Remember 1999/2000? Well those of us old enough to have been in the industry back then sure do. Anything with a dotcom was considered gold dust. The World was never going to be the same, and in some ways that was true. The interet has changed things for ever, and in many ways for the better. Sadly somethings remained the same. Not disimilar to goldfish, it appears investors have limited memory capacity as well.
Say hello to the App (AKA, Dotcom 2), and with it we are about to repeat the same mistakes that were made a decade ago. The dotcom era apparently brought with it a new set of investor metrics, which many of us had hoped had gone the way of the dinorsaur. Earnings, we were told, were meaningless, value investing was no longer valid, Buffet was out of step, the future was all about growth…… a new term entered the dictionary, Monetization……..
I should probably confess at this point, I’m turning 40 this year. I understand that as a middle aged male I’m out of step with many things in popular culture, with the exception of perhaps technology. (I admit, I’m a geek at heart). Despite this evident handicap, I have had some moderate success in business. I’ve built an online company over a 14 year period which has grown each year since inception. We have been profitable (we will return to this point in a moment) each year of trading, and remain to this day debt free. We have seen and weathered two recessions and adapted to a rapidly changing industry. Yes some of this can be considered fortune, but the bulk is down to strong leadership, great strategy and a consistent, talented, loyal team.
I know we are not alone, I know there are thousands of businesses out there with similar success stories, some with incredible achievements. So when I speak now, I speak not only for my own business, but for the thousands of others without the time or inclination to speak for themselves.
Not all businesses are created equal! We’ve already established that I’m getting on in years…..I’m also old fashioned when it comes to free enterprise. I believe that to be considered a business you need REVENUE, more importantly you need to realise a PROFIT. This might not be that surprising an opinion to those of you outside the world of technology, but in the tech bubble I occupy, it seems im very much in the minority. Today, just as i witnessed back in 1999, I’m told all you need to be considered to have a business is launch an app (back then it was of course a website). If it gets really popular (stop me if any of this sounds at all familiar), then that means you are a growing business. In fact that means you are worth a fortune to potential investors, who will clamour over each other to invest (theres no need for me to write about facebooks latest valuation here, suffice it to say, they actually have a director of monetization!). These speculators, sorry “investors” will come in all shapes and sizes. Some will even have sprouted wings and self-titled themselves angels. They will explain that the last 10 years of internet businesses are now out of step with the changing world, that social is everything, that if youre not mobile, then you will be dead in the water. Sure you might make money now, but thats not going to last.
The future (I’m told) is all about social, apps, mobile, clouds (another rant altogether) and most importantly “users”. Those of us with actual businesses (remember I define this as paying taxes after providing paid goods or services) refer to our users slightly differently (for good reason) we call them customers. A user you must understand is a “future customer”, or so we are lead to believe.
Speaking for the silent tech minority out there, i dont buy any of it! More accurately, neither, in most cases, do the “users”….
So where does this all lead? I want us us to come up with a new designation for groups or individuals who produce a service or product, give it away for free in the hope of future revenue. I’m actually being serious now. I think speculators/investors need protecting from themselves. There should be a clear distinction between what is a real business (however boring and mundane that might be) and aspirational businesses. Please dont get me wrong, I love apps, I have hundreds on my phone, ipad, and as of today my desktop. I dont hate creativity. I hate creativity masquerading as a business. I have no respect for individuals who sell these aspierational fantasies on unsubstantiated claims of growth (not all users are equal). I believe action needs to be taken very soon to protect the hard earned income of investors who are understandably fighting to regain some of the losses realised in the past 3 years.
Unfortunately deep down i think its too late. The money is already on the table and the wheel has started to spin….. a few months from now when the ball stops i fear for the consequences of our inaction.
Note: I should also add, that just as was the case in 1999/2000 in amongst the hype and pick axe salesman, some real business did exist. Ironically those business rarely got any media attention (you rarely do unless you require external funding). The same situation exists today within the app ecosystem. Real businesses do exist and thrive. They above all should be concerned for the coming bang, for fear of becoming tarnished with the whole.