Roger and I spent most of last year playing Cassandra, saying that there would be tears before bedtime.  As the Dot.Coms crash around the ears of the Gaderene swine, the pearls are being thrown out with the bathwater. 

Or something like that.  Mix your metaphors as you will, who has really got hurt and what has really changed?  Sadly, the answer is “Almost none of the guilty” and “Almost nothing”. 

A few instant millionaires became somewhat less affluent, quite a few very foolish day traders got blown out of the water and a lot of employees now sitting on a pile of worthless stock options are keenly seeking new avenues to instant wealth.  But the investment bankers who took huge fees for placing the issues are still charging huge fees for the next generation of hopefuls; the big accountants who did the due diligence and business plans are getting fat fees for bankruptcies and restructurings.  The vulture capitalists are still out with their road shows, now pooh-poohing e-commerce, but snapping up wireless, optical and all the toys which may or may not power tomorrow’s go-faster Internet.  Cybermalls are out.  Portals and vortals are out.  Pet shops are out.  But already received wisdom is coalescing around tomorrow’s winners.  In Economics 101, they teach you that markets are cyclical.  In the new Internet Age, the cycles are just faster.  Stupidity, however, seems built into the system.  This must be some sort of golden age for contrarians. 

If we pretend we are men from Mars landing on earth for the first time, what do we see when we look at the Internet?

 While we are impressed with the speed with which the Web has spread, we are puzzled that what looks like a cheap communications system is most highly concentrated where affluent people already enjoy excellent and relatively cheap communications.  We are surprised that some marketing geniuses have convinced most users that they have to spend a multiple of what they really need to get a machine capable of putting them on line.  We note with surprise that while hundreds of millions are being spent to direct users to high cost commercial sites, the most intensive use of the Web seems directed towards free mail, free music, free software and free porn. 

And our Intelligence Officer asks just why it is that the people who seem to be guiding all the big money deals are the same people who have been wrong on pretty much every IT issue over the last 20 years. 

It is as if the monks in the scriptorium had been given responsibility for diffusing Gutenberg’s precocious child.

The interesting outcome is that, effectively, we have two Internets.  There is the big money big engine internet of the telcos and traditional content providers, the investment bankers and  big IT consultancies.  On that internet, there is the promise that a FTSE star of 1999 can be assured of being a FTSE star in 2009 – just listen to our received wisdom and spend lots of money.  Then there is the Wild West internet of the geeks and freaks, the playground of the mad, the bad and the sad, the Bizarre Bazaar where $1000 software is free if you can run ARJ and open an .nfo file, where you can take your pick of hundreds of thousands of pieces of CD-quality music, where every perversion imaginable (and some still unimaginable even when you stumble across them) is catered for. 

The former is a stately structured place, where your guides wear thousand quid suits and assure you of their expertise, surrounded by mahogany and chrome and insulated with seven and eight figure fee notes.  The latter is a place of ramshackle excellence where hackers and crackers plot mad schemes to deface the CIA site, break open DVD security systems and generally give anarchic effect to their proposition that “information wants to be free”. 

There is surprisingly free movement beyond the two worlds.  The odd-looking young men that the gentlemen in expensive suits keep decently hidden in back rooms often meet with co-conspirators in plotting midnight attacks on the establishment.  The wild-eyed lunatic running an ISP in the backwoods with a Dodge half-ton and a quart of shine is a reserve member of the National Security Agency, available for call-up at any time. 

Probably not since the time of the Elizabethans – when a respectable merchant could turn buccaneer then pirate then merchant again a dozen times on a single voyage – has the dividing line been so ill-defined. 

Learning the right lessons is crucial.  Most IT companies were desperately wrong about personal computers twenty years ago.  They were not stupid people.  They were certainly no more stupid than the people running passenger steamships in the 1950s, railroad systems at the dawn of the internal combustion engine, or the telegraph moguls when Mr Bell’s quaint system for sound over wire came along. 

It is human nature to try to cast the new into the shape of the old.  Roger and I had fun at the expense of bean counters and that noble institution, Barclays Bank, a few years ago when they thought that e-commerce would take the shape of an electronic mall.  Of course, telcos want to make the world of packet switching operate on their expensive switched circuit. Copper owners will try to persuade you that asymmetric is logical, because that’s how their systems operate. The banks would rather like to charge you a premium for the privilege of saving them money by banking on the Internet.  And it’s entirely logical that the credit card companies would think it’s pretty neat that they charge more for electronic commerce. 

Most of all, it is human nature to want to own a nice chunk of tomorrow’s big winner today.

The odd thing is that we are prepared to bet on the advice of people whose primary thought process is that tomorrow’s outcome can most accurately be assessed on the basis of hundreds, thousands or even millions of outcomes yesterday. 

Looking backwards is sensible.  We do it all the time.  But you have to look to what happened in other periods of disruptive change.  In other periods of disruptive change, the established order stampeded like a herd of cattle into Tulip Mania and the South Sea Bubble.  You can take it as gospel that when that unsung genius first started a fire by striking a flint, a thousand village elders bet the whole tribal stock of cowpie shells on schemes to achieve the same with granite, chertz, basalt …

The crucial thing to remember is that when the herd moves, it is the elders – the custodians of a thousand yesterdays – who are doing the counselling. 

What have we learned? 

When it comes to disruptive change, the old rule of the social sciences is doubly valuable:  don’t listen to what people say, watch what they do. 

Company A brags that all its employees are on an intranet.  Smile politely and ask for the log files.  Ask who may post content.  Find out whether all the action really happens on informal group intranets of which the management knows nothing.

Company B tells you they have an industry postal which “positions them for international leadership”.  They tell you they spent $10 million with a top international consultancy.  Ask what user research they have done, what are their repeat visit rates and average length of “visit”.  Check for real time interactivity and connectivity.  Be gentle. 

ING tells you they have introduced humanity and efficiency into internet banking.  Believe them.  It can be done.

Yes, there are winners out there.  It just isn’t necessarily the folks you’d expect or the ones spending the big bucks to say it’s them. 

Mostly, it’s a world of Bourbons:  people who have learned nothing and forgotten nothing.  And, of course, there are the communards storming the barricades.

If you are going to rely on received wisdom – and most of us have to most of the time – just make sure you’re listening to someone who doesn’t believe that the history of technology and economics began in 1945.