Do it now - or kiss it good bye... learning from crashes

Osborne 1 "luggable" PC - crashed before takeoff to the IBM (DOS) wave [circa 1981]


I was reminded of a few personal crashes in life from the recent Wall Street crash (the one started by the Lehman Brothers closure). This phenomena of a sudden surprise from "nowhere" is not something unique to the tech business. But for us it is something that happens more often. The financial crash in US banks seem to happen every decade or so. Someone thinks of some scheme to sell you something. Someone tries it out and it works. Everyone else copies the first guy, and the party begins. A few months or years later, some wise guy suddenly notices that this is a scheme. Then some event causes a crash and it all ends in tears.

My first crash in the tech world was the Atari EPROM game event. I was at GI Micro in NY and you would not believe how quickly the place emptied out. But I was young and thought that this was "just this place". That gives away my age. I also remember the PC hardware crash. That was not fun to watch. There was a mini crash with printers, the dot impact kind which ended up with Epson taking the market and dominating it for a few years. When the laser printers came out you should have seen the dot impact printer crash. These technology waves are going to be with us and are pretty much the modus operandi. Just like a stock price will plummet when investors fear is stirred into a frenzy, technologists need to figure out what to do before and after the crash. It does not matter if the crash is due to financial, technology, market, or a combination of other factors. Once we crash the landscape changes radically and the nimble to change will survive.

These general observations of drastic change or a real crash are nice to talk about, but what is more useful is specific examples to what we could do about it. Crashes come to technology as financial changes, as see today with Lehman Brothers, Merill Lynch, Fannie Mae and Freddie Mac. Lehman Brothers was one of the largest technology deal underwriting and negotiation firms on wall street. They have been doing it for a long time. Lehman was also a big Mergers and Acquisitions (M&A) firm, which is one of the most used form of selling start-up companies. We will have to get used to smaller, newer firms, and maybe a smaller end market for new company stock. This will also affect spin-offs and acquisitions. But that is not the end of the world. Technologists are not going to stop inventing and creating new products.

Lehman Brothers' web site description of their technology financing expertise

In the mean time, the financial markets which "feeds" the technology sector will have to recover. Just like the Dot-Com bubble, it will take a little time for investors to gather back their trust in speculative technology investments. This will not take long, there is another Google and Facebook lurking somewhere, maybe not even in the US, but the money and know-how are still in New York's Wall Street and California's Silicon Valley. We technologists need first of all to take a good look of what it would take to ride out a period of financial drought. That does not mean stop developing, actually the opposite. Just figure out how to do things with less outside money. Maybe smaller steps which enable technologists to bring in revenue while they develop. Maybe more deals with larger partners, even outside the technology sector. Maybe even other ways to work. Remember, the Osbornes, Compaqs, and Apples of the early 1980's didn't have the big financial infrastructure that existed in the 1990's. Maybe that is a better way to start. Maybe without the eager speculators with "easy money" we will do things better and smarter. What do you think?