When the web 2.0 became reality, it almost seemed as if a new era had begun. The internet turned interactive. Gone was the world of static websites and simple readers’ comments. We reasoned: interactivity would change society, it would affect politics and our lifestyle. It was the heyday of sites like Digg and StumbleUpon, which presented a daily repertoire of interesting and exciting online discoveries.
Then the web became social. Myspace, Youtube, moving pictures and sound. Cheap to produce and easy to upload. Facebook emerged and turned social networks and social media into a mainstream phenomenon. Finally, the web embraced being “mobile.” Smartphone web use is on the rise and accelerating. We’ve long ceased to number digital developments as 3.0, 4.0, and so forth.
Compared to previous cycles of development and innovation, the past seven years (that’s the timeframe we usually consider when he talk about the history of the internet since the 2.0 phase) are remarkably short – the blink of an eye. Yet it seems almost timeless.
Have the last seven years been a time of progress? For the idealist, the answer is yes: The development of the internet has allowed for the democratization of knowledge, for new ways of acquiring, conserving and sharing knowledge. And it has given rise to new forms of participation, too. For the materialist, the last few years have spawned several new business models. E-commerce has changed how we do business. It’s the money, stupid – everyone shops, and the internet has largely eliminated the need for big department stores. Theoretically, we can now buy cars, furniture, and shoes online. We can arrange tutors for our children, we can book a plumber and hire a gardener with a simple mouse click.
Landline telephones have become outdated. We don’t even need to place a call to hire a taxi or order a pizza delivery. An app suffices. Indeed, we could probably live quite comfortable without ever leaving our house. Only the Church refuses to embrace digital technologies: Confession is still offered within the confines of a church building and by an actual priest. There’s no app for absolution. But there’s an app for almost everything else. In the realm of business, e-commerce has led to the decline of old companies and has given birth to new ones. Those who failed to see the vast potential of online marketplaces lost customers.
Now everyone is waiting for the next big thing: A big innovation – maybe an app so sophisticated that it makes all other apps irrelevant? An app that can feed the hungry and heal the sick, a digital Excalibur. We project an almost messianic hope into future innovations.
Entrepreneurial spirit, creative energy, inventiveness and the profit motive all feature strongly in those hopeful projections. Our expectations seem unbounded. But it’s easy to lose sight of the unexpected: In the Bible, the messiah rode into town on a donkey; he didn’t arrive aboard a spaceship from the heavens. Maybe the next big thing will start small, maybe its value won’t quickly skyrocket to 100 million dollars.
Unless we remain conscious of the unexpected, we’ll find ourselves in a situation where everyone works towards 100 million dollar exits that probably won’t materialize. If that happens, we’re not sustainable and we’re not creating lasting value. Good things often require time and patience. One example: Facebook is struggling to increase its ad revenue. But the social network also has more than a billion members. If you argue that such a network of people (and the data they upload) doesn’t constitute a valuable thing on its own, you haven’t understood the impact of the digital revolution.
And one more thing: If even a company like Facebook struggles to satisfy paradisiacal revenue expectations, many other companies will require even more time. The business models aren’t the problem – but it might take more than one, two, or three years to turn an idea into a functioning and sustainable business.
Digital business models cannot all depend on ad revenue. Who is supposed to click on all the ad banners? And how is that model supposed to finance rising marketing and advertising budgets? We cannot create a sustainable New Economy if our business model remains limited to clicking on each other’s ads.
For 2013, we should thus agree on the following resolutions: First, we have to work sustainably. Second, companies should be built to last. Third, companies should not be geared towards a lucrative sale and a quick exit – and we should resist the temptation to lure serious investors by promising them astronomical rates of return. Those fairy tales are the stuff of movies, not the basis for a new and emerging economy.
Newconomy is the new weekly column for the start-up industry. It focuses on the intersection of classical and new economies and of politics and entrepreneurialism. Newconomy is sponsored by Factory, the new start-up hub in Berlin.