An Innovative Recession?

I think this will be especially true if the common fear of recession is realized and capital expenditures are reduced. This has some very interesting potential impacts to both our economy as well as our technological landscape.

It seems we are poised for some tremendous growth, especially in new technology startups. By lowering the barrier to entry of capital costs (e.g. building a data center, using up front capital, versus pay as you go computing and storage services), smart and innovative ideas are no longer priced out of testing products and services in a free market.

All this growth will likely be coupled with a very healthy outlook for VC funding. I think these numbers from 2007 will increase as investors pull more of their money out of real-estate and seek to put it somewhere:

At the end of August, VC Keith Benjamin of Levensohn Venture Partners proposed that tech IPOs and the investors who launch them could flourish as the mortgage mess poisons Wall Street. Benjamin says the credit crunch could be “the catalyst to put tech stocks back into favor.” The idea is that money will move from investing via hedge funds and private equity back to technology, which has been under a cloud since the dot-com crash.

I think that these things coming together now couldn't come at a better time. It might save us from a real recession, or at least cut the pain of one. Of course, to really see this innovation take off, we might actually need the recession to forced the tightening of the corporate pursestrings that would fuel technologies like Amazon Web Services and the knowledge growth to build solutions on these platforms.