They're at it again. Proclaiming the end of everything but themselves. Trying to overthrow everything that preceded them.
A look at a recent television commercial shows a bunch of old men at a dusty board meeting acting frumpish because they are reluctant to change with the times. The message is that the old men that manage the company are behind the times. The old men have always sold what they want the way they want regardless of what their customers wish. And by damn, the old men are going to continue running the company that way come hell or high water.
In the background, the wise, new and agile e-commerce cadre of MBAs is just waiting to put the old brick-and-mortar frumpies out of business.
As the commercial fades to black, the old company and the old men die, slumping to the table into dust. The message: the new is good and right; the old is dumb and worn out, bound to fail. Have we heard this all somewhere before? Are we to believe what we see and hear?
Is it true that the new is good and the old is bad? Is it true that the new will overthrow the old and completely revolutionize the world? What has been the truth about the clash of old and new in other arenas in another day and age?
One day radio came along and wiped out vaudeville, or so we were told. But the people that were stars in vaudeville went on to become stars in radio. The entertainment industry continued, barely skipping a beat.
Then movies came along and wiped out radio, or at least the theory was that movies were supposed to wipe out radio. Tell Rush Limbaugh that radio is dead. Next, TV came along. TV sure did wipe out the movies. Tom Cruise, Julia Roberts and Brad Pitt look really upset. And videotapes, of course, have wiped out television.
With every new advance in technology, there is always this fear that the new technology will wipe out the previous technologies. But they never do.
When you look at the progression of competing and replacement technologies over time, it seems almost silly to think any one advance in technology will "wipe out" the preceding generation of technology. New technologies find their place, but wiping out the old technologies that preceded them is almost unheard of. The stars and talent that have mastered one medium have little trouble transferring that talent to another medium.
For sure, new advances in technology change things. Usually technology broadens the possibilities of consumption, but this does not negate the talent of the stars of a particular medium nor obliterate other forms of consumption. Broadening the possibilities of consumption merely open up the range over which the stars of today can be the even more successful stars of tomorrow. The stars and talent of one technology have a way of becoming the even more successful stars and talent of the next technology. The new technology complements not replaces the technology that is already in place.
In today's world, to say that the new wave of technology the Internet is going to wipe out everything that came before it is simply preposterous. Yet if you believe Wall Street, the venture capital community and the media hype, that is exactly the message that is being given and is being believed by a whole host of people.
Now let's put this phenomenon into the context of information processing technology. Does anyone remember assembly language? If you want to do something really challenging an exercise in mental gymnastics sit down and program your personal computer in assembler. Just a few hours of this activity will convince you of the difficulty that the early programmers had. Then along came COBOL which was supposed to erase assembler programming. But was assembler really erased? Well, not quite. You don't see assembler on a widespread basis, but it is there. There are some crucial bits of code that simply can't be produced and executed any other way, and those bits of code are being written today in assembler.
Then came 4GL technology. We were promised a 1000 percent increase in productivity and that we would not need COBOL any more. Certainly 4GL technology opened doors that would not have been opened otherwise, but do we still have COBOL programmers being productively occupied? You bet we do. Ask all of the people who madly rushed through Y2K if COBOL is still around.
Then the database came along, and we were told that it would replace sequential media such as tape storage. Sequential storage died when disks came along, didn't it? Tell StorageTek and a few other tape vendors that tape is dead, especially with the need for near-line storage in the world of data warehouses. If there is one promising technology above all others when it comes to the management of the volumes of data found in data warehousing, it is near-line storage.
The relational database came along and replaced everything before it. The relational database zealots proudly predicted the demise of all other technologies in favor of theirs. If that is the case, why does IBM still receive billions of dollars in license revenue for nonrelational technology? IBM's DB2 was reputedly going to replace IMS. Then why are there thousands and thousands of active IMS licenses today, twenty years after the advent of DB2?
Now we hear that e-commerce and e- business are the wave of the future. Entire companies are changing their strategy, betting on anything starting with "e." Are we just seeing a bunch of lemmings rushing to the sea? Haven't we seen this before? Are the people who were not successful prior to e-commerce going to be successful now that e- commerce is here? Conversely, are the companies and products that were successful prior to e-commerce going to be unsuccessful just because of the arrival of e-commerce? Think about that for a moment.
History of new technologies arriving on the scene would certainly suggest that e-commerce and e-business are not about to replace anything, regardless of what Wall Street thinks. Just because we have e-commerce and e-business does not mean by a long shot that we will be throwing away everything that has preceded them. Nor does the advent of e-commerce and e-business mean that everyone and everything preceding them was dumb and wrong. The message given by the TV commercial showing a bunch of old men running the company and dying is simply not true.
Indeed, e-commerce and e-business are very important and are, undoubtedly, changing the world. But they are not changing the world in the destructive, revolutionary manner suggested by the e-commerce and e-business zealots. Instead e-commerce and e-business are a welcome and productive addition to the world of technology and business. E-commerce and e-business have a complementary role to play, enhancing the other capabilities of the corporation. To think that e-commerce and e-business are going to replace everything (or anything!) that preceded them is simply incorrect.
Does all of this matter? It matters to the investment community because Wall Street simply doesn't get it. It matters to the venture capital community because they don't get it either. Does anyone really believe that all of the high-flying stocks out there today are going to survive, much less flourish? When old- fashioned financial measurements are applied (and that day will come), many of the stocks that seem wonderful today for $200 a share will have a hard time finding a buyer at $20 a share.
Eventually Wall Street's hard-nosed investors will demand: show me the revenue, show me the profit, show me the market share. Until you can do that, you are simply a speculation maybe a sophisticated speculation, but still a speculation and all speculations carry risk.
Recently a friend of mine's company was sold in Silicon Valley for $90 million dollars. The company had no product. The company had no customers. The company had no revenue. And someone paid $90 million dollars for it! This type of investment mentality is sowing seeds that are going to reap bitter dissension. It is only a matter of time. Does anyone remember Holland and tulip bulbs?
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