How will the credit crisis affect Silicon Valley?

It’s probably just a matter of time before the credit crisis hits Silicon Valley, as this article in the New York Times notes. The larger unknown is the potential impact on startups, venture capital and revenue as well as innovation. The dynamics of the current market may force players in the valley to adopt desperate measures in order to survive a potential shakeout on par with the dotcom crash. However, a lot of people may not be ready. In particular, I like this quote from Jonathan Abrams, founder of Friendster and Socializr:

“The economy is tanking and people are arguing about whether they should go to Demo or TechCrunch. Few companies sound like they are breaking new ground. It’s like, ‘Here is Twitter for dogs.’ And people still think they are going to get rich by being a blogger.”

“It seems to me like the industry is still in denial,” he said.

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