Dana Blankenhorn

That 2002 Feeling

The last tech crash began in 2000 and I was in the center of it, a mid-career writer with a specialty called Internet Commerce.

That year saw denial and bargaining.

The next year saw anger and depression.

It was only in 2002 that acceptance came.

We know what followed. Talented programmers worked on open source projects and standards bodies created what became the Cloud. When proprietary advantage became worthless, and there seemed there was nothing to do, people worked together with technical goals in mind rather than just financial ones.

It was a slow build. In 2002 my gross income was zero dollars. In 2003 it was zero dollars. I got interested in what’s now the Machine Internet, which I christened the World of Always On, and in 2004 I finally made a few dollars. The next year I was asked to cover Open Source, and my career took off. For a time.

I’ve mentioned before how, in every photo of a stock market crash the people in it look similar. Similar age, similar backgrounds. They’re different people. Those who watched the 1987 crash were different from those who saw the 2000 crash, different from those who saw 2008, different from those who saw 2022.

Fire Sundar Pichai

Recessions are good for markets.

They show us where the rot is, where the poor performers are.

This current one is no exception. It revealed that some of our Cloud Czars, the companies dominating the global economy with hyperscale datacenters paid for with cash flow, aren’t as clothed in gold as they seem. Some are downright naked.

Early this month, I identified one source of rot and urged Jeff Bezos to fire Amazon.Com CEO Andy Jassy. But it’s also time for two other founders to get back in the game. Larry Page and Sergey Brin need to push out Sundar Pichai.

Pichai is the kind of numbers-oriented manager Wall Street loves, but Silicon Valley should despise. He’s the kind of go along, get along guy who can make the trains run on time, but completely lacks vision. In technology this is a fatal flaw.

It’s obvious in how he dealt with artificial intelligence, the new hotness of 2023.

This is not about firing an ethicist. It’s a more basic failure to see where things were going, and deploy the necessary resources to get there. 

Where Computing Happens

I met my first computer in 1976, in the basement of Herman Brown Hall, on the campus of Rice University in Houston.

The computing happened in a big room, separated from me by a window. I passed a stack of punch cards, tied with a rubber band, through the window. They came back along with my output. Which usually said the program had died on Line 3.

By the time I got out of journalism school, two years later, computing was moving to desktops. A neighbor bought a $20,000 Cromemco machine that could run 3 terminals. She hired friends to work at the terminals, transcribing court records. I think they got 50 cents a page. Computing had come home.

The Other Arms Race

We talk a lot about guns in the US, without doing anything about them.

But there’s another, even more dangerous arms race, going on.

It involves cars.

It’s not just that there are too many of them. They’re too damned big. Spending $60,000 for a pick-up that will never see a trailer hitch, or an SUV higher than an elephant’s eye, is stupid. Especially since these cars are sitting, unused, 90% of the time.

People buy giant cars for the same reason they buy guns. They make you feel safe. They buy as much car as they can afford, like these things are houses.

The Word for 2023 is Efficiency

If you can save costs, in business or consumer markets, you can make money.

This is technology’s big opportunity in 2023.

The cloud has already transformed how people interact. It’s now going to transform how machines interact.

Sensors and network software can be applied everywhere. Thanks to falling chip prices this can now be done cheaply. There is labor available to write the software, build the companies, and reap the rewards.

Consider the water system. Why aren’t sensors monitoring the condition of pipes, warning of potential failures, and identifying leaks the moment they occur? Why are water authorities still depending on people finding cracks in the street with water coming out of them on their own?

Positives of a Tech Recession

Despite some stunning investment losses, I’m enjoying the latest tech recession.

No one likes a recession, but sometimes it’s like spring cleaning, necessary to clear the excess. There were a lot of zombie technologies, zombie companies and zombie assumptions that have been overrun since the Fed decided that money should cost money and there should be less of it around.

Web3, the metaverse, and crypto were all fake from the jump. Advocates for streaming and podcasting didn’t understand that the gating factor is time, not money. A lot of companies were selling themselves based solely on sales growth, ignoring the need for profit.

This means there’s now opportunity, in the form of talent, for new ideas that will power the economy forward. The main trends I described in 2019 – the end of oil, the Machine Internet, and DNA as a Programming Language – they’re still on. But there’s a lot more, too.

The Intranet of Systems

 

A warehouse is a system.

A factory is a system.

A hospital is a system.

The Machine Internet is now ready to take its next step, toward the transformation of systems.

Vendors have been adding intelligence to machines for a decade. My car can now tell me when my tires need air. Many machines can tell their owners when they need preventive maintenance.

An Intranet of Systems would get all the software on these machines working together, the way orchestration software lets a company control its supply chain.

What Xi Jinping Doesn’t Know

Dictators can do many things.

They can hold territory. They can terrorize people, even kill them.  They can force our bodies into lives of drudgery and poverty.

What they can’t do is whip people into creativity.

Xi Jinping is betting he can. By controlling what people see and hear, by whipping up patriotic fervor, he thinks he can make China a dominant economy. Many western analysts agree.

He’s wrong. They’re wrong.

This has nothing to do with western investment. It lies in the nature of the 21^st century economy. Because money no longer comes out of the ground. It rains down from the clouds. Technology provides added value. That trend is accelerating.

The Time Is Now

Here is what 45 years of studying business cycles has taught me.

Now is the time to work on your next great startup.

Right now. When the whole world is collapsing around us. When old business models are failing. When everyone is worried about their job, or about to lose it.

Look at the opportunities. I detailed them three years ago. The end of oil. The machine Internet. DNA as a programming language.

These boil down to renewable energy, control systems, and medicine.

Nurture Talent

The biggest threat to America’s cultural and economic dominance is our winner take all system.

We have succeeded because we nurture talent. Talent is what dominates the world economy in a cloud-based world. Talent must be nurtured if it’s to turn potential into reality. There is no limit to how much talent a cloud-based economy can absorb.

Talent needs comfort. Talent needs to focus on itself. Talent needs freedom.

Anyone who studies talent in any sphere will tell you this. So will all talented people. They will say that their parents let them dream, that their schools nurtured their potential, that their first bosses mentored them. They will talk a lot about patience.

You don’t know where talent will come from, or when it will form. You can’t just focus on those who display talent at a young age. Some take time to find their talent. Matt Turner, who will play in goal for the U.S. team in next month’s World Cup, wasn’t drafted after college. In soccer mad countries like Brazil, he wouldn’t have gotten a chance.

This is America’s secret sauce.