Dan Kimerling over at TechCrunch identifies that companies like Google, Six Apart and Plaxo were born during bleak times – but then makes the mistake of drawing a causal connection between their success and the subsequent economic turnaround. As a result, he states the following:
“Given the current economic environment, continued technological innovation
is one of the things that is likely to turn the economy around and help
restore confidence in the health of the world wide economic engine.”
Sorry Dan but you are way off with your conclusion. Saying that great tech innovations lead the economy out of tough times is as illogical as saying terrible tech innovations sitting in the TC death pool are leading the economy into tough times.
THE TRUE MORAL OF THE STORY
The true moral of the story is that – in tough times – people create tools with real utility and real business models. There is neither the patience, nor the money for kids with “cool” ideas (aka DeadPool), so entrepreneurs are forced to get back to the basics in tough times and create technologies that can actually be utilized by people willing to pay for them. They are adopted into the mainstream and flourish as the economy inevitably enters recovery and prosperity.
This only further supports my well documented rants that the last 4 years has seen far too much emphasis on “cool” but utterly useless tools. It is no coincidence – but it is ironic – that the cool phase occurs as VC’s become flush with cash thanks to the success of real technologies born out of tough times.
Unfortunately, the availablity of funds leads to waaayyy too many dumb ideas, which are only accentuated by blogs such as TechCrunch that get caught up in the mania, which only leads to waaayyy more dumb ideas.
SURPRISE !! DUMB IDEAS DON’T LAST
Unfortunately – but inevitably – dumb ideas don’t last. If you need any further proof, just take a look at both the size of the TC Dead Pool and it’s accelerating rate of growth. VC’s get squeezed by the lack of exits and suddenly people in Silicon Valley are shocked at the drop off in VC funding.
TechCrunch itself is an example of this when Dan states the following in his post:
“VC funding, essential for many startups, will not come if VC funds
do not see IPOs occurring because the IPO market is all but non-existent
and corporate buyers cannot go to credit markets in order to fund acquisitions.”
Unlike Dan, however, I won’t make the mistake of creating a causal connection betwen crappy technology innovations and a weakening economy. Crappy technologies suffer in a weak economy, they don’t create a weak economy.
Likewise, great technologies are born out of scarcity and flourish in a growing economy, they don’t create it.
I hate to see the economy in a recession – but at least I can look forward to smart people once again creating great technologies.
Regards,
George