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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.
I just picked up a package from the Post Office this morning. I placed the order on the internet and when it arrived the From address was about 10 miles from where I live, I drive past it twice every day and ride my bicycle past it on Saturdays and Sundays. I paid shipping and waited, when I could have just nipped in and got the item I wanted right away. Truly, I've taken the internet for granted. Anywhere to order from might as well be another country, for the way I simply point and click.
A feeling of having made the same mistake before: Deja Foobar
I've learned that Slashdot provides a lot of resources for procrastinating at work, reading articles about how much money is lost because employees surf the web at work...while surfing the web at work.
And knowing's half the battle!
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.
strangely enough, the titles of the magazines devoted to the internet boom: "fast company", "red herring", "wired": these were cautionary roadsigns, titles picked perhaps unconsciously as signposts of what we were all really dealing with
;-P
we were all... "slashdotted"
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
for further reading i would suggest: the roaring nineties written by josepth stiglitz. stiglitz, who won the nobel prize in economics, was part of the clinton administration. i just finished it and i think it gives a great overview of what went wrong and what went right with the "new economy". he is fairly balanced-being critical of both bush and clinton. also, you dont have to be an economist to appreciate the arguments presented in this text.
-- john
Thanks, but we could really have used that nugget of wisdom in '97 :-P
of course Al Gore invented the Internet. it does, after all, run on al-gore-ithms.
The One Rule Of Chess You'll Ever Need: Don't play someone who carries a kit in their bookbag.
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.
made technology startups mainstream news; focused public awareness and attention on the internet and what it can allow you to do. All of these are good things. It showed people what would work and what wouldn't. Sometimes in a stark and brutal fashion. I can't say it was an era that should have never happened, because sometime, somewhere, you need to make that leap of faith from merely thinking about a business to actually starting one. The new economy gave lots of budding entrepreneurs the chance to get their feet wet, chances that they may not have gotten before..Google came from the dotcom era, didn't it?
The best thing to come out of the whole "new economy" for me was the experience that I got.. Never jump into a project without a cold blooded analysis of risk vs reward, never go into a company because they "look" exciting; check the fundamental things out first. Feather your nest, because you never know if things could change for the worse tomorrow. In short, be conservative.
All the same, I wish I had graduated just a couple of years sooner (1997-1998) because regardless of competency or suitability, being called an "architect" fresh out of college gives you experience at that level that would otherwise take years to achieve.. Good times, good times.
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)
Anyone ever heard of that company? I used to work for them back in 1998-2000. It was supposed to be a huge (as Amazon) online store where people could by gifts chosen from our catalog that had thousands of gift items from jewelry (high end stuff) to home and garden, business, kids gifts, kitchen and food items to flowers. There was a gift reminder service (a personal event calendar where you enter event b-day's, etc.) that would remind you to buy a gift for the scheduled event, it would even provide a few suggestions based on info you provided.
The only problem was that the owners allegedly sold private shares of stock illegally. (A court Minnesota ruled against the company is several lawsuits brought by shareholders). The bankruptcy still lingers on. The thousands of shares I received for being an employee are worthless. My belief now is that the owner never intended to make money or operate a successful business. All he talked about was 'going public' and how rich we (he) were going to be.
The "New Economy' taught me a lot. After working to two other companies with the same business model I now work for an 'Old Economy' business that actually believes in making a profit, serving it customers and taking care of it employees. There is no IPO in sight for this company and that's fine with me.
I'll take a steady paycheck today instead of the promise of stock pay offs tomorrow.
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.
Really? Judge for yourself...
Nothing beats the 17th century tulipmania . The power of human greed is always amazing.
Save the bandwidth. Don't use sigs!
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.
This is one of those flat-out lies that won't die. If those pinheads had done even the least bit of fact-checking they would have found that this canard was the creation of RNC spin-meisters. The curious can check out these links:
i ns /
6 40 .html
a mp aigns/wh2000/stories/gore032199.htm
http://www.firstmonday.dk/issues/issue5_10/wigg
http://www.theregister.co.uk/content/archive/13
http://www.washingtonpost.com/wp-srv/politics/c
and there are many, many more.
FWIW, we actually get the dead-tree edition of Fast Company magazine (don't ask why, it's a long story) and it's just as slick and empty as any of the old Dot-Com business plans. These people are just a waste of ink and pulp.
... is that self employment is the safest way to build a career. Why? The fundamental unit of trust is another person, not another company. As self-employed, I've insulated myself from most, if not all, of the stupid crap that companies do. While I have friends who have been laid off and rehired several times, I'm now for the first time confident in my financial future because I have a list of clients who all really need my services. They now trust me to get the work done. I trust them to pay on time. And that (to me) is worth more than a fat 401k because in ten years my work will be inflation-adjusted and grows with my clients (all of whom have been selected in part because they are likely to grow and already have a good pattern of it.)
And when I get ready to hire? The number one thing I'll be looking for on those resumes is a history of self-reliance and individual responsibility. There are a lot of professional committee-manipulators out there who like their comfortable BigCorp positions, and good for them. I'm confident that in twenty years, when we both look back and to see where we stand, my contributions to the world will be both worthwhile and significant.
Really, it all boils down to trust. That's what underlies the economic viability of open source: you're dealing with people and standardized network protocols and not organizational entities or proprietary lockin.
http://tinyurl.com/4ny52
Interesting topic, though I would characterize Fast Company as the "Cosmo" of tech/business publications. I found some of the articles non-researched, ill-conceived and sophmoric. In one section Fast Company continues to propagate the myth that Al Gore claimed he 'invented the Internet'.
I was one of the folks who stood around scratching his head at the explosion of IPOs for "dot coms" that had no legs to stand on. Why the imposion occurred shouldn't have surprised anyone who was paying attention, but it played on many peoples' sense of greed at the expense of their common sense.
I was one of the people who was there in the early days with technology and services that were way ahead of their time. OTOH, I was one of those that didn't run out, sign up a bunch of pimply-faced MBAs for a management team and then rush to do an IPO. Today, my company is far from the largest, but we're very stable and have a solid client base. I don't have a personal helocopter, but I did get my small slice of the dot-com pie when I sold a domain I registered in 1994 for an insane amount of money. That was exciting and depressing at the same time. It wasn't what I ever imagined would be one of the big payoffs relative to what we were doing. I suspect there may have been at least a few other companies who really wanted to build an honest solid net-based business model, that were overshadowed by the parade of spineless, over-hyped dot-coms run by people who perhaps a month before were selling life insurance.
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...
For example, there was (and still is) clear preferrential allocation of shares, thereby allowing only a select few to gain the benefits of an IPO. What we need is non-preferrential allocation of shares, akin to what Bill Hambrecht is doing with the OpenIPO system.
Nonetheless, the (historical) "new economy" was a lot more riskier than the "old economy", not less. There is a lot more reliance on innovation and high-risk investments to drive growth, which is great when the innovations work out in the long run. However, when big gambles, such as the dotcoms, fail to pay off (eg: no revenues, or costs exceeding profits), then the whole economy suffers.
This is likely the largest mistake that investors made. They failed to understand the high-volatility nature of the "new economy", and took far greater risks than they should. They failed to realize that by investing in new IPO's, they were effectively taking the same risks that venture capitalists do.
You don't even need to mention the Internet in this kind of thinking. In general, there is no magic in business. If you think there is, you don't know what's really going on.
Avg Investor: "But that's where the money was!"
Exactly. That's where the money was. It didn't seem to stick in many places, not even in this hemisphere.
I'm still in business. I started building content-rich websites in 1996.
/. can claim the same kind of (limited) success. Nevertheless, my accountant once called me a "survivor" and it always astonished me how people would plunge headlong into the next new thing without thinking about their "survivial" at all?
1. I saw that "information" on the web is still just "information". I'm a librarian so I knew I could do something with it.
2. I hired sharp, 20-something MLIS grads, promised them that they wouldn't get rich but that they might get to do something interesting, and told them, "throw out the rules you learned in Library School, but keep all the concepts."
3. I tried *very hard* not to spend more than I brought in in a given year and we usually succeeded.
4. I never got rich but I'm still paying the mortgage on my house and liking (for the most part) what I'm doing.
5. We constantly looked for new and better ways of doing our stuff but *never* through out the previous iteration if it seemed to still do the job.
How I did this shouldn't be a secret and I know lots of others on
dcobbler - www.digitalcobbler.com
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.
Worked for a CEO who spent most of his time bashing Microsoft, instead of running a business. He claimed to be a victim of Microsoft's evil business practices. He ridiculed other dot coms for being mere hypes. In the end, fake business, accounting scandal, CFO bailed right before the fallout (Fastow?!), COO fired and under FBI investigation (scapegoat?!), company collapsed, $400 million wasted, CEO ousted. The ex-CEO, $30 million dollor richer for running a company into ground, is still bashing Microsoft, at least this time he can't blame Microsoft for his business failure. Lesson: a lot of anti-Microsoft heros are human scums.