I’ve just got a job in the New Economy

4th April 2001

A FEW weeks back I became the editor of bluepages.ie which is the web arm of the Dublin People Group.

My new job is to put content onto the site, in addition to the web editions of The Northside People and The Southside People. Therefore my livelihood is now dependent on the New Economy.

That’s capital N, capital E. (This means it’s important).

My timing has proven a bit iffy as the New Economy has more or less collapsed.

A large number of the dotcom companies in the US have gone bankrupt and the ones that remain eke out a perilous existence at anything from a third of their peak value down to as low five per cent.

We can safely say that phase one of the Internet revolution has come to an end.

What happened is that the Internet failed to mature in time. Most of the companies that went on-line did so before the general public. They spent a fortune marketing their ideas and the revenue failed to materialise. When they ran out of money they had nowhere to go.

To use an analogy from the automobile revolution – these companies invested in the internal combustion engine before the car became available.

Which means that the New Economy is still a good bet. Well he would say that, you’re thinking.

All right, it looks as though there won’t be a New Economy. Rather, the old one will just adopt the new technology. What we’re seeing is retail ventures setting up on-line stores. You can now do your shopping at Superquinn over the Internet.

You click the items you want and they bring them around to your house. It’s not so revolutionary when you look at it like that.

The tech-heads tend to overstate the impact of new technology and then, when nothing radical happens, there’s a big anti-climax.

It wouldn’t matter if the problem was disappointment. But what we witnessed over the last four years was a modern gold rush where tens of billions of dollars were invested in wild dreams.

The Nasdaq market in New York was where all the new tech companies were listed, where values doubled instantly and where geeks wearing John Lennon glasses became millionaires overnight.

The venture capitalists bought into it, the pension funds bought into it and Joe Public bought into it big time.

The Nasdaq index went over 5,000. Now, less than a year later, it’s around 1,800.

When you think that the index includes all the good companies you can see that some people have taken an enormous hit.

Recently myself and a mate decided to buy a few shares on the Nasdaq. We bought $1,000 worth of shares in Adobe. They make the software that we use to produce the pictures in this newspaper.

Adobe is a leader in the graphics field with a long track record and proven products. It’s not a net start-up company. I didn’t think there was much chance of losing any money and I wanted to see how the whole market thing works.

We bought the shares for $28. We got 35 shares. I looked up the Internet to see how they were getting on. It was only then that I realised what was going on on the Nasdaq.

Adobe shares were fetching $90 less than a year ago. They have since traded as low as $24.

Right across the sector thousands of people are being laid off and the whole disaster has pushed the US into recession. Ordinary stocks, overvalued by the feel-good factor going around, have dropped in value like a stone.

So the new economy (notice the capitals have gone) is really much like the old economy.

But its time will come. In the next phase, when the business cycle turns, when the wires are big enough to carry the traffic and when the net arrives on your TV – the Internet will change the way we live.

Meanwhile, I’m sitting tight. And while I’m at it I might as well get in an old-fashioned low-tech plug.

I want to make the bluepages.ie the place where Dubliners go on the net. So log on, have a look and let me know how I’m getting on.

As well as that…

The ITEQ stalls

NOT to be outdone by the Americans, the Irish Stock Exchange launched their very own tech market called the ITEQ.

A handful of companies from the main market were also put on the ITEQ and a new ITEQ index was born to go with the traditional ISEQ index.

The new market was launched last September and the aim is to have 40 high-tech companies listed in the next two to three years.

After six months not a single new company has gone on the ITEQ.

And a good thing too, apparently. Because if you’re not in, you can’t lose.

In Germany the equivalent Neue Markt was hammering along like an Albanian chain letter banking scheme. Now, inevitably, the arse has fallen out of that market as well.

The Central Banks are trying to step in to restore some order.

All of this should take the sickeningly smug smirk off those economists who have proclaimed the victory of capitalism.

When tight comes to tight, the market still depends on the state to stop it cannabalising itself.

The old debate about the ownership of property and production is not over yet. You can put your money on that.