I’ve just wobbled home from Wobble 2.0, the first of the new Chinwag Live event series. The big question on every one’s lips was, of course, whether we’re in a new economic bubble.
Mike Butcher has seen more booms than Basil Brush thanks to his time spent at NMA and the Industry Standard. Chairing the panel, he recalled the web design bubble, the ISP boom, the portal boom and the print media booms of the late nineties. He’s got a terrible suspicion that he might be the unwitting star in some sort of techie version of Groundhog Day.
Dave Nicholson of Zopa pointed out the lack of any IPO fever or day-trading in Internet stocks, key characteristics of the dotbomb era. He also explained that he thought that being first to market with its e-bay for loans scheme would protect his business from being ripped off by copycats. Building a community around the service was, he thought, helping to “leverage network effects” in a web 2.0ish way.
Matteo Berlucchi of Skinkers was next up. The company makes most of those downloadable news-headlines-on-your-desktop applications for media companies, it seems. There’s also a rather-cool-sounding P2P distribution service on the cards that will adapt to whatever ‘receiver’ (dedicated app, email, RSS, SMS, etc.) that you’re using. He’s a bit more sceptical and pointed out that mergers and acquisitions appeared to be the new IPO fever.
Ryan Carson was more buoyant again and pointed to the low cost of launching a decent product. His own offering, Dropsend, makes him £70K a year, but that isn’t enough to make his company of five people profitable, so its main business remains organising large tech events. The gist of his position was that if you’ve got a good idea, just do it.
The final panellist was Andrew Orlowski of the Register. One of the best-known Web 2.0 sceptics, Orlowski was arguably the most impressive speaker. His main point was that “the big returns on investment are going to come from solving the really big problems that we face — and that isn’t what Web 2.0 is doing.” It’s not an economic bubble — there’s been $500mn invested in Web 2.0 companies, apparently, which isn’t all that. Orlowski argued that we’re in a rhetorical bubble. Infrastructure people just aren’t sold on the idea, he suggested, and ultimately Web 2.0 is “presentation layer people trying to solve infrastructure problems.” Why has this idea taken such hold? Because there’s so very little trust in the media, the government or big business. Web 2.0 offers an off-the-shelf ideology that promises hope through radical trust, or dogma as Orlowski sees it. Infrastructure guys are not big fans of radical trust, as you may have noticed the last time you tried to do anything sexy with your company internet connection.
There’s one school of thought that says that simply asking these questions proves we’re not in a bubble. That the caution and scepticism that exists around this phase means that we’re in no danger of over-inflating our egos about its chances of success. In that case, though, the fact that we’ve been talking about global warming for twenty years would mean that it won’t ever happen. I’ve been buying English strawberries on the way to work recently which suggests a flaw in that logic.
As per usual, the ‘after-show party’ was as enlightening as the formal part of the evening. I was especially pleased to catch up with Helen Keegan of Beep Marketing who has almost completely sold me on the idea that it will be mobile phones not web browsers where the really big technology revolution happens. Why? Because they’ve got mobiles in Africa, India and China, not web browsers. OLPC doesn’t seem like it’s going to change that any time very soon. Ultimately, what the 100,000-odd people who read Techcrunch etc. do with their browsers is going to look pretty piddly compared to, say, the Chinese using their mobiles to get the latest news. Mobile technologies are also easily monetised and people are used to the idea of paying for mobile stuff in a way people on the web are resistant to.
Helen’s also keen on the idea of mobile TV. I once said I’d never use a mobile phone so I won’t make any sweeping generalisations about this, but I’m not really sold. I once bought a mobile TV — one of those 2-inch screen jobs — and used it once. I never see anyone else using them either, so I can only conclude that people don’t really want to do that. But then again, I prefer writing to television anyway, so I’m probably prejudiced.
Going to stuff, so you don’t have to.
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One panelist seems to feel that if we are questioning whether we are in a bubble that we cannot be in one. But, didn’t we just leave a huge dotcom boom and bust era? And aren’t investors wary of the true value of any new web-based endeavor (be the Web2.0 or not)? I don’t buy the argument that if we question whether we are in a bubble that we cannot be in one. But, the question remains, “are we in a bubble?”
Well, what are the dynamics of a bubble? Are bubbles only found in web-based environments? Are there other bubbles that can inform us? First, let’s look at the dotcom bubble. What made it fall? Was it the proliferation of websites? Was it that commerce was not being done on the web? No, it was that investors made imprudent decisions on websites of dubious value. The ROI was not well evaluated and, in many cases, never delivered. So, the dotcom bubble was caused by investors…not by those who were creating websites.
Recently, I was reading about the speculative oil market. Oil reached over $84 per barrel. Many bought at that frenzied rate and now are paying for it as the value of oil now has plummeted to $54 a barrel. Speculation is the culprit.
Is that happening in the Web 2.0 world? TechCrunch writes about its “DeadPool” of companies (websites) that got funded and fizzled. For each of those companies, they were on a bubble. But, are we seeing an increased rate in failures. I think not.
In the end, a bubble is precipitated by a rate increase in failures. I am not seeing that right now.
Historically, there was the Dutch tulip bulb bubble and the South Sea bubble. Both are often cited as analogous to the dotcom bubble. In both cases, something that wasn’t worth very much became valued very highly because of hype.
In many cases, I have to blame greed for these latter-day bubbles such as the oil boom & bust you cite. Unfortunately, though, we’re not necessarily, individually, in control of deciding to fall for these things. Who’s to say, for example, whether my pension fund or savings trust decided to buy oil at $84 or Google stocks at a similar value?
Back to the historical examples. Isn’t it interesting that they’re both from the C17th/C18th when the entrepreneurial class was born? And that there are no more recent examples? The re-emergence of entrepreneurialism as the new rock’n’roll over the last ten years is intriguigingly analogous.
I’m sure if you talk to Trump, he would say that entrepreneurialism is alive and breathing, but what is conceived as entrepreneurialism by him is simple “owning a business.” And although there is considerable risk in any venture, only in the last few years have we begun to see VC capital entering the software field so vigorously. And it seems to mirror later 17th and 18th centuries…doesn’t it?
I think there is an important point to consider here. We now have the ‘digital natives’ who are essentially people who grew up within the web era. (Born from 1984 — people say).
Whilst you may not envision yourself using a video mobile phone much of the younger will be likely to adopt this or other new technologies without hesitation. So it could just be a matter of time?
Rosie — you may well be right. I am old and worn and probably ‘don’t get it’.
OTOH, I’m not sure age has anything to do with this. As I understand it, journalism students are among the top sceptics about citizen journalism, not the ‘old timers’ you might expect.
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