But, a substantial portion of their revenues come from startups paying them for advertising
Total VC funding in the US is on the order of $50 billion per year. If you assume 20% of that goes straight to advertising, which is unlikely, that's $10 billion. Facebook and Google sell about $100 billion a year worth of ads.
I would guess that Google and Facebook have less than 1% of their revenue concentrated in VC-funded startups. They simply don't have enough money to matter relative to the size of the broader economy. It is not 1999 -- Yahoo is not making headlines with money it got from startups whose valuation is driven by Yahoo making headlines.
People in the startup community think the startup community is co-extensive with the tech industry. AppAmaGooFaceSoft beg to differ.
There was a good quote on Pando about who lost the most in the bubble - it wasn't tech, it was telecom by a long shot. All their income looked real - it was providing a real service - but a few levels of indirection down the line it was all broken.
I'm not doomsaying, but if there's a big movement in anything it tends to have weird action at a distance.
Thanks for bringing the actual data to the table Patrick.
You wouldn't happen to have any on the more local housing and local economic impact of startup employees would you?
I'm convinced that as the rest of the world burns or stays stagnant, they are looking for a scapegoat, and the geeks who are suddenly rich and in some cases pushing them out of their homes and away from their families make a mighty easy target.
The world wants their economic collapse because God forbid this economic cycle go on for longer than the last (but I'm sure it would be just fine if they were profiting from it).
And even if you live in SV, which I do, I still don't the no it would change much. That's the other data I'd love to see...how much of the SV economy comes from startups totally reliant on VC money?
My guess is not much at all. They almost certainly don't have enough total employees to dent the housing market because there is still huge demand to live here for other demographics, and the broader economy has many other healthy businesses that wouldn't even notice if all the VC money disappeared overnight.
People think the VC ecosystem is larger, and has a greater impact than it actually does.
I think you are thinking of the last dotcom bubble where there wasn't much else on the internet. The real world full of real businesses making real things has caught on to this internet thing. Internet advertising doesn't come primarily from tech VC.
