FRAMINGHAM (03/13/2000) - How do you know when an industry has hit that invisible peak and is going to start its long, inevitable slide downhill? When did we first realize that re-engineering was an overworked bromide? Or that ATM wasn't going to solve every problem known to man? Or that pen-based computing created more problems than it solved? Or that the telephone industry would screw up ISDN beyond belief?
For more than a few years now, I have been on the Rubber Chicken circuit, speaking from one side of the country to the other, talking about the future as if it were my best friend. Want to know how many homes will have cable modems this year? (About 1.4 million.) Or how many companies will install T-ls? (A lot.) Not only do I have the answer, courtesy of The Yankee Group Inc., but I will outline finely honed scenarios for the next five years, like the rest of my guru brethren. Nothing can be more important, though, than knowing when an industry is at its peak because I have to damn well get off that Electronic Soapbox and get on another one - and it had better be the right one.
There used to be three clues that helped me determine when an industry had peaked:
When IBM Corp. enters the business. IBM is always late to the party and always comes bearing the wrong gifts. When IBM gets into a business, that is the best signal I know to flee.
When Business Week puts the industry on its cover. Or when Time names Jeff Bezos the man of the year. Or when trade publishers start a new magazine in the space. Or when the industry forms a lobbying group/industry association/trade show. All are sure-fire signs of the beginning of the end.
When Harvard Business School writes two cases on the industry. I'm teaching down the river at MIT these days, so this might be taken as professional jealousy, but it's not. Harvard "gets it" about two years after the Fortune 500 companies get it, and you and I both know that the truly smart people got it two years before that. So Harvard lags what is really happening by four years.
Recently I added a fourth clue for determining that an industry has peaked: when Bill Gates anoints it. This is especially true when Brother Bill picks something to succeed in the communications arena - the One Great Truth is that while Gates may be blessed in the software market, he always gets it wrong in communications. My first column here five years ago made awful fun of Gates' plans for Teledesic and predicted its collapse ("Bill's a closet environmentalist. He's so concerned about global warming that he's going to launch enough satellites to block out the sun.")What's disturbing is that Gates has just blessed wireless Internet as the next big thing. The Yankee Group and I have been saying this for two years, but now that Gates has said it, I'm wondering where the flaws in my logic are.
It's one thing to know the One Great Truth (i.e., Gates is always wrong in communications) when you're just doing market research; it's quite another to be running a venture incubator and putting a lot of money into an area that Gates has doomed.
Of course, there's also the possibility that, despite the One Great Truth, Gates got it right this time. Hey, even a blind squirrel finds the occasional acorn. It just makes me nervous to be on the same side of the guru fence as Bill, knowing his track record.
Actually, I have concluded that even though Gates has blessed the wireless Internet market, he really didn't mean it, and that wireless data will be as big a market as I had thought. And if you see Bill, please tell him to stop screwing with the One Great Truth.
Anderson is senior managing director of Yankeetek, a venture incubator in Cambridge, Mass. He is also chairman of The Yankee Group and the William Porter Distinguished Lecturer at the Massachusetts Institute of Technology. He can be reached at email@example.com.