Does all of this seem familiar? It certainly does to me -- and I feel a bit of fool for not noticing it before. Ever since the dotcom bubble popped, we in the tech industry have been awaiting the next boom. Two years ago, when I first returned to writing this column, I confidently predicted that we would see just such a boom right about … now. So where is it? I can assure you that everybody in Silicon Valley has been looking for the next breakout for months. For a while we thought it would be PDAs, then desktop game machines, then the next generation of cellphones, and most recently, the iPod/MP3 breakout. The most imaginative predicted something out-there like nanotech or biochips.
Some of these new businesses have been big, others just fizzled. But none (except perhaps for music downloads) have had that kind of deep impact, culturally transforming, smell-the-Zeitgeist effect of a true technological boom. And yet, even as we have been peering towards the horizon, scanning for the Next Big Thing, it may be peaking right under our feet, right now. The blogosphere is not just a media revolution, but the tech boom of our time.
So why haven't we noticed? Because it came disguised as a cultural trend, not an industry. We've become accustomed to tech booms following the paradigmatic model of minicomputers, microprocessors, calculators, PCs and even iPods. That is, a small number of start-up companies chase a new technology, and in the process develop an important new product. That product, in turn, so perfectly fits the needs of customers that it becomes a phenomenon. The skyrocketing growth of the industry this product creates -- and the huge wealth earned by the pioneering companies -- quickly draws armies of competitors, backed by mountains of venture capital money.
For a brief period, every one of the competitors in this new industry enjoys impressive growth -- and even more impressive valuations. A few manage to go public, making their founders unbelievably rich -- and thus stirring even greater competition. A bubble forms, the market cannot hold that many competitors … and pops, almost overnight killing hundreds of companies and depositing thousands of people on the street. The stock markets slump, awaiting the next boom.
That's the standard model, and you can see it working through the usual cycle right now in MP3 players. But what if it isn't the only model? After all, the other great trend of the last half-century is the increasing democratization of high-tech entrepreneurship. You had to be physicist to start a semiconductor company in the 1950s, a technologist to build a computer company in the 1960s, and a marketing genius to start a PC company in the 1970s. What made the dot-com boom of the Roaring '90s interesting was that, for the first time, you didn't even have to be a businessperson to start a Web content company. The dot-com boom was run by people who had likely never met a payroll, had no real product, and little prospect of ever seeing profits. And if the shakeout was bloody, with perhaps a 95 percent fatality rate, in retrospect we have to say that it worked. The dot-com world is bigger than ever, producing immense revenues and profits, and filled with billion-dollar companies.