There’s been a lot of tongue wagging about social media being another bubble. But just like we saw in 2001, critics are taking the wrong lesson from history.
I remember picking up the landmark “Burn Baby Burn” cover story in Barron’s at a Wall Street newsstand in June 2000. It listed the dates that hundreds of dot-coms would go broke given their spending rates. I didn’t know much about the markets, but I knew that email — which my company, Mail.com, sold — couldn’t go away. Like our ancestors who mastered fire, they’d never give up its life-changing benefits.
Once the 2001 recession set in, cynics pointed to financial failures of dot-coms as proof that the outlandish claims about the net’s impact were false. Today, we know the change that those technologies brought were under – not over – stated.
Now, as social media reaches critical mass, critics are throwing out the “B-word” again. They point to how Facebook, Twitter and Foursquare don’t have business models. As if the status update, “sharethis” function and crowdsourced rankings will ever be given up! The companies that run them may change. The business models supporting them may evolve. But their value won’t go away even if their inventors do.
To those critics who still don’t see the social forest for the bubble trees, I invite you to turn to another chapter of history:
It’s 19th century. Investors are going wild about a new technology called the “railroad.” The press fawns over the corporate titans building tracks Westward. Everyone knows life will never be the same again. True, the railroad stock bubble will soon burst on Wall Street.
But in town after town, across border after border, people are heeding the irrevocable call: “ALL ABOARD!”
