in Canada

The Tech Bubble IS the Recovery

I keep hearing nonsense about tech bubbles recently. I think people are losing sight of the opportunity in front of them right now.

There are something like 500mm broadband customers in the world right now. There are over 5b mobile users in the world right now. Of those only about 500m have 3G (i.e. broadband) access.

So there is still something like a market of 5b people right now who will over the next 5-10 years start using the internet as part of their daily lives. With new smartphones & new tablets, price points are reaching levels where broadband will be affordable to all these people. And as broadband becomes available, new internet delivered services & products will be used. MASSIVE OPPORTUNITY.

But thats only part of the story. Basically, still in this day, there are tons of service/industry sectors where the internet is barely used. I’m talking about you health care! There are major major industry changes coming in sectors like government, health care, real estate, law, delivery, etc. Many government services still require paper for submission. Anybody done taxes or applied for a visa – think neither of those two could be done better? Many doctors still rely heavily on pen and paper (prescription pad anybody?). Many legal & financial transactions are still quagmired in a world of yesteryore, completely non-digitized. Anybody bought a house recently? There are multi-billion dollar opportunities here.

On top of riding disruption in many service & industrial sectors, there are still major changes coming in the way we consumers use the internet. Last year e-commerce accounted for 4% of all commerce, and online advertisting was only 13% of all advertisting. Meanwhile the average person is spending more and more time online and consuming more and more internet services, meaning that commerce, advertising & media production will all explode online. MORE BIG OPPORTUNITY.

And, more so, most infrastructure still hasn’t even been hooked up to the internet! Can you turn lights on/off over the internet in your house? Is your car on the internet (driving as a service – DaaS??)? Are large buildings on the internet, can we remotely control them? Are local bridges on the internet throwing off readings from sensors, cameras, etc? How many more devices, buildings, cars, etc can be added to the internet? A few billion++?

And, with 5B people now having access to GSM phones, you think the world of communication isn’t still evolving fast? Want to know why Kik, Color, GroupMe, Beluga, etc are all getting massive amounts of money and its no joke??? When was the last time you sent a text? Was the experience kind of lame (you had to remember a weird 9 digit number that represents that person , type in T9, etc)? Did you pay some stupid amount of money for it – like $20/month for unlimited texting? Were roughly 5 TRILLION texts sent last year globally at revenue of something like 5-7 cents per text – wow a $250B market!!! Has MMS been a total failure with a horrible user experience that nobody outside of Germany ever used to share photos? Did it still generate $31.5B in global revenue last year??? You think its not worth giving a company like Color $41mm to take a crack at that revenue??? If I were a mobile carrier right now I would crap my pants every time I read about one of these companies raising big money. Entrepreneurs & VCs have started a mobile messaging WAR against the carriers – because its a big opportunity, not because they are being stupid.

And hasn’t it gotten cheaper and less riskier to launch new web products & services, like cheaper by several factors. Shouldn’t people invest in big market/low risk opportunities?

And doesn’t Silicon Valley have massive leverage and far more competitive advantage over EVERY WHERE ELSE IN THE WORLD (and maybe New York.. and maybe the collective geographical diaspora known as University of Waterloo graduates). Can China, India, Europe, blah, blah, anywhere really, truly come close to competing with Silicon Valley head to head in making money out of the future of the internet?

So there are BIG massive billion dollar global opportunities. And there are unique advantages in the US globally. And its cheaper and less riskier than ever to invest in these companies.

Isn’t this EXACTLY the policy the people, the government, the investors, the entrepreneurs, the hackers, the inventors and everybody should be endorsing? Is it bad that easy fed printed money/gov’t stimulus cash has trickled down into the valley and created a surge in investment in high-tech? Don’t Americans want to kick ass and win and have most of the new billion dollar companies built here? And isn’t this a true legitimate chance for the country to recover in the long-run? Isn’t it less risky and a better idea than Friedman telling us to invest in better solar panels every day in the New York Times? Where else would you put this money? Building bridges???

I’m not even American, I wish you guys would blow this chance so up here in Canada we’d build the best tech companies! But at least some of the funding will flow to the hands of the our University of Waterloo students who will eventually move home when they have babies.

But in all seriousness, I think every startup who got funded recently, should realize they have a civic responsibility to bust their asses off with HUSTLE AND HACK. These are tough economic times for many, and you have the opportunity to do something about it and make a difference. I don’t want to read articles about the 4 monitors on your desk, or the ipad you got when you joined, blah blah blah. Don’t act like over-privileged, whiny, little bitches spoiled rich kids. Get out there and help re-build.

  1. I recently had an interview just after reading this article and used the exact phrase “Hustle and Hack”. It turned out to be hit phrase with the hiring manager. It seems that employers love the entrepreneurial mind.

  2. Great perspective Dan. I have been following both sides of the ‘bubble’ debate and fall firmly on the side of ‘this is just the beginning’. Dot Bombs were are bubble because they did not have and financially fundamentals (ie no revenue or crazy burn rates). Today’s startups have clear metrics that can be benchmarked towards revenue and profit. Will there be some huge failures in the market, absolutely, and those failures will produce value through the learning and spawning of new ideas and leaders (thats how the Valley works).

  3. Behavioural finance tells me this isn’t a bubble. One of the characteristics of speculative mania is that (almost) nobody thinks they actually are in a bubble, that the sky isn’t the limit, that they aren’t in a ‘new age’, that things aren’t ‘different here’ or ‘different this time’.

    This is true of the recent US real estate and banking bubbles as well as the dot-com bust. In fact it stretches all the way back to the first cases of group idiocy, the Mississippi affair and Tulip mania, hundreds of years ago.

    The very fact that so many people are talking about a bubble in tech means that there will not be a bubble in tech.

    However, this line of analysis does suggest a huge bubble in Canadian real estate : )

  4. Point well taken. We need the government to get behind Canadian start-up and put some wind behind their “sales” (pun intended). I like what I see going on in Waterloo. The Broadband project the government is introducing for rural eastern Ontario is start as well

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