industry than John McCain.
In other topics:
- Execs said that “green and clean” technology is one of the bright areas amid the financial crisis and economic turmoil because consumers are focused on higher fuel costs and energy at the core of this crisis.
- While there continues to be considerable discussion of innovation coming out of emerging markets, 55 percent of respondents think the United States will lead in producing the next generation of “leapfrog” technologies in the coming decade.