A semi-daily chronicle of my life as a musician, a family man, and a citizen of Oregon.

Nov 18, 2007

An observation on the late '90s .com bubble

I was listening to Buzz Out Loud today and one of the hosts made a reference to the '90s .com bubble and the business ideas that were prominent at the time.  They were talking about the whole idea of start-ups thinking "We're not afraid to make something that fails, we'll just keep making enough different products and services that when one of them launches it will pay for the whole all of those that lost money". 

I'm referring back to the time when the economy was driven by this new whacky medium called the internet and the influx of cash was such that it wasn't even expected that a company needed to be showing profit for years and years.  I think we all remember.

Of course, through the lens of '07 this whole time in history  looks pretty ridiculous. 

At my current job I'm project managing this big web site upgrade.  As a result I've been learning about all of these different software engineering methodologies like agile, scrum, extreme programming, and spiral waterfall. 

For a key portion of this project we've settled on a methodology that is radically different from what many of the not-so technical people in the company are used to.  Many of these folks learned software development in the course of their current jobs, where a lot of them have worked for the last 15+ years.  Some of these folks even perceive what they've learned as the *right* way to do things and any other method as the *wrong* way to do things. 

As a result I've been put in the situation of trying to explain to these non-technical people (of which I'm one myself) how the software development methodology we're using works and what the advantages are.

The simplest way to explain what we're doing is to say that it's incremental - meaning that the software is developed one piece at a time - and that it's iterative, meaning that the same process will happen again and again to build on the core of the most important parts of the software.  The hope is that by working in this way, the software is driven by its key purpose rather than by a feature.  Wikipedia has a pretty good article on the subject if you're interested in learning more.

I'm sure this seems like the most aimless post in the world so far but let me bring it back to my thought this morning... what stood out is that a key feature of the iterative approach is the practice of creating a first version of something which should result in a working piece of software, and simply throwing this first version of the software away, making use instead of the second version of the  software built as your working model that you share with others.  This is the beta version.

I wonder if a professional bias was exposed when these young developers ended up being the heads of these start-ups, talking to venture capitalists about the new way they work.  I wonder if the worldview of a software engineer could accept and promote an idea of "we'll just keep trying stuff" more easily then someone trained in a different model.

Could the .com bubble be blamed on the acceptance of an iterative/incremental method that was merely a good idea in the wrong context?

2 comments:

Aaron said...

Dave,

Jen forwarded me the address of your blog a while back and, though I've visited a few times, I've obviously never commented.

On the general topic of internet bubbles, I wonder if we're not headed into another one. The math these days is getting pretty sketchy. How, for example, is Facebook worth nearly half as much as Yahoo? Is Google really worth more than IBM (which has eight times the revenue)?

Then again, I wonder how or if the time-honored methods of valuation apply in this economic system. I don't claim to know the answer to that one.

I enjoy the writing...hope you keep it up.

./dave said...

Hey Aaron!

It's great to hear from you - if for no other reason than to admire your kick-ass grizzly adams beard. As a prodigious grower of neck hair and not much else I'm green with envy.

I couldn't agree more about Facebook. I feel like Facebook will be the next MySpace on its way to becoming the next Friendster. Facebook is beholden to the finicky devotion of social networkers, which right now means teenagers. I'm not convinced that Facebookers have become so entrenched in their habits that they won't abandon Facebook for the next big thing. Thus, it's incumbent on Facebook to always be the next big thing with increasingly ahead-of-the-curve offerings.

For Google, on the other hand, the name of the game is targeted advertising. So I think the value of Google is increased in comparison to IBM on the basis of potential.

IBM has a solid revenue stream and I think even a decent growth potential because of the booming need for middle tier software tools, but the opportunity to grow isn't nearly as high as for Google who have the opportunity to enter different advertising markets, most notably their recent entry into the cell-phone market(probably soon to be the only kind of phone people have).

I completely agree that the web 2.0 bubble will burst soon, but without the far-reaching repercussions of the original .com bubble. I also think that Google has as good a chance of getting through the web 2.0 trauma as they did of getting through the original .com bubble burst.

It's always good to hear from ya, Aaron!