Marc Andreessen was interviewed about Bubbles in today’s New York times. It got me thinking about a core lesson from history: breakthrough technologies impact society in unexpected ways, and generally take 20 years before their true potential is realized.
In late 1994 I had to make the biggest decision in my life: Should I quit my career as a management consultant to start my first internet business? I was learning tons as a consultant, had great mentors, and had a hard time imagining having more fun.
However, since my first lemonade stand, I always felt destined to start companies. In following the growth of the World Wide Web, I felt the time was right to try my hand as a full time entrepreneur. My gut said the magnitude of the web opportunity would more than offset my relative lack of business experience.
My holistic, big picture right brain was ready to make the move, but my analytical left brain still wanted more data. I needed data to squash my hesitation. The problem was little data existed about the World Wide Web. I charted mentions in the press; I charted user growth; I extrapolated future data. But none of them gave insights into the impact of the internet on society. For that I would have to look back into history.
Edmund Burke said, “Those Who Don't Know History, Are Destined To Repeat It.”
I say “Those Who Don't Know History, Are Destined to Not Profit From The Future.”
So I hit the books to study the biggest technological changes of the last 1000 years with an emphasis on the societal impact. My targets: Gutenberg Printing Press, Steam Engine, Electricity, Railroad, Broadcasting, Telegraph, Movies, Telephone, Automobile and the Personal Computer. Research took several weeks, but my view was unobstructed as I was able to stand on the shoulders of giants. Much had been written about the impact of technology on society. Eventually a pattern emerged:
Phase I: People at first underestimated the technology’s potential
Phase II: People then got excited about the potential, but then underestimated how long it would take (The bubble)
Phase III: Technology eventually reached its potential, but only years after the bubble popped
Phase IV: Eventually Society was impacted in even more than expected, and in unexpected ways, usually about one generation later (20 years)
Printing Press, Steam Engine, Electricity, Railroad, Broadcasting, Telegraph, Movies, Telephone, Automobile and the Personal Computer all conform to this pattern. This is not an asset bubble pattern (think Tulips, Silver or Mortgage Backed Securities). It’s a technology bubble pattern. Around 2015 we should expect to enter Phase IV for the internet.
Get Ready! Phase IV is where the second order and unexpected societal impacts occur. The automobile led to suburbization, highways, the drive-in movies, fast food and a change in how you interacted with your community. Electricity lead to the light bulb, reading at night, home appliances, and the change in the role of women in the household.
Reshaping the media industry is entertaining, but the “World Wide Web” is just getting started. The “big” industries are Energy, Finance and Health Care. When the internet, combined with social and mobile, hits those industries look out! Those changes will make CraigsLists, Yahoo and Netscape look like my first lemonade stand.
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