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The technology is irrelevant


By Scott Bradner


It has long been a truism that the quality of the technology too often has little to do with marketplace success.  VHS vs. Betamax is the most commonly cited example.  But now we are seeing an old factor starting to have a bigger impact on technology selection than just marketing and patent licensing departments.


I'm writing this column on the day that Worldcom announced that it had found about $4 billion worth of expenses which had not been dealt with "according to generally accepted accounting principles," as the Wall Street Journal quaintly put it in a news story.  The Associate Press writer headline was not quite so quaint and called it "the biggest case of corporate fraud in U.S. history."  That headline approximates the headlines over the past few months talking about the cable operator Adelphia Communications, and, of course Enron.  It also echoes, many smaller headlines announcing the demise of one company or another because of questionable business practices.


Each one of these headlines traumatizes the investment community and causes them to back away even further from startups working on new technology.  Each time a big company like these goes bust it hits the potential market for new ideas hard.  Throwing away a few hundred billion dollars of investor's money tends to cause them to retreat and get that deer in the headlights look.  Not exactly a good market to get new or continuing funding for startups.


We had the Internet bubble, then the Internet bust, but we thought that the bubble was just stupidity, or more politely put: "irrational exuberance."   And I did see a bunch of breathtakingly dumb ideas get funding during the period when it seemed that VCs were funding anyone who knew how to run PowerPoint.  At one level, the quality of technology did not seem to matter much during those "good old days."  When the inevitable bust came, I figured that we, in the 'Net world, were just victims of our own inability to think seriously about ideas.  I figured our thinking was somewhat muddled by all the money flowing around.  Lots of good ideas died for lack of continuing funding, along with many ideas that just might have been dead to begin with.


But it now turns out that some of this was irrational greed instead.  It's harder to stomach what is happening to the startups that were leading the way on the paths of innovation which are key to our technological future when criminal behavior is involved.


Since we cannot depend on established companies, or now on VCs, to fund the longer term research and development startups they once did we have to look to other sources of funding or be willing to stagnate.  In the time before the boom, federal research money was a key innovation driver, maybe not as adventuresome as it could have been, but key never the less.  It looks like it's time for the feds to open up the purse strings even more.



disclaimer:  Harvard, as well as I, get federal grants, but I did not ask the University's opinion so you just get mine