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Sunday, November 10, 2002
Bloviation alert -- this is one of those "What Does It All Mean?" pieces.

We have all had a chance to get used to the idea that the Nasdaq is going to take a long time, maybe a decade, to recover the 2/3's of its value it has lost. Earnest young consultants by the thousands have sold the Porsche and moved back in with Mom and Dad. Fiber optic demand is still far below capacity. Up until three years ago, the Internet was going to change everything. So what did actually change? Both more and less than we expected.

Item 1: People

Part of what I do for a living is hooking up a big database to a secure extranet for a custodian bank. That means that money managers using our application can click on us in MS Explorer and see what securities they have in which portfolio and lots of other useful things. This is information that used to be faxed to them, entered into a spreadsheet, printed, faxed again... This way is better. You get what you want, when you want it, and can change it to show just what you wanted to see. It is really amazing what has changed since I started in the financial services industry. So what didn't change? Mostly, people didn't change. One of the users of this application was pleased to see that he could get some information for the reporting he had to do just by clicking around. Yet he was still hand-typing other parts of the reports without noticing that this information was also on line,

in the same menu he was looking at for the other information
. If you're an IT professional, you are probably chalking this up to typical "luser" behavior. Maybe it is. Yet one of the guys I work with (web applications are part of the job, remember) has never even ordered a book or a CD over the Internet. Nothing! It is going to take some time before the Internet gets truly integrated into our economy. It is just not part of people's habit sets yet.

Item 2: Markets

The ones making money off the Internet are the ones who reach their markets more efficiently through the Internet than by other means. Think about eBay. It is still primarily an auction site, but have you spent any time looking at the odd things for sale? I bought a handful of trilobites and other fossils for my kids through eBay. The fellow I bought them from tells me that the majority of his business in fossils and raw semi-precious stones comes to him the same way. One of my kids is a model train enthusiast, and when we went to Charles Ro Supply in Malden MA for more absolutely essential stuff, we were often amazed at the number of out-of-state license plates in the parking lot. They have had a mail-order catalog for a long time, but now they have another channel.

Of course, the biggest group of merchants making money in the Internet is the pornographers. This is another case of getting to your customer by changing the distribution method. Just as the VCR's success came at the expense of the local porno theater -- why not watch at home in privacy? -- the on- line porn entrepreneurs are taking some business from the video purveyors and expanding the total market. I'm not saying this is a good thing. At the very least, one does not meet interesting people that way.

The big losers in the early Internet rush were those who had no particular reason for putting their wares on the web. Anyone for a 50 lb. bag of dog food? We'll throw in a free sock puppet.

Item 3: Things We Never Though Of

You're seeing one of them here. Weblogs took off in the aftermath of Sept. 11, as ordinary people (and some extraordinary ones) looked for a way to express themselves, communicate with others, and get around the corporate news blockage. Weblog software meant you didn't have to learn HTML to get your opinions, musings, or free-floating anxiety on the Internet. They say that freedom of the press belongs to the one who owns the press. Well, we all just got the equivalent of a printing press, and pretty cheaply. Anyone for media bias? Forget it. Our local paper is the Boston Globe, which makes the Guardian look even-handed. I still read the paper's editorial pages -- Jeff Jacoby is there -- but in the world of weblogs, the biggest one is Instapundit, hardly a mush-from-the-wimp Globe editorialist.

So what else is out there, after weblogs? The point is that we can never know until they happen, no matter how much money you lavish on Bain, Sapient, [fill in your least favorite consultants] or what have you. Townsend's law of prognostication: The future will resemble the present in every way, except for certain important but unforeseeable differences.

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