Linking dot.coms to the railways
None of us can avoid the debate about dot.com companies and why they attract so much money when they are not showing any profits; and we can't avoid the shadenfreude when they go bust or otherwise don't do well.
We call them the new economy. What’s interesting is to consider how they compare, give or take 150 years or more, with the old economy.
I am talking about the railway age of the 1830s and 1840s. They were the dot.coms of their day. There are some interesting parallels. Thus, the railway entrepreneurs hit on something they knew was going to be what people wanted. They sold their idea to millions of investors, many of whom lost money.
But they raised their cash and they built their railways, learning their skills, political, technical and financial, on the way. They weren’t always particularly fussy how they did it; indeed some of them went to prison.
But the end result was the railway system that we have today. Of course we constantly grumble about it, but it’s there and part of our national infrastructure, and nobody would wish it away.
Dot.coms are likely to be the same. They too will give rise to failures at the early stage, though let’s hope none of the forerunners go to prison.
But like the original railway builders they believe in what they are doing.
Perhaps the most interesting parallel is the way in which both let the technology challenge change the received ideas of doing things, rather than being dominated by them.
The railway entrepreneurs could have built their skills around the existing highways and transport industry; horses, carriages, post houses and all the like. But they didn’t. Equally the dot.com people could see their ideas as an add-on to traditional delivery of goods or of services. But they don’t. As with the railways, they take the technology first and then came to the product, as opposed to the other way round.
Now this is perhaps not what the textbooks tell you. But it is a way of doing things that frees-up the animal spirits of the entrepreneurs and their perception of the future and its capabilities; and off-loads the received baggage of the people in charge of the existing way of doing things. That is why, incidentally, this is a trade for young people, not the oldies.
Developing the railways was a huge enterprise and involved a great many tears. The same goes for dot.coms. But at the end of the day the new economy will develop just as the old economy did and benefit us all.