Monaco Media Forum: Irrational Exuberance 2.0? Not really.

In January 2005, I went to the Web+10 conference at Poynter in Florida (for the full monty, go here for the audio). Poynter’s Howard Finberg asked what our fears were now 10 years into this real-time experiment of online journalism. I said: Irrational Exuberance 2.0.

Former Fed chairman Alan Greenspan used the term back in the 1990s. He first used the term in 1996, but I remember it being thrown around in the boom. As the Wikipedia entry says:

It had become a catch phrase of the boom to such an extent that, during the economic recession that followed the stock market collapse of 2000, bumper stickers reading “I want to be irrationally exuberant again” were sighted in Silicon Valley and elsewhere.

As I asked on the Media Guardian’s blog, Organ Grinder: Is GooTube the sign of another internet bubble? I have a personal interest in this. I covered the boom for the BBC, and I remember in the late 1990s, everyone wondered why I didn’t head off across the Potomac to the Dulles tech corridor and AOL to make my millions or better yet to Silicon Valley. I didn’t because I could see the handwriting on the wall in 1999. It was more than the damn sock puppet. I remember when companies launched a round of funding simply to pay for multi-million Super Bowl ads. I knew that there were speculators tacking on to their name simply to float on the market. I knew there was something of the tulip craze to it, and I knew that by 1999, most of the companies that were launching were derivative or trying to be the first entrant in a market without understanding the market they were entering.

I knew that stability at the BBC was worth more in the long run than ephemeral paper millions that would be gone tomorrow in the chorus of ‘Sell, sell, sell’ on the trading floors of Wall Street. However, along with the cyber-snake-oil-salesmen in the late 1990s, the crash wiped out a lot of good companies and a lot of good people and slowed, or in some cases, stopped online news development. I often say that after the crash, of the people who I knew in online journalism, only a fraction – possibly less than 10% – still were working online.

And it boiled my blood that I heard the odd news exec say after the crash: See we told you the internet was just a fad. And even if they didn’t say it, they decimated their online news operations. I remember in 2002, after an interview that I produced for the BBC with Peter Jennings about 9/11 how he led us on a tour of their online operations. He was honest and heartfelt in his respect for these online journalists at ABC and said ‘The Mouse’, ABC’s new owners Disney, were downsizing the department. I don’t really want to see that again.

It heartened me today to hear venture capitalist Pip Coburn put the current wave of digital activity in perspective. Google paid $1.65 million in an all stock deal for YouTube. But back in the boom, network equipment maker JDS Uniphase paid $41 billion for an optical networking company. They later had to write-off $38 billion of the deal. He says that he’s much more excited about what’s going on now. “Real value is being created,” he said.

And I’d have to agree with him. Internet innnovation is far broader and more distributed than it was. That doesn’t mean that we’re in a ‘New Economy’ where the old rules don’t apply. We’ll have other downturns, other waves where speculation outpaces innovation and other crashes, but no one will ever write the internet off as a fad again.

Related Links: Pip Coburn’s excellent post from 2004, The Internet After The Crisis. Fascinating look back and forward.

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