This Is What Happens to Silicon Valley in a Downturn

industry Silicon Valley is in a real downturn. It seems so um, I shouldn't laugh, because obviously, for a lot of people, this is very very serious. We've had a number of tech companies coming out and saying that they're going to be firing literally thousands of people in this downturn. And what's kind of remarkable about it is this is something a lot of people we're kind of expecting. You know, these are all growth companies. They tend to do very

very well during periods of low interest rates. Once rates start going up, we see the pressures sort of added on, and then we see these cyclical downturns, right and you know, like the story of the twenty ten with tech was really the first industry to come sort of roaring out of the gate, and that recovery and the broader use economy never had a great recovery in that decade, but tech was absolutely booming. And so there is this flip.

And you know the other thing is like, when I think of Silicon Valley or Tech, you know, I have certain ideas of like what a boom looks like and all these amazing perks and free dried cleaning and free steak dinners if you stay at the office, and free bean bags, all of it. I don't have a great intuitive sense about what a downturn looks like Silicon Valley, right, And I think it's never really been promoted as part

of Silicon Valley. It's always, you know, come to this place, create a start up out of your garage or whatever, and become a billionaire and enjoy all this money and all these perks. But as we just mentioned, it is a cyclical industry. There are as many downturns as there are upturns at this point, and yet they don't get

as much attention. No, there's definitely it's a boom bust industry, and you know, I've talked about many times my first memory of markets or during the dot com bubble, and then there was the bust and we sort of forgot about tech for a while and all these companies but they kept plugging away. But yeah, I don't know really what happens to this industry in a downturn, And I think it's like an interesting question. I don't know when

it will rebound, but right now we're definitely in one. Yeah, So we have really the perfect person to talk to us about previous downturns. That's right. So we met this guest recently. We were out at the Berkeley Forum on Corporate Governance and we talked to her there and we just had to talk to her again for the podcast itself because it's very interesting, someone who's very informed on this question. We're going to be speaking with Margaret O'Mara.

She is a professor of American history at the University of Washington and she's also the author of the book The Code, Silicon Valley and the Remaking of America. So a great person to talk to about the history of the valley, the history of tech, and all the changes it's undergone. So Margaret, thank you. So much for coming on the Odd Lots podcast. It's great to be here. Thanks for having me. Yeah, we had to after chatting with you recently out in San Francisco, had to have

you on the show. So you know, we do have this idea of like what what what tech, what these firms do in the boom times and it sounds pretty great. So it's pretty fun. Makes everyone want to flog to San Francisco or you know, the valley and be part of this world. But uh, we don't really talk about the other side as much. We instead we sort of forget about it. But obviously there for every boom, there must be a bust. Yeah, what goes up must come down.

Which was actually uh I was reminded of it was that was a song of one of the many commercials of pets dot com, which was maybe the emblematic dot bomb story of the last big notable downtown durn In tech which was the dot com boom and then the dot com bust. Yeah, this is a cyclical industry. Grows fast, grows hot, and uh and then there's a cooling period. So I mentioned interest rates in the intro, but you know,

I don't think it just boils down to that. Can you maybe talk about what is the common thread in terms of sparking bus in tech, Like, what is it that tends to set these things off sets the industry into contraction. Yeah, well, there's some things that are very particular to the industry, and then there are macroeconomic conditions that are that are sparking at two. It's usually you know,

they're always working in combination. I think a common thread is there's a big market run up um and a lot of froth and excitement and and excitement about you know, companies that are are legitimately you know, minting money by doing usually by doing something new and a new class of products. And also around that surrounding that some some businesses where the you know, fundamentals aren't strong and they're

being buoyed by this general enthusiasm in the market. We saw this in the sixties with what was then called space age stocks, all these transistorized electronics that these companies kind of the first gen of Silicon Valley companies that were very much attached to defense electronics and NASA and the space program. You know, so you have a little you have some froth, and then of course macro economic

conditions are are shaping that too. You have low interest rates that are giving, you know, incentivizing investors to go and play the stock market, and and tech seems like

a good uh, a good bet. And there's also you know, usually a boom is fueled by an entry of a new group of companies and particularly platforms and products that are high growth, whether it be the space age stocks the sixties, or the personal computers of the early nineteen eighties, or the commercial Internet of the nineties, or more recently and and for quite some time. This is a very long boom we're coming off of, you know, the big

platform companies of quote unquote big tech. So you kind of need this sort of like nice confluence of story in macro, like you need the investor enthusiasm. Low rates probably help in some way, but there also has to be like a thing that people get excited about for because low rates itself, what did you know we're talking about, like it kind of joked about, like the bean bags and all the perks. Isn't that always been part of the booms? Like how long have they been sitting on

bean bags out there? Maybe sitting on bean bags for a while Um, I mean the bean bag goes back to the early seventies. Uh. And and you know it's this it's this interesting kind of but you know, if you think about maybe not bean bags themselves, but this idea of a different sort of corporate culture, more informal

corporate culture, non hierarchical get that goes way back. I mean in in case of the Valley, you know, you can maybe start that with Hewlett and Packard and the famous HP way, the what they called management by walking around no corner offices, shirt sleeves. Tie ties still had ties, but we took off the jacket. Um. And this was in the nineteen fifties. You know, Hewlett Packard was you know, founded in a garage, iconic garage startup in nineteen thirty nine.

By the fifties, it's a publicly traded company. It's extremely successful. And Hewlett and Packard are very kind of self consciously working against the organization man paradigm that was the you know, that was corporate capitalism in the nineteen fifties. So so that, um, you know, setting that creating a culture where management and the rank and file engineers are all kind of on the same side is uh. It's taking the culture of

the engineering lab and transferring that into a corporation. And it also was you know, I think philosophically too, it was this was the high water mark of private sector unionization.

People like like Dave Packard, we're very much against unions, just saw them as you know, that's a sign that something's wrong with a company if if you can't find a way to get along, and that instead that employees of all rank should be rewarded with stock options, they should have a stake in the ownership of the company.

So it was a different model and that that kind of percolates through I mean HP, there are a lot of HP veterans that go on to start venture firms, start other companies, and they bring that laid back California more sort of ostensibly egalitarian and corporate culture with them.

Can you give us some examples of what companies tend to do during an industry downturn, Like, is there a typical playbook that stands out to you with your you know, decades of historic knowledge, or like does it tend to vary by firm and firm culture, So for instance, I could see, you know, if your business starts coming under pressure. There's obviously an incentive to cut back on spending, maybe

start to trim your workforce and lay people off. But there might also be some companies that are especially aggressive and decide we're going to try to write this out as much as we can and just use this as an opportunity to take market share. Yeah, and I think it depends a lot on the financial position you're coming into the downturn with, and and particularly if you're an early stage company. I point to Google as the you know, the ultimate example of a company that benefited from a downturn,

notably the dot com bust. Google's founded in kind of late on the cycle of the hype cycle of all these dot com startups, and they secure this unbelievable seed round of million dollars split fifty fifty between Kleiner and Sequoia, which you know, these big firms don't do deals together, but everyone wanted an end and so they had, you know, they kind of had this foundational capital. And then the

all of these other companies go out of business. And two things that you need back then in two thousand one or so is you need people. Ever you always need people, um, and so Google is able to acquire engineers for less than they would have had to pay otherwise. And also just you know, the talent was now available, there was more oxygen in the labor market. And they

also needed computing power. This is before cloud computing, right, that is when you had to go buy a piece of hardware and server blades and high powered CPUs to to power your search engine. And so they were able to do that as well. They were the sort of their capital expenditures ultimately gave them a lot more runway and a lot more time to not have to turn a profit. Was you know, they were really advantaged by that. And you know, I think thinking about kind of company

behavior in a downturn. You know, we see when we talk about Silicon valley, oftentimes we're thinking about the very big consumer facing platforms, right, the ones that ordinary people were that were interacting with every day. And there are many different Silicon valleys, There many different parts of the of the whole industry. If you look at the dot com bust, for example, there were companies, you know, semiconductor

companies that were still hiring people. There were other you know, hardware kind of the people who were doing the fundamentals were still there was that the transition to commercial internet was still very much underway. There was a lot of real there were so many, you know, important use cases that have been proven in the early days of the commercial Internet that there was still a lot to be

done and a lot of business to be had. It was just these very giant, you know, splashy consumer facing websites and and platforms that went out of business that were the ones that got a lot of the menine what about you know, just in terms of so layoffs and other restructurings. Do the bean bags go away? Do do the ties come on? Like like, is there a sort of I don't know, reun liberalization of culture in a downturn where it's like, okay, we have to get

serious here. Yeah, you know, I think that the I wouldn't say the ties come back on. There have been times when the ties come back on, you know, I think the most the standout example is is Apple. If you go back to the eighties, the mid eighties Apple, when it's growing fast, John Scully is brought in from Pepsi as this literally the guy in the suit. So

that's a great example. Could we have like, right, could we all have this perception of Steve Jobs, and then they bring in a Pepsi executive to running Yeah, the guy who sold sugar water. Yeah, there was lots of lots of grumbling about that. And then of course, kind of spectacularly and famously infamously, he and the board fire Steve Jobs shortly thereafter, because Max sales that the Macintosh comes out with a splash. We all remember that per Bowl add the iconic Super Bowl ad and the Mac

being this game changer. But what's forgotten in that story is that it had a big splash but actually did not kind of flatlined a bit. It wasn't another Apple, too, which was the first giant hit that Apple had, and Apple was getting IBM had gotten into the personal computer business. Remember with those Charlie Chaplain ads that were everywhere. Anyone who was, you know, around in the nineteen eighties might

remember those. And so they were eating Apple's lunch, and so so Scully, you know, the suits are brought in, Jobs is fired, and then Apple has a pretty dismal decade after that, and Jobs comes back and it is brought back in CEO, and then after that it's up into the right and that arc. Actually I think has um squashed the suits and so so to speak, that the answer. But I think to your question, there is a real, you know, more conservatism in terms of spending

and due diligence. I think, you know, the tail that always wags valley dog is venture capital. Right, Um, what are the vcs doing? What are they hunting? How much you know, what are they spending on? How much do they have to spend? And they are really kind of driving what you know, first, they're picking the winners or the potential winners, and they're also you know, what they're

demanding of of founders and their portfolio. Companies will change in a downturn and there'll be a lot less tolerance for the splashy parties with ice sculptures, for sure. This was something that Jason Callicanis brought up on our podcast, which was, you know, it's easy to criticize a lot of tech companies for expanding too much during the boom, but his point was this is what investors, ie venture

capital was asking of them. They was all about growing market share and it's not until you know, things start to pull back that there's really that pressure on companies to maybe either start spending money or actually produce a profit. Yeah, that's exactly right. The venture capital world m is you know, a lot of these vcs were once operators to right,

so you know where do vcs come from? And some of them are have backgrounds in banking, but some of them were founders themselves or people who were you know, part of the core teams of companies that were very successful and they turned that into the you know, the

high tech venture capital model. The Silicon Valley style of venture capital model that starts in the sixties is is one that is not just money, it's expertise, and it's and it's importing very particular type of culture and cultural values that is very growth focused, moving fast and break things.

Breaking things has been a Silicon Valley mantra since the early years of the semiconductor industry because by necessity you had to move really fast and be incredibly agile and lean and ready to pivot at any moment and moving really aggressively to get a chunk of the market. And so that sensibility has uh even you know, the hyper

focus on growth. I think that's that that that's the origins of that and that you know, and of course that was an utterly different business than than what the dominant business of Silicon Valley, which you know, software dominant dominant rather than hardware dominant. But nonetheless, I think founders get a lot of heat for excess, but someone gave

them the money to do it. So I think it was like the day we met in San Francisco several weeks ago or maybe the day after, and it was just like the complete implosion of f t X. And the reason I ask is, you know, one of the

other things that's sort of like crumbling here. And again I don't know if it's how cyclical it is, but you know, I associate Silicon Valley with this like the cult of the individual, the individual founder, particularly so the f SBF cult obviously the Steve Jobs called maybe the Mark Zuckerberg cult at some point the Elon Musk cult. Who started that? Where did that come from? The yeah, where did that come from? Well? That is really deep roots.

I mean I think this is you know, this goes extends beyond and before the Valley itself and kind of American culture, American political culture a a a nation born of revolution and uh that is always lifted up and mythologized the you know, the so called self made man um you know, the since the nineteenth century, I mean that this has been these you know, the heroes have been these, these you know, individual geniuses, whether it be Thomas Edison or or you know, going forward and and

of course the you know, the real story is whether it's John Wayne style Cowboy or the great inventor Edison. They yes, you have an iconic, charismatic, extraordinary individual, but also you have an individual who's got good timing, has connections, has a whole team behind them that is part of

an ecosystem. And that the secret of Silicon Valley is the fact that it's this extraordinary ecosystem and networks of people again that you know, we think about, you know, these these founders, whether it be uh, you know, Jobs or Musk or you know, on and on and on. They're all people who you know, of of standout talent that also were lucky and had had some help and

have a team. And I think Jobs and Apple are really great example, um when we go back to the beginning of Apple found you know, founded in a garage like many a computer startup at that moment, and Jobs and was um were like you know, there were a lot of guys doing what they were doing. Some of them were in fact building technically better machines. But what

none of those other ones had was Steve Jobs. Not Steve Jobs his own capacity to do all this himself, but the fact that he recognized in his you know, while he's still walking around barefoot with his beard, that he needed to hire the very best marketing person in the valve, like he needed to get the very best venture capitalist. He needed to get a really good operator with experience he could take them from a garage and

turn them into a real company. And that is what he did, and all those people made Apple into what Apple was and allowed Jobs to be the storyteller in chief and be the ultimately the transformative figure he became.

So I have a slightly different crypto related question. But since you brought up, since you brought up personal computing, and this is something that stands out in your book, this idea that Silicon Valley time and time again kind of frames these new technologies as some sort of revolution. So the personal computer was going to revolutionize our work lives, the dot com boom was going to revolutionize access to information. Crypto was going to be this big new financial system.

And yet with every boom, you know, as we've been discussing, there does tend to be a bust and a lot of disappointment. Can the tech sector can silicon value like maintain this revolutionary narrative or this revolutionary idea if people are sort of becoming more experienced with booms and bust or maybe it's just me getting older, but it feels like we've gone through a number of these disappointments at this time. Yeah, we have, but yet we we key

up again. Um. You know, the revolutionary declarations are always somewhat overblown. But also you know, think about all the devices we're using, um, even to conduct this conversation, and um, they it is extraordinary the rate of technological growth and development of computer hardware and software in a very short amount of time. And so some of the storytelling and the hype and the amount of capital that's been infused to make that come to be has you know, there's

there's a there's a they're there. You know, it's interesting and one of the hallmarks of these you know, the latest generation of revolutionaries is in a way they're they're answering a problem, they're fixing the errors of a past generation, whether it be uh, Steve Jobs or Bill Gates, as these new style CEO s rising up like phoenix is out of the ashes of stagflation in the seventies when big business and C suites of all kinds were pretty unpopular.

And here's something very very different, kind of promising to change the world and empower you. Um, these are the new types of business enterprise that are so alluring in many different ways to politicians and media and two ordinary users and to a kind of baby boomers who are kind of looking for self actualization in there the things they buy and now have the income to buy it.

And if you fast forward, even just looking reflecting on FTX and same bank and Freed and his very very rapid downfall, you know, part of his rapid ascent was, you know, bankman Freed was not only a you know, he's he's rising at a time when when the the last generation of wonder boys are starting to get more tarnished. Right that there's the tech lash, there's critique of of Zuckerberg and and Um and Bezos and these other people who once were at one time viewed more generally uncritically.

And and also you know, I think SBF was a standout in the crypto world where there were a lot of people that seemed like hustlers, you know to the outside observer, and here was someone who seemed more you know, was proclaiming, you know, he was philanthropic, altruistic, and a lot of blue chip investors and leading vcs bought into

that very in a very very big way. So you know, it sounds like another you know Tracy as like, well, okay, you see these booms and busts over the time, and there's the tech lash and everything, and then it's like, okay, you know, the sort of like see do failed crypto revolution. You go cynical over time. But I take it another theme of silicon values. Every downturn, people think, oh, this time it's over, Like that was the last boom and

this is the final post. Yeah. If I had a dollar for every premature obituary that's been written, I mean for over the years. At the end of the nineteen sixties, the stock markets cooling, um, the the defense spending um that once was driving so much of the really almost the entirety of the economy of the valley is contracting,

and Vietnam is Vietnam and deeply unpopular. And and so Lockheed which was the you know locked now lockeed Martin, then just Lockheed, which was by the way, the biggest employer in the valley from the mid fifties through the end of the Cold War. It's Space and Missile's division that was down in Sunny Vale. They laid off thousands of workers and there were you know, local press was like, well that's it. It was fun, alright, guess we're guess

we're moving on. And the same in the seventies when vcs could just not get not raise funds at all. There was just no money. They were resorting to desperate measures like licensing their technology to Japanese companies, which ten years later they really regretted. But even at the in the late eighties, end of the Cold War, you know,

defense again, defense spending contracts dramatically. That was California's thrown into a mini recession in the early nineties because of that, you know, and also the PC market, which was ghosts was so hot, had kind of plateaued and there was no next thing that was clearly there. And then a few years later you have the commercial Internet, so so you know, the out of the ashes comes something new. But it's very easy to could declare it's all over,

um and I and and now what's really interesting? I think what's I think it is important while we make these historical comparisons to to show some contrast between then and now out I mean, now we have the scale is much bigger, The impact is much more significant. You know, the scale of everything, whether it be hiring or layoffs, is much bigger. And the way in which these companies are affecting kind of every dimension of our lives and the global economy is is at a scale that wasn't

even present in the dot com boom or bust. Another thing that's happening now, and you know, we've obviously been focused on the retrenchment of venture capital and private investment, but one thing that's happening now is you have a lot of government investment coming on stream, and you have things like the Chips Act, which basically aims billions, if not trillions of dollars at ramping up US chip making capacity and other vital technology capacity and things like that.

How much does that like help in a downturn? Can the government money basically come in and fill the whole left by retrenching venture capital. Mm hmm, it can um well, just generally, you know, independent of of the commercial boom and bus cycle. Government money is absolutely it's always been a critical thread, a critical part of the Silicon Valley story, a critical part of the history of American technology and technological development. It has you know, you go, Silicon Valley

is Silicon Valley. It is what it is because of military spending, which is sometimes a weird idea to get your head around when you think of the value, you think of kind of free market capitalism and its finest, but actually it has its origins in this defense spending, which created a critical mass of of sort of small electronics R and D in the valley and and also took Stanford from being kind of a reasonably good mid

level research university into the powerhouse. It became. I mean, the people on the ground, including Stanford administrators, were making helping make that happen, taking advantage of these new streams of money. But what what government does, and we see this, let me pull out the space program is a great, great example. We always talk about, you know, we need another moon shot. Well, let's talk about the real moonshot.

And see how that that worked in the Valley political economy, because I think sometimes it's easy to sort of say, oh, it's all free market, or when the government comes in, it's a you know, totally different type of political economy. And in the case of the Valley and actually more broadly American um American economic history generally, it's it's a kind of a blend of public and private that's very

distinctive and very American. So, you know, the sixties, you already have a lot of electronics spending in the Valley. Then um spot Nick rockets into orbit. In the fall of seven, the Soviets get the first satellite into space. They be the US, and everybody's hair is on fire. It is it is a huge black eye for the Eisenhower administration. Is it is bad. There's also a great anxiety about reports that the Soviets are outpacing the US and producing missiles, the so called missile gap. That gets

Washington in a panic. So the money starts a flowing. There is lots and lots of money coming out. And then Kennedy comes into office and says, we are going to reach the Moon by the end of the nineteen sixties. And then all of a sudden, there's this intense demand for very small, light fast electronics, which are exactly what the valley is specializing in. And so this is really the beginning of the semiconductor industry. The true first clusters

of startups are are they're building integrated circuits. They're selling to NASA, but they're they're doing it. These are you know, these aren't big lumbering defense contractors. They're startups and there are a lot of them, and they're competing for this business.

And so there's this incredibly competitive industry that is essentially you now have an incentive to to develop and produce a new product that doesn't yet have a commercial market, and and it's put the government has put a thumb on the scale as a customer and as a as as a funder of research, and it it just drives all of this activity up and down the chain from basic research to apply to universities in companies large and small.

And then you know, the net net of all that space spending for the semiconductor industry is they went from building these bespoke two thousand dollars and upward integrated circuits that nobody had a could afford on that you know, no enterprise could afford or really thought they needed. And it they scale a production, they drive down costs, they're able to turn it into a commodity product. And that's you know, that's what I think the potential for government spending.

How So now is these we're kind of silicon valleys entering a different age and you have this new these new flows not just for semiconductor research and development, but also green energy too. That's has a lot of potential. You anticipated my next question, you know, and Tracy mentioned the Chips Act, and then there's the Inflation Reduction Act, which is going to channel a lot of money to

green tech. But the common threat of both of those, it's like, Okay, part of the reason we seem to be doing green tech is obviously concerns our climate, but there's also a national security impulse even embedded in the Inflation Reduction Act moving the battery supply chain away from China, moving it to the US. This idea that there's some sort of like global competition about energy tech and energy

security for obvious reasons. And the thing I'm curious about is how does it work in silicon In silicon valley when you have this sort of hard nosed geopolitical security state defense to Haartman investment driving the show, how does that interact, which sort of like hippie California capitalism. M Uh, it's yeah. You wouldn't think these two things coexist, but

they do. You know, this is both smart politics and it is real geo politics, right that there isn't a national security dimension to high tech spending UM and high tech competition, particularly now with China, which is sort of this interesting mash up of the competition that the US had the Soviet Union in the fifties and sixties and

the competition it had with Japan and the eighties. Right, it's got this both end and Look, the only part of the discretionary budget that the US that has kind of been safe from austerity and and shrinkage, particularly in the last forty years, has been the defense budget. There's a reason that DARPA has this outsize role in fueling innovation in the valley because it's been kind of the one blue sky research funder that hasn't been kind of

had its budget you know, questioned every every cycle. Uh So, I you know, there, there's it makes sense there there's you know, putting calling this a defense move um does make it in a way politically insulated in a way, and kind of creates this allowance for the great deal of spending that does need to happen to move the needle.

But the hippie culture and the defense culture, that, yeah, that's a it's a it's a it's always had that weird juxtaposition, quite honestly, and I think, you know, part of why it's able to do that is because of the essentially the indirect nature of so much of the spending.

And this is again going back to this kind of quintessentially American habit of not liking big government, not wanting to appear to have big government, and so instead spending for economic development, in particular through indirect means, whether it be in the early nineteenth century awarding um, you know, private entities, the you know, uh contraxt of you know, build canals and infrastructure and turnpikes, or or the transcontinental

railroads right in the night eighteen sixties and seventies, which was a kind of a boondoggle, but it got those railroads built. Or fast forward to the defense economy, you know, the Cold War military industrial complex. Eisenhower called it military

industrial for a reason. The money was flowing from the government through industry and universities and these other private and educational institutions, so that the the guys and the bean bags, or the kids in the computer lab at Berkeley or Stanford weren't necessarily immediately aware of the fact that everything that was doing was being enabled by defense spending, which you know, in the late nineteen sixties, a lot of those kids at Berkeley and Stanford suddenly realized that was

what was making it all go and that was part of why they were protesting and marching against the war or they they saw the among other things, that the military had essentially taken control of technology and was using it for ends of which they did not approve. So just on this theme the intermingling of free market entrepreneurship and government spending, which is definitely a theme that stands out in your book, and you emphasize this point a lot.

But in in a downturn where venture capital is potentially retrenching and the government is ramping up it's spending, is there a possibility that more traditional businesses become bigger or more powerful compared to you know, the traditional Silicon valley tech startup because they have access to maybe deeper pockets, or because maybe they have closer relationships with the US government. Is that a possibility that we start to see a

sort of shift in power. I guess m M. I mean Tesla Like Tesla versus a traditional carmaker would be the obvious example of this, right, yeah, yeah, possibly, But there are a couple of things that work against that. One is if the government purpose of government spending is to incentivize and grow new markets and new technologies and to kind of bring bring new technologies online that are now just good ideas or really expensive and impractical ideas.

Oftentimes it's new firms and new entrance that are needed to do that. Again, the you know, this is why you know, companies like fair Child Semiconductor and National Semiconductor get the edge on UM, you know, get the Apollo program business because the big incumbents couldn't do it. I think the other thing that's in play, and we saw this a bit in the Space program too, which is that that spending is ramping up at the same time that UM. This when Robert McNamara was Secretary of Defense

for Kennedy and the Johns administrations. McNamara later becomes kind of the the face of the Vietnam War and not a good way. But in the beginning, he comes in. He comes in from Ford. He was the president of Ford, and he was part of a group known as the whiz Kids at Ford that were these number crunching efficiency experts, and he came in He's like, we gotta make this

whole contracting more efficient. And he actually wanted to kind of get away from single source contracting and kind of bring more oxygen into the system and get more more people, more more firms competing for the business, so that would drive down costs and and that's part of actually created

this opportunity for these small companies. What's happening right now, I think in a kind of analogous way is one of the things that the both the Chips Act and the Inflation Reduction Act or trying to solve for is the intense geographic concentration of tech on the two coasts right So within that, you know, we have this new spending that's kind of regionally focused to build tech focused economies in places that don't have them, and also you know,

putting chip plants in Ohio, right, Like, there's this sort of very deliberate economic development strategy going on. We saw some of this, quite a bit of this in the early Cold War too. I mean that the Southern States and sun Belt states that also happened to have some pretty powerful senators Hello Richard Russell of Georgia. Uh that you know that got these defense facilities that were transformative

for the economy. Right. So there's sort of this geographic strategy that the Biden administration and um uh those the sort of are trying to uh kind of push out. And there's a lot of obviously a lot of local leadership and regions that have been left behind in many ways, particularly formally industrial regions and the in the Midwest and elsewhere that are you really trying to build out their infrastructure.

So I'm looking to see kind of what that does to um, kind of disrupts this geographic pattern that's so intensely concentrated. Margaret, thank you so much for coming out odd lots so glad we got to hand this conversation. It was really fun. Thanks for having me. Thanks Margaret. Yeah, that was great, Tracy. I really like talking to Margaret. You know, one thing that is very useful with the historical perspective is this time it's different, or this time

it's really over. That that's like a pervasive view that it's not just now, it's not just post dot Com. That from the very beginning, people always say, oh, that was it, that was the last boom bust. There one day there will be another boom. Well, I agree with that. I do wonder whether or not, like people's experiences tend to be tempered by the disappointments of the last downturn, but maybe not, because I mean, here we are in

and all of crypto is falling apart. People have been comparing that to the dot com boom for ages, so clearly memories of dot Com era. They eventually that was like twenty years ago. It feels like only yesterday, okay. But also like her example of whether or not it starts to affect culture with the PEPSI CEO forgot that that was pretty funny. Yeah, and just you know again, like what the saving I don't know if it's the saving grace or you know, where where would you be

bullish right now? You're probably bullish on the areas that can sell something to the US government, something that might have like a defense capacity, something that might have an energy capacity, something that might have a semiconductor capacity, etcetera. So there will be new markets, but maybe the exciting things are not going to be as consumer oriented as we got from the boom in the right. It kind of reminds me of that market's mantra, don't fight the FED, right, like,

don't don't fight the U. S. Government. It's pouring trillions of dollars of money into particular. Don't fight the Pentagon. There we go. Don't fight the d O E loan, don't fight jigger shot at the Daily Loan protras, don't fight the military industrial complex. That is good life advice. Shall we leave it there? Let's leave it there? Okay. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at

Tracy Alloway and I'm Joe Wisn't Though. You can follow me on Twitter at the Stalwart. Follow our guest Margaret O'Meara. She's at Margaret O'Meara. Follow our producer Kerman Rodriguez at Carmen Arman, and check out all of our podcasts at Bloomberg under the handle at podcasts, and if you want more odd Lots content, go to Bloomberg dot com slash odd Lot or Tracy and I post the transcripts, we blog, and we even write a weekly newsletter. Go there, subscribe

and read it. And I wanted to let you know about a special event that we're holding four listeners. My co host Tracy Alloway and I will be speaking with past guest Josh Younger, as well as Columbia law professor levmanand in a special live episode of the odd podcast on November We're gonna be holding it at Bloomberg h Q, and you're welcome to come mingo join. We're gonna have cocktails, canapas and other stuff on that day along with the

live recording. So if you're interested in attending a live episode of the Odd Lots podcast as well as meeting me and Tracy, as well as meeting our guests, and as well as meeting other odd Lots listeners, go find the rs VP. Both Tracy and I have tweeted about it. It's also on Bloomberg dot com slash odd Lots. Sign up and join us in New York City at Bloomberg age Q on November twenty nine. Thanks for listening to the