I have seen the future and yes, Virginia, it does have a dot in it. It even has a com.
The only market view that is even more extraordinary than the irrational exuberance over the pioneer dot comers during 1999 and early 2000 is the disdain with which Net companies are now held. But there is a difference between the two extreme views. The early dot excitement carried less power to change reality then the new pessimism born of the dot crash.
Unfounded optimism can create a bubble, but the bubble is destined to pop from the weight of its own unreality. Gloom, however, can deliver a deep and troublesome reality.
This works the same in the overall economy. When we enjoy an economic boom, it is always understructured with favorable trends such as productivity gains, low borrowing rates or low taxation. Consumer confidence can rev these bright elements, but public optimism can't fuel a boom. A bust, however, can be powered by dark expectations. But not forever. A good idea is ultimately irrepressible, and Internet business is a darn good idea.
At a B2B e-market conference, Michael Levin, CEO of e-Steel was asked by a member of the audience whether he now regrets putting the "e" in this company's name. The implication, of course, is that that pesky "e" ties him to the poor reputation of dot com start-ups. Levin laughed, saying, "It could have been worse. We originally considered calling ourselves e-Steel.com."
In time, the surviving Net-based companies will regain respect and acquire a sterling reputation. But they will have to earn it back. The trouble in River City came from bad business propositions, and the venture capitalists deserve some of the blame. They should have known better. It's much harder to blame the twenty-somethings who won multi-million dollar backing. They did nothing more than come up with cool ideas. The VCs were drunk with greed and bought into the peculiar belief that a group of college dropouts had somehow gained some secret knowledge that could turn cyber-communities into gold.
In the hands of bold, experienced executives, however, the Internet is becoming a powerful tool for productivity gains, customer service, supply chain efficiencies, collaborative design, global reach, mass customization and widely varied product selection. Each one of these items alone has the leverage to deliver massive economic gains when it is implemented across all industries. What we may see in the future is all of these Internet-based functions implemented across industries globally.
The full effect of this business transformation could take ten to twenty years, maybe more. But those will be fun years, with productivity gains giving our economy a backbone stronger than we've ever seen. Sure, we'll see stumbles along the way as the traditional economy adopts e-business. It's not a simple change. Even with the great promise of Internet connectivity, analysts look over the shoulder of major companies such as GM and whisper, "Aren't you spending a bit much on IT?"
And then there there's the corporate buyers who toy with Net-buying, but won't take the full leap. These buyers are only a few years from retirement and they're not about to risk their pensions on some new technology that might take them down a blind alley.
Do you know what it means when a buyer makes a big mistake on a new purchasing strategy? Imagine an assembly line shutting down because a few barrels of bolts didn't make it from Taiwan. What do you tell your boss when he sends two thousand workers home. You don't tell him anything because you're fired and he doesn't want to hear about how you saved five percent on the bolts because you used the Internet.
But that problem is temporary. Soon enough all of the controls will be in place to make sure the suppliers in the Net selection are prequalified to deliver, and the buyer's boss will begin asking, "Why aren't you using the Net? We can't afford to buy over the phone and fax."