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Rise in Technology Jobs and Funding - Sustainable Boom or Dot-Com Bubble?

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The incredible recent and continuing success of companies such as LinkedIn, Facebook, Groupon and Skype has led many to claim we are entering into another ‘Tech Boom’.
 
Such claims are also supported by the findings of the Association of Executive Search Consultants’ (AESC) first quarter 2011 report on the retained executive search industry - senior executive hiring within the Consumer Goods and Technology industries saw the greatest quarter-on-quarter strength. Peter Felix, President of the AESC, commented;
 
‘Of particular note are the increases now being experienced in the major countries of Europe such as Germany, the UK and France and in global industries such as Manufacturing, Consumer Goods, Health Care and Technology’
 
The ever-increasing influence of the internet on daily life means companies can reach an enormous and diverse potential audience with relative ease. A startling statistic that gives further value to the notion of the gaining momentum of a ‘Tech Boom’ is this: Facebook took seven years to reach 600 million users. Twitter took five years to reach 200 million users. Cityville (a popular facebook app) reached 100 million users in 45 days. This environment spawning huge geographical reach with heavily engaged users offers incredibly potential for tech start ups, and entrepreneurial skills are becoming increasingly valued in larger technology organisations.

Investors are rushing to pump money into online start-ups such as fashion website Gilt Groupe Inc, which is now valued at $1 billion.
 
In recent months, valuations on the aforementioned online companies have been ever increasing – LinkedIn has recently been valued at $3.3 billion according to the terms of an IPO -, and in recent weeks we have also seen the sale of Skype to Microsoft for $8.5 billion. Facebook, Groupon and Twitter are also rumored to be considering going public in the near future.
 
However, it must also be considered whether this growth is sustainable – will lessons be learned from the ‘bursting’ of the dot-com bubble in 2000, in particular with regards to unsustainable borrowing? For example, Foursquare, the location based social network is attempting to secure funding that will enable them to value the company at $500 million – this is despite the fact that the site earns relatively little in terms of revenue.
 
Such a rapid growth can also be compromised by a shortage of talent and expertise in the industry - David Tisch, director of TechStars, a mentorship-driven investment program, was quoted in the WSJ explaining it was hard to find top engineering talent. "You can't build a team at the pace and quality you need," he said.
 
The increasing stock prices, online success stories and availability of venture capital inevitably cast many people’s minds back to the days of rapid internet growth of the late 1990’s and the bursting of the ‘dot-com bubble’. Have we learnt the lesson from last time, or has the reach and power of the internet changed the landscape beyond recognition?
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This article was written by Chris Storey, Marketing Assistant at the Association of Executive Search Consultants (AESC).

BlueSteps is the exclusive service of the AESC that puts senior executives on the radar screen of over 6,000 executive search professionals in over 70 countries. Be visible, and be considered for up to 50,000 opportunities handled by AESC search firms every year. Find out more at www.BlueSteps.com 

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