This call got me thinking about the landscape in DC. It is, as it always has been, a center of government. Those of us who live here joke about the difference between Washington, the center of government, and the District, a wider culture of arts, nightlife and activity outside of government. The reality is, however, that the two are inexorably fused at the hip. Spending Friday nights enjoying nightlife inevitably means spending time among people connected in Washington, on Capitol Hill or other parts of government. It is difficult to live in this city without being part of the Washington-culture somehow. More after the jump.

Today, with the Obama administration and its embrace of internet culture, the advent of “Government 2.0″ has come about. Government 2.0, a term describing the second generation of government using the faux-fashionable way of versioning, describes an embrace of web technologies and culture to advance the mission of government. Without getting into my feelings on Government 2.0 as a whole (my thoughts are well-documented), it’s difficult to escape the reality of enterprise in DC.

DC is not a city lent to Silicon Valley-style innovation. We will never house the next Twitter and Google only exists here as a lobbying arm of the Mountain View, California search giant. It is a city dedicated to practical innovation. We will never have the sex appeal to attract the innovators in California here. It’s not our style.

What we do have is an opportunity for innovation as it pertains to agency mission. We do have the opportunity to develop products that meet the needs of elected government, established government and citizens in a time of economic uncertainty. We do have the ability to build products and services that meet the needs of Washington, but as long as we try to meet the needs of the country and the world, we run the risk of barking up the wrong tree.

Yahoo made a massive move last week, announcing a search deal with Microsoft. Carol Bartz, the CEO of Yahoo, suggested that Yahoo could not compete with Google anymore in search and the deal would allow Yahoo to focus and innovate in the areas they could compete. If you haven’t been paying attention to me since 2007, then you would have missed my thoughts on this. Yahoo came to grips with the realization that they couldn’t compete with Google but they could own another niche. This is the same realization that DC has to come to for itself. We can’t (nor should we) compete with Silicon Valley. Besides the fact that they are dwindling in relevancy as the spotlight shifts to other cities and reasons, we have something they can never have.

And while Silicon Valley warlords aimlessly try to find their relevancy and foothold in Washington, we have the ability to use our real connections, our real knowledge of the inside-the-beltway world, and our real grassroots abilities that we displayed in getting our President elected to bring new and relevant innovation to government.

By the way, the first person who suggests government agencies need wikis and Twitter to be relevant, is banished back to California.

The message delivered to those in attendance was that things could get a lot worse than people think, and it will be a more protracted downturn. To give a historical perspective, Sequoia had a similar meeting back before the last bubble unraveled burst. We know how that turned out.

Hot on the heels of Sequoias meeting, angel investor Ron Conway sent an email to the CEOs of his potfolio companies advising them, in the words of Mike Arrington, of a bleak immediate future:

You should lower your “œburn rate” to raise at least 3-6 months or more of funding via cost reductions, even if it means staff reductions and reduced marketing and G&A expenses. This is the equivalent to “œraising an internal round” through cost reductions to buy you more time until you need to raise money again; hopefully when fund raising is more feasible. Letting go of staff is hard and often gut wrenching. A re-evaluation of timelines and re-focus on milestones with the eye of doing more with less will allow you to live many more days, and the name of the game in this environment in some respects is survival”“survival until conditions change.

Brad Feld, an investor in Lijit who I work for, echoes my sentiments from yesterday (or rather, I echoed his since he went first):

My recommendation to all of you entrepreneurs out there is to get off the negative sentiment treadmill, step up, and lead. The people working for your company are likely confused, concerned, and overwhelmed with all the noise in the system. In the near term, building your business will likely be more challenging on a number of dimensions. So what – that’s the normal cycle of business. You don’t need to be a blind optimist and spout happy talk, but you do need to have a clear sense of purpose and goals for your company. Leadership 101.

Times get tough. The people that approach the challenge with some clarity in their thoughts are the ones that will emerge on the other side stronger than ever and positioned to be the next generation of winners in this space.

Quote:

We work really hard in Silicon Valley, why? It’s not the money (only a few strike it ‘rich’) I think it’s the passion for creating new

Someone should remind Jeremiah of the 140 character limit of Twitter. ;)

I take a lot of exception to this statement because it is exceptionally wrong. Not only exceptionally wrong, but naive.

First of all, as an insider it’s easy to say everyone is just working to create and innovate. While that’s true to a certain extent, it was much more true two years ago. As the outsider to the Valley that I am, I’d say the Valley is one of four North American hotspots for money flow – Boston, New York, Canada (Toronto) and the Valley.

That places these four locations on the map as one of the four places every entrepreneur in North America wants to be. The reason why DEMO and TechCrunch 40 were so successful is because entrepreneurs want money!

Yes, they need money. This is true. But the drive for more money is beyond what it was when the interactive web was in its infancy and companies really were sprouting up because people wanted to work passionately on a project. They discovered some idea and the technology had matured enough that the idea could be pursued.

Today, we are talking about San Francisco-based Automattic valuating at numbers well in excess of $200M, Palo Alto-based Facebook (along with some fuzzy math) weighing in at some $15B. GigaOmniMedia, the parent company of GigaOm and the rest of Om Malik’s empire getting $1M+ for hardware, or something…

Everyday, new companies are being funded and it’s mostly in the Valley.

I love the Valley. I love the entrepreneurs in the Valley. I wish I was there living but no job has taken me there yet. But it’s a very introspective and naive thought to believe that the Valley is full of people who just are passionate. Yes, passionate people make the best companies. That I will not argue with. I think there is more passion to get the big exit than to build a solid product.

I could be wrong. Feel free to correct me. ;-)