Randall Stross over at the NYTimes recently wrote about Thomas Siebel’s contention that Information Technology’s “glory days are past — long past, having ended in 2000.” According to Siebel, from 1980 to 2000, “All you had to do was show up and not goof it up… All ships were rising.”
That is, of course, an absurd statement. Those 20 years are littered with the tombstones of failed technology companies, from startups which never got out of the gate, to high fliers who could not make the transition to new generations of products and platforms, and everything in between.
Big companies often lose their ability to innovate or take requisite risks, but the industry has not. That is the very nature of technology: creative destruction.
While human society seems to inevitably vacillate between irrational exuberance and pessimism (a cycle the media industry enhances and perpetuates), entrepreneurs and innovation keeps on plugging along. New areas for growth and opportunity keep on being discovered.
IT remains a growth engine, but it has long been too big a piece of the global economy to make generic statements like that from Tom Siebel. The lesson that I wish more investors would learn (or more importantly, remember) is that from a pure finance, cash-flow perspective the total lifespan of individual technology companies is shorter than some of the big valuations imply.