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Have We Learned from the New Economy?
prostoalex writes "The new issue of Fast Company magazine looks at the so-called New Economy in retrospect. There were some myths about the Internet that were not true, or could be considered true only partially in the brief history of the Internet boom, there were people who got burned and those who nicely cashed out and then there were those who had to start a new life because of the Internet."
1)Internet Hype
2)???
3)Profit!
Actually, World of End's What the Internet Isn't (previously featured on slashdot) has the ideas that can be applied to the "new economy."
the people who grasped these ideas are the long term winners.
Sure, spammers claim that they make money, but just like intrusive telemarketers their days are numbered!
Some domain name speculators made out. Some vapourware employees made out. But these are flash in the pan events.
Jeff Bezos and Co turned a profit! How? By aggregating their shipping (that free shipping option that allows them to pack more onto a truck) they are using tried and true business methods to stay profitable.
So what have we learned form the new economy? If you don't have a sustainable business model (i.e. 1)hype 2)??? 3) Profit!) then cash out quick! (however I think that business model is pretty old; Con-men have been around for years!)
In the future, I would want to not be isolated from my friends in the Space Station.
Dont be fooled into investing in something just because it uses the internet!
.com behind the name isnt a magic formula for success!
.com!
Actually look at the business model first! Just because it has
Be aware of what the internet can and cant do, ebay is a wonderful perfect use of the internet, you pay for the servers and maintenance and everyone who uses it does the rest, however on the other hand an idea to sell toothpicks over the internet is not a good idea, even if it is a
Post apocalyptic gaming goodness
The big lesson to learn from the new economy was that the basic rules of economics still applied. Sure there were a lot of innovations that transformed many industries, but the basic laws of supply and demand still held true. The basic requirement that businesses had to generate revenue in order to survive still held true. It seemed that every time you looked around during the 90s there was another new economy: the information economy, the digital economy, the attention economy, the experience economy etc. etc. but these were all put forward by people who didn't know anything about economics.
I've finally got around to changing my sig
Meet the new economy. Same as the old economy.
People unwilling to relocate, who thought customer orientation was beneath them, who only wanted to work on leading edge technology, funded by venture vultures got burned bigtime.
Those of us in other locations (say philly), who focused on customer-oriented services, and did work on boring old accounting systems and automating boring old work flows did fine. We were customer funded. We did fine. As a matter of fact we had to turn down work just to preserve our sanity.
It doesn't matter what we've learned, because like every other economic bubble, by the the next one has come along everyone will either:
i) think they know why this one is going to be different or
ii) will have forgotten the lessons of this one anyway
Athletic Scholarships to universities make as much sense as academic scholarships to sports teams.
As far as politics, money and corruption is concerned:
The more things change, the more they stay the same (ref: "Golden Rule" - he who has the gold, makes the rules).
I know the above comment is cheap, but IMO, one thing that *hasn't* changed in the "new economy" is that (white-collar) crime still pays for too many high powered execs and that corporate accountability is hard to enforce.
Again, IMO, this is one of the reasons more people lost their jobs, in high-tech or anywhere else, than was neccessary.
uR iGn0ranc3, Their Power
The whole notion of a "new economy" is the myth. Economics will be what it always has been: People offering something that other people want/need. The only thing that changes is what is offered.
Those who understand that have successful internet businesses. Those who don't have failed internet businesses.
You can tell a great deal about the character of a man by observing those who hate him.
Lesson: The size of the poppage will be AT LEAST as big as the bubble.
Table-ized A.I.
The whole phenomenon was down to greed. I worked on a big project, and it happened like this:
- A good idea started
- Good people got hired
- Investors dumped in a load of money
- Stuff got too big too quick
- People on stupid salaries started thinking they had to change stuff all over the place, new logo new this new that
- The web visitors just said no thanks had enough - it wasn't working like it used to
- The site that is left is no more, but you can see the changes here:
Links: what was left The new look The old look country siteThe idea was OK, but by the time a load of stupid shit like free email, instant messaging and all that was tacked on, it just didn't work any more, cost way too much money...
But we had a great launch party for Orientation Morocco, let me tell you!
Conversion Rate Optimisation French / English consultant
The one thing I get to take with me after taking a job in 1999 at age 19 to make more money than I ever expected to, through being both fired and laid off in 2003, is that continued education and awareness of the outside world have been paramount towards any career success I have.
:)
The Internet continues to be my preferred source of education. I've taken online classes through a community college. Newsgroups have helped me solve most of the problems I have at work, and I look sharper for it. I've regularly used online news sources to keep me aware of what's new in the world, given that local news anchors have more brilliance in their smile than their skulls.
Aside from my service costs, the Internet remains as free as Al Gore intended
-m.
I think that people who wants to play the market should take a class in accounting or similar courses to learn to read financial statements. I took several accounting courses in hopes of opening my own business someday and I was suprised to find that GAAP allows enough flexablility to inflate or deflate the "earnings" by the companies. I also learned that Statement of Cash Flow often times are more important the Income Statement or Balance Sheet. (A company yachet may be counted as an asset but does nothing to brining in money and most likely to be sold under the book value if company needs cash).
All the day traders I knew during the boom didn't know how to read the financial statements. They just relied on advises of some hot shot, other day traders who knew no better, and their gut feelings.
1f u c4n r34d th1s u r34lly n33d t0 g37 l41d
Closing the magazine, I thought: "Either these guys deserve a Nobel Prize in Economics, or they just don't understand anything about Economics".
Late 1999, I remember talking to a friend about Yahoo and other companies offering free services over the World Wide Web. He could not understand how these companies could offer a valuable service (email, personal web space, etc) for free and (a) make money, (b) have a stock price that went through the roof.
I remember telling him: "This is not going to last. The stock market is going to crash really badly and most of these companies are going to go down in flames".
Today, I am really happy most of my money was not invested in stupid schemes such as pets.com or any other "new economy"/Internet company.
Bottom line? Here are my most basic rules for economy, new or otherwise...
One last thing: 90% of all the people who made money in the new economy where insiders, people who knew if a stock was going to go up or down. Think about that for a second.
The right to offend is far more important than the right not to be offended. (Rowan Atkinson)
One of the key indicators of just how well the ruse worked is that 60% of the working public was in one way or another invested in "Wall Street" during the late 1990's. The last time this many of the "regular working public" invested was during the 1920's.
Another, perhaps clearer indicator of how well the ruse worked is looking at just how much money was drained from the US economy (ie: your wallets and mine): $3.3trillion.
It's tragic, really. The technology was in some cases quite good. eBay roars along. Dell digitized their entire business model. And governments around the world have started to adopt Open Source works as the foundation from which to build upon. But greed extracted a huge price on the economy and our ability to reinvest those dollars in continued Research and Development.
he is fairly balanced-being critical of both bush and clinton.
Interesting that he can be balanced when he's being critical of a man who wasn't President during the "roaring nineties" (#41 had little, if anything, to do with the new economy, #43 was elected after the bubble burst).
God invented whiskey so the Irish would not rule the world.
The thing most out-of-work programmers and undergrad students haven't yet grasped is that programming is not an ends of itself. You don't make a decent living as a programmer; you make a decent living using programming to develop something that has utility to someone willing to pay money for it. Simply pronouncing your C++/Java skills and hoping someone gives you a problem to solve doesn't qualify you for an $80k/yr job. People who will succeed in software from here on out will have to be focused on finding innovative things to do (hint: more free software ain't it) and hoping nobody has patented it first.
Unfortunately, most of the low-hanging fruit has been picked and society's need for programmers is much, much less.
tax the rich their fair share
You know, I see this a lot from the leftie types, but none of them ever seems to have the knowledge to be able to put an explicit percentage on exactly what "fair" is to their little minds, or exactly what "rich" is for that matter. Let us take the IRS data for 1999, the newest date Google finds in its top ten links:
A) Do you think "rich" is "the highest 1%"? Well, they earned 19.5% of income, but paid 36.2% of income taxes. What would you think "fair" for that 19.5% is, if different than 36.2%?
B) Do you think "rich" is "the highest 10%"? Well, they earned 44.9% of income, but paid 66.5% of income taxes. What would you think "fair" for that 44.9% is, if different than 66.5%?
C) On the other hand, the bottom 50% of taxpayers earned 13.2% of income, but paid only 4% of income taxes.
Now, precisely what in this profile do you find unfair? What target percentages would satisfy you as being satisfactorily "fair" then?
the list is huge, but here are a few leading contenders: Fast Company, Wired, Henry Blodgett, Mary Meeker, any VC firm, Wall Street, and on and on...
i think the lesson to take from the internet boom/bust is don't get taken for a ride by some body who wants to build a next-generation, new-paradigm ecommerce portal (or a monorail) with other people's money...
that is if optimality was defined by an intention to stimulate the economy and reduce magnitude and druation of the recession.
Well, considering that there wasn't a recession (we never had two consecutive quarters of negative growth, the definition of a recession), and all this talk about "lost jobs" ignores all the new businesses which have been started in the last two years, I'd say he did a pretty good job with what he was handed.
That said, I'm not sure either President deserves any real blame, and not a lot of credit, for the boom and bust of the turn of the century. Clinton did push through some things that helped the Internet and the larger economy grow (though he should've tried to keep things from getting as out of control with regards to wild market valuations), and Bush probably wasn't as proactive as he could have been (even though by the time he took office all of the forces were well in motion). But all-in-all, they both did fairly good jobs with the hands they were respectively dealt.
God invented whiskey so the Irish would not rule the world.
Why do you Libertarian types never
factor that in when you talk about
taxes. You'd think the US Federal
income tax was the only tax paid.
Cripes. The rich benefit the most from
the US government. They can afford to pay for
it.
Man!
Greed and the media. When they were running the "dotcomcrash" financial news it convinced enough people to pull enough money out of the tech sector to make it collapse, so only the large players would survive and buy up all the little guys.
If you look at human nature, I mean really look at it and how it behaves in a system that advertises to them, teaches them how money works, expects them to be greedy and spend money to make money, then turns the whole economy upside down on them we see that this is natural for capitalism.
It will happen over and over and over again until we either decide to value eachother more than money or get rid of money itself. Personally I feel like managing all this money is inefficient in a digital world. But most people don't understand what it means to live in a digital world where a computer connected to the internet can replace a TV, telephone, Postal service, library, newpaper, and many other things for most common uses. And these internet-connected computers can be made smaller than a cellphone or a walkman.
That's why we're in such bad shape. We've got everything, but no incentive to use it because we only wanted the money.
So let's take a look at how "fair" even the most "fair" tax rate, the flat tax, is.
The richest 10% made 44.9% of the income, and thus pay 44.9% of the taxes. The lowest 90% made 54.1% of the income, and thus pay 54.1% of the taxes. This doesn't look fair to your numbers game either.
There are benefits of taxes that the rich are privy to but the poorer are not. Like tourism and promotions budgets that help local businesses. Or government-sponsored research and selective tax breaks on new industries. Infant-industry protection. Or government-sponsored invasions. Take your pick.
Doing the Right Thing should not be preempted by making a buck.
The people who designed the internet technology were not running about with stories of how much money was going to be made, nor were they talking about "revolutionary economies" or other such crap.
The system that evolved was not and is not, and hopefully will not be, designed as a system for the generation of enormous amounts of profit. It is designed to be a communication, publishing, and media-distribution system that enables all comers to take part based on their willingness to learn the techniques.
The internet bubble was not created by techies, it was the creation of assholes from wall street and their MBA bearing offspring who saw the geeks working late on something they did not understand. Being typical assholes, they figured that there must be a lot of money to be made, otherwise why would Poindexter be spending all of his spare time and losing so much sleep over this hobby of his. So they came forward with offers of money, and Poindexter, surprised as he was, accepted the money in return for writing code to implement these poorkly though out and vague ideas.
The MBAs began to get restless during the mid 1990s, wondering when the return on this interweb thing was gonna come rolling in. They began sending their offspring to college for CS degrees, because obviously Poindexter was doing something wrong. He seemed happy whenever his code worked well, but never seemed concerned about the money (why should he be, he was getting paid). The MBAs figured it must be a cultural thing, and seeing that they knew what clothing was in style (and Poindexter did not), and they drove the right SUV (and Poindexter did not), that their own children would be better for running this interweb thing, and they would have to find a way to take it away from Poindexter (because he was obviously not doing it right, as he ghadn't made them their billions like that other Poindexter out in Redmond had). Their children came back from school and began starting internet businesses left and right, they knew how to talk to venture capitalists (as that was their culture) and how to play the media. Their businesses gathered money from investors and they paid themselves (and each other) high salaries until the money ran out.
A few of them, who had somhow discovered a clue by spending tiome with their classmates (in the process discovering their own inner Poindexter), created strong businesses that were based on rather mundane things, like selling fasteners or books, or providing usefull services for free to the public that could be sold a specialized services to companies, such as non-biased searches.
The rest of the children of the MBAs folded their companies, while wiping a crocodile tear from their eye, fired all their Poindexters on short notice, and drowned their sorrows in the huge amounts of money they had scammed from their parents and their parents business partners (because, of course, that was the way of their culture). And they complained about it. Obviously, Poindexter must have done something wrong.
Now the investors, the MBAs, the venture capitolists are all crying "foul! foul! Where are the billions you promised? Why did you not make me even more rich than I am already? There must be something wrong with that internet thingy, and I'm gonna get my congressman to fix it for us."
Poindexter shrugs. His code is working fine. It does exactly what it was intended to do, and given enough time it might possibly be possible for a guy to make a living without being harassed by a bunch of venture capitalists and MBAs wearing the latest ugly suit and driving those ugly road hogs. Meanwhile he'll just sit at his computer, and design yet another application protocol or device that the assholes will finance never understanding that the internet is not designed to make the money people rich.
It is designed to diminish their control.
Read, L