Youth is intoxicating. So is energy and enthusiasm. People who have been there, done that (cough investors) can become jaded, so when new energy hits, it can be invigorating and truth be told, there was a long dry spell after the dotcom era bubble burst. When the Social Web hit, investors saw a renewed energy and potential: the pipes might not have been quite ready for the claims that the early internet pioneers were espousing, but now they were and it was the wild west, all over again. Just like the first time around.
That’s not all that seems to have come ‘round once more. According to The Guardian, everything old is new again (Has the tech bubble peaked? Signs that the startup boom may be fizzling Startups are beginning to run out of money and investors are becoming more discerning. How does this compare to the time leading up to the dotcom crash?). It’s a must-read.
According to The Guardian, here’s how they compare:
“I got here in 97 and it was like it is now – incredibly packed, impossible to commute, high apartment costs,” said Mark Dinan, a software recruiter based in the Bay Area, who keeps track of companies’ hirings and firings.
“We’re seeing overvalued companies, funded based on hopes and dreams and aspirations and not good business models. Companies counting users and eyeballs rather than profits. There are a lot of similarities.”
Another echo of the dotcom era is what Dinan calls “bad habits” such as the allegations of sexual harassment at Uber and human resources startup Zenefits cheating on mandatory compliance training.
“There was a lot of crazy behaviour in the late 1990s, including sexual harassment. It’s a result of there not being discipline,” Dinan said.
Then again, one of the mantras of Web 2.0 is to move fast and break things, even if that includes the law. Considering Uber and Airbnb in many cases/localities, it seems more or less de rigueur.
The dotcom days were heady, crazy days, indeed, but there were companies that did survive: Google, Amazon, PayPal and Salesforce, to name a few, are all still standing – and profitable. Razorfish, one of the early New York-based successes and now part of the Publicis Groupe, is one of the world’s largest interactive agencies.
But no one ever mentions the major difference between the dotcom generation and the current one, or maybe it’s that no one wants to see the forest through the trees: Namely, that Gen X was the inspiration and the workforce for the first iteration and for Web 2.0, it’s the Millenials. Gen X were the latchkey kids who had to learn self-reliance early on, and who actually had a work ethic. The Millenials (not all of them; it might be time to call the group who grabs all the press and attention the Entitled Millenials, meaning, the ones who were raised in the metropolitan areas/elite enclaves on the West and East Coasts, and maybe it’s high time we distinguishing between the Millenials – the generation at large – and the WEEllennials: the West and East Coast Entitled subset – the I want what I want when I want it (which means now) generation who lack a true work ethic (Waiting for Success: The Most Important Career Advice No One Talks About).
In the dotcom era, The New Economy became the catch phrase for ‘no business model’ and such was the order of the day, so it became the new normal. In the Social/Interoperability Era, it’s culture fit, work/life balance, social responsibility – and again, there is a that lack of business models – that seem to have superseded common sense. The digital natives of the new era are no more blessed with special powers or prescience than were the digital creators of the first era. Maybe less so, considering that the first generation of dotcom entrepreneurs literally had to make it up as they went along. There was neither a history nor a playbook to follow.
Then there’s FOMO to factor in: the investors who felt that they had missed out on the ride up before the dotcom bubble burst and weren’t going to be caught unawares again, and who felt that these digital natives were the logical successors, and a generation who had learned from the errors of the previous generation, who would lead them to the promised land.
The laws of economics are still the laws of economics, then and now: Do not pass go. Do not collect $200B dollars.
Dear WEEllenials:. Failure is not af badge of honor. And there is no Participation Award.
When we read about yet another fledgling company getting funded based on an idea/product that we’ve already seen out in the market – perhaps albeit without the special sauce apparent only to the founders and the investors who wrote the check(s) – it’s usually followed by a post-mortem some months or perhaps a year or two later, depending on when the money runs out, on why the company failed.
Time for some perspective. The plates are shifting, and it’s not the same world that it was in the dotcom days. Markets are volatile, yet they do offer instant liquidity. There are power shifts going on in the US, which is causing a lot of uncertainty. Other countries have major economic and people issues. And investors are overwhelmed by so many startups building not so interesting / not so scalable businesses: B2C businesses with tiny, if any, legs.
Hype no longer sells.
The problem is, we’re already seeing signs of the downturn (where are the exits? The IPOs, Snap aside) and it will no doubt be more emotionally devastating to the tech community at large when cometh this current cycle’s demise, as funding gets more and more scarce. For the first time in their lives, for this generation, it’s going to get real. The current crop is not as robust or resilient as was the last crop, and even back then, there were great many meltdowns. People were in a daze and did think the government was going to come in and save them. Didn’t happen. Won’t happen.
As Shelley Palmer said, albeit referring to the IoT, It’s the Wild West, it’s getting wilder by the day, and there ain’t no sheriff. It applies to this cycle in all of its iterations and creations. The fact is that we seemed to have forgotten the lessons of the dotcom era, or somehow decided that they simply didn’t seem to matter. And that’s what truly takes the prize. Onward and forward.
#DigitalDownturn, #Millenials, #ParticipationAward