Opportunities in Difficult Times
Thanks. It‘s fun to have a chance to be here. I’ve been in this theater now exactly three times in my life, today I gave some speech about five years ago in here and I got a question from a student who suggested that we go borrow a bunch of money when we had a bunch of money. I had to really think hard about that for like three years. But the first time I was in here was sort of a major moment. I was at Stanford, and the play“Pippin,” my favorite play, was performed on this stage. And I remember thinking just how awesome thisplace was, and it‘s sort of fun for me to have a chance to speak here, although it’s not at all what I expected.
I‘m here in the Bay Area for one reason, and one reason only. I was meeting with a few interns, one of them last summer, who’s in the class. And he said to me, come on, man, will you come speak to our class. And I said, blah, blah, blah, all right, sure, I‘ll come speak to the class. And I said, what’s it all about? He said, it will be like 50 people, something like that, and we‘ll all just kind of chitchat. And then I pick up the paper on the way down here that sort of reminds me of what we’re doing, and I said, wait, what‘s with this 1,000-person thing? I thought it was kind of 50 people in an entrepreneurship class. But it is, nonetheless, a delight to be here. We’re not going to get Nikio back for the summer, but we‘re working hard. Nikio, Ollie, Steve, by the way, at Microsoft.com, for other bright talented people looking for work, we’re always hiring, even while the economy is tough. There‘s always a place in some part of Microsoft for the most talented folks around.
So, I’m glad to have a chance to be here. I‘ll try to talk for 25 minutes or less, and then I guess we have a chance to do some questions and answers at least from I don’t know if it‘s just students in the class, but nonetheless I guess we get to do that. I’m going to start with just a little bit about the economy, not because it‘s the cheeriest or sort of warmest subject to start with, but at least if you’re thinking about entrepreneurship, it‘s probably the right place to start. You say, my gosh, I am graduating, I am starting a company, I am moving forward in the worst economy in whatever, 70-plus years. Is that a good thing or not?
Well, first let’s start with the basics. It is really a bad economy. Business is tough. People really are being laid off. We had a round we did yesterday. It really is a tough, tough, tough environment. There is no question about it. And I like to characterize, at least for folks at Microsoft, that I don‘t actually thinkwhat we’re doing-we didn‘t go down, and we’re going back up. The economy is kind of resetting over a year, two years, three years, at a lower level. And then we will build from a lower base. And that happened because essentially the world borrowed too much money. The question I got here five years ago, should I go borrow a bunch of money, it‘s a prescient question. The world had too much debt, just as a statistic.
You say, why are we talking about this in entrepreneurship? Because you’ve got to understand a little bit kind of the environment in which you work, but consumer plus business debt was about 300-odd percent of GDP before our recent bubble burst. Before the Depression, it was 160 percent of GDP. It means we probably at least have one or two GDP‘s worth of extra money that’s been used to fund business investments, to fund startup companies, to buy PCs, and flat panel displays, and servers, and houses, and blah, de blah, de blah. And now you say flush, all that extra debt is going to get flushed out of the system, and it‘s not going to be replaced, because after one of these- there’s been four of them in the last 200 years of U.S. history, after one of these bubbles, people don‘t immediately start borrowing again. Everybody is a little more cautious than they were before. So it’s a tough economy.
You say, well, gee, I want to do a startup, is there going to be investment out there? Well, gee, I want to sell to customers, and they‘re going to need to buy equipment to do things, or, gee, I want to appeal to advertisers, and there has to be a consumer demand out there. Those are some of the kinds of ideas that I’m sure are swirling at least in some entrepreneurial heads in this audience. And yet, in a sense, you could say there‘s really not a better time to start a business. If you’ve got the right idea, you will get some funding. The ideas that weren‘t good enough shouldn’t have been funded, and they won‘t be funded today. So in a sense, the fact that there’s a more critical screen, there‘s more of a careful thought process, the fact that customers are pickier with theirmoney today, all of that really is a chance to make people better.
One of our folks reminded me, Microsoft was started and Apple was started during kind of a recessionary period. General Electric, ironically, was started right after the great deleveraging of 1873. That was the bubble before the Depression that was just like this one. So, in a sense, there is opportunity. And there may be more opportunities in the long run even if kind of the entrepreneurial opportunities are less glossy than they might have been in the short run.
Particularly as a guy whose business has for the last 29 years been software, the number of opportunities to create brilliant, genius, amazing ideas, the number of interesting things that we see people doing, it continues to be stunning. So there’s not going to be any shortage of real possibilities. And so the question is, will you have the patience, and the tenacity, and the interest to really start something that‘s important.
