Tuesday, November 21, 2006

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Greed and envy are good

This New York Times story by Katie Hafner seems pretty upfront in making this point:

Envy may be a sin in some books, but it is a powerful driving force in Silicon Valley, where technical achievements are admired but financial payoffs are the ultimate form of recognition. And now that the YouTube purchase has amplified talk of a second dot-com boom, many high-tech entrepreneurs — successful and not so successful — are examining their lives as measured against upstarts who have made it bigger....

Seven or eight years ago, when it seemed that anyone with a business plan could get rich, the finger of fortune was generous — and democratic. By the time it occurred to people to be envious, it seemed, they were rich, too — at least on paper. It was in Silicon Valley, after all, that the term “sudden wealth syndrome” entered the clinical vocabulary.

In the end, of course, much of the paper wealth turned worthless. But now, in the wake of successes like YouTube and MySpace, which was sold last year to the News Corporation for $580 million, some people believe that the foundations for more solid success are now in place. For one thing, the viability of online advertising is no longer in doubt, as Google and others have proved.

And the success of a YouTube can produce not only envy but also serious motivation — in Silicon Valley and beyond.

“Over all, I think things like YouTube make people reconsider the possibilities,” said Bart Selman, a professor of computer science at Cornell. In 1999, at the tail end of the dot-com boom, Professor Selman had a start-up called Expertology, which used a Web-based system that tapped collective expertise to generate legal referrals. The business failed. “After the dot-com bust, people were thinking, ‘Maybe this is all just hype,’ ” he said.

Now, Professor Selman said, he has seen several start-ups, like Hoovers.com and LinkedIn, successfully pursuing ideas along the lines of Expertology’s mission. “But of course, timing is everything,” he said.

And while he says he thinks the YouTube deal was “a little insane,” Professor Selman, who has watched several colleagues become highly wealthy after joining Google, is considering trying his start-up luck again, with a variant on the Expertology idea.

“Maybe there’s more to the economic model than we realized five years ago,” he said. “Maybe the new wave is a little more solid.”

Professor Selman, 47, said that while he was careful not to “overhype” the new wave, he routinely tells his students that they have a good chance of starting the next Google or YouTube. “I believe there are still many opportunities out there that we cannot even conceive of at this point,” he said.

With rewards of that scale on the horizon, the pressure to make a fortune can be enormous, and people have different ways of coping with it. Some find inspiration in others’ success, while some spend tremendous amounts of psychic energy worrying about how rich their friends are.

posted by Dan on 11.21.06 at 08:46 AM


Well, kind of a superficial take on a very superficial article.

Much of the envy here is because there's so little to separate video sharing site A from video sharing site B, or Google employee #100 from Googler #10000. Easy to see the only difference as luck, or timing, or both. Easy for just about anyone in Silicon Valley to think, "That coulda/shoulda been me, dammit!".

But while this kind of greed and envy, like that of the late 90's, may be a "powerful driving force" in the creation of 40 dating web sites, or 20 B2B exchange companies, it's harder to argue that the truly major innovations in high tech have been driven by the same forces. I mean, if the people who actually invented the Internet had had the option or inclination to drop out of grad school and make $millions selling pet food online, how good would that have been?

posted by: lewp on 11.21.06 at 08:46 AM [permalink]

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