April 28, 2004 Can Google IPO lift Silicon Valley's gloom? By Rachel Konrad, Associated Press SAN JOSE, Calif. - Can an initial public stock offering by Google lift Silicon Valley's economic gloom? That's what investors, entrepreneurs and job hunters are asking as the world's most popular Internet search engine flirts with becoming a publicly traded company. Mountain View, Calif.-based Google - a rare dot-com that has survived competition from Microsoft and Yahoo! - faces a Thursday deadline to file documents that would clear it for an IPO. The company's stock market debut would likely come later this year. Skeptics say no single company could spark a rebound in moribund Silicon Valley, which has lost 200,000 jobs and has suffered a 10-fold increase in corporate office vacancy rates since 2000. They insist that Google's IPO would transform founders and venture capitalists into billionaires - but wouldn't boost fortunes of struggling tech workers in the region. Thousands of high-paying jobs have disappeared due to offshore outsourcing, automation and corporate consolidation. But notoriously optimistic entrepreneurs in the epicenter of the world's tech industry say Google's IPO could be a potent psychological symbol. They're comparing iconoclastic co-founders Larry Page and Sergey Brin to other Silicon Valley teams: Steve Wozniak and Steve Jobs of Apple Computer; Bill Hewlett and Dave Packard of Hewlett-Packard; and Gordon Moore, Andy Grove and Robert Noyce of Intel. "What Google proves is that if you stick with your core principles and work hard, you can win," said John Gable, 38, co-founder of Menlo Park, Calif.-based software companies Kavi and Complete Nonprofits. "The valley won't turn around overnight, but this is a good step in the right direction." Other entrepreneurs say Wall Street's giddy anticipation over Google - which could raise $2 billion in an IPO - could extend to other innovative startups. Toni Schneider, 34, is chief executive of Oddpost Inc., which specializes in Web-based e-mail. The San Francisco-based startup recently upgraded its offices from a dilapidated Chinatown storefront to a horse stable converted into a funky loft. "There's been a lot of people talking about search and social networking software for a few years, but the Google frenzy is generating a a renewed attention on Web mail," said Schneider, a Stanford University alum, like Page and Brin. "Google is making people think about the next generation of technology in our specific area - it's great." Paul Koontz, general partner of Menlo Park-based Foundation Capital, said Google's IPO is more promising than the 1995 debut of Netscape Communications. The Web browser's IPO ignited Wall Street's interest in Internet companies - and ushered a wave of venture capital, overexpansion and collapse. "Netscape had extraordinary growth and potential but it didn't come close to the scale of Google in terms of revenue," said Koontz, Netscape's first vice president of marketing. "The Google guys are well established, and it would only take a massive sea change in technology to compromise their footing." Others in Silicon Valley - known for intense cycles of boom and bust - were more measured about what Google's IPO could mean for the region. Some said comparing Google to Netscape was little more than wishful thinking - a desire to relive the late 1990s dot-com euphoria. "Google will have the effect of rekindling or reinforcing that Silicon Valley spirit of optimism and techno-utopianism," said Jim Koch, director of the Center for Science, Technology and Society at Santa Clara University. "What it won't rekindle is the sense of broad-scale opportunity and instant riches of the late 1990s. The late '90s were a perturbation, and they're not going to be repeated." Economists were pessimistic about Google's ability to turn around the regional economy - particularly the flagging job market. The exodus of jobs to the developing world, and the consolidation of startups into a handful of large companies mean fewer jobs, regardless of stock prices. "The big distinction in the next economic cycle will be between the stock market and the job market," said Stephen Levy, director and senior economist at the Palo Alto-based Center for Continuing Study of the California Economy. "In the late '90s, the craziness in the market induced people to start a lot of companies that in retrospect had no business plan - they started, grew and then went bankrupt. That won't happen this time." San Francisco resident Mark Kriozere, 31, is painfully aware of local job market woes. The former portfolio manager, who moved to the area in 1995, has been unemployed since February, when a Bank of America contract ended. "When I first moved to the Bay Area, it was really easy to find a job, and really hard to find a place to live," said Kriozere, who's looking for business analyst positions. "Now it's just the opposite. ... The damage in the Bay Area is done, and the fact that Google's going to have an IPO doesn't mean things will suddenly turn around."