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Squawk Box September 30 – Credit Crunch continues, and Cloud Computing

We continued our discussion of economics today, the day after the single largest drop on North American in history.  The markets are up today, after president bush called on US lawmakers to pass the bailout package, but there is still a lot of speculation about what this will mean for companies and investors.

We started with Eric Schonfeld’s piece on how this will impact Venture funds.  Schonfeld points out that limited partners in a venture fund commit capital and then deliver the money to the venture fund as the VC commits to make investments. He postulates that as investors suffer losses elsewhere they won’t be able to make their commitments to the venture fund. As a result, Silicon Valley investor confidence is at it’s lowest level in 7 years.

We then moved on to Rafe Needleman’s advice to startups for surviving the downturn.  He says, in essence, don’t count on advertising, rotate your business into enterprise, don’t go direct, raise money from angels not VC’s, conserve resources and (paradoxically, spend to plan).  We had a few survivors of the last downturn on the call who added some color and additional viewpoint to Rafe’s advice.

Switching topics, we then discussed the emergence of a series of anti-cloud computing rants.  There was Larry Ellison complaining that he didn’t understand what Cloud Computing was, beyond a marketing term for technology that already existed, and Richard Stallman’s rant against Cloud Computing that appeared yesterday.  We debated the definition of cloud computing, the privacy implications, and more.

On today’s conference call: Dan York, Jim Courtney, Hudson Barton, Brad Dixon, Bill Volk, Sheryl Breuker, Marcus Elford and Sergio Meinardi.

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