Synopsis
The author focuses his attention on the new economy to search for morality in the midst of unprecedented prosperity.
Extrait
Chapter One: A World Without Limits
What's New About the New Economy
We have it in our power to begin the world all over again.
-- Thomas Paine
The young people in high tech, who have not learned to talk better, describe it as a "holy shit experience." This is how it works. You are a graduate student living in a group house and paying $375 a month. You have no steady source of income; you are just barely making ends meet. But you have a Big Idea for a company. You've developed software that enables corporate Web sites to handle large volumes of traffic. Or you've figured out a way to use the Net to improve efficiencies in the medical supplies business. Or you've got a new idea for making web sites more interactive. Whatever.
It doesn't matter who you are or where you come from. You are now the founder of a company. You come up with a cool, offbeat name -- something techno-sophisticated, like QuantumFour.com, or offbeat like Waitingforgodot.com. You approach investors with your plans for taking over a whole sector of the market. You promise the investors a "ten bagger," an investment that increases tenfold in value. They're skeptical about where your company's profits are going to come from, but you emphasize that at this point "mind share" is really important.
Somehow you manage to convince them that your idea is hot and you are cool. They give you start-up money, and you hire a lawyer and establish a corporate identity. You set up a bank account, find yourself a logo, design some letterhead, and then hire a dozen employees. You've got a bookkeeping guy, a Web guy, a marketing guy, and so on, but you've made it clear to them that there is no strict division of labor, and everyone takes turns taking out the trash. You give these employees options, which at this point are worthless pieces of paper.
You and your team set up shop in a beat-up old office that you've leased for a year at $1,000 a month. It doesn't get too much sun and the landlord had better hope the fire inspector doesn't drop by. Otherwise it serves the purpose. Basically, you move in. You put in eighteen-hour days. Sometimes you fall asleep on the secondhand sofa; soon you start keeping a toothbrush at the office. You dress like a slob and live on Whoppers, Twinkies, and cherry Coke. You rarely read the newspaper, and you don't return phone calls from friends and family. You're totally focused on making your concept work.
Sometimes it doesn't. That's the fear that haunts every start-up. And you know what failure means, because you've seen it happen and you know it ain't pretty. You don't want to default on the rent and have to fire all your employees. You don't want angry investors banging on your door because they got back only eight cents on the dollar. Most of all, you don't want a year and a half of your life to go to waste. But that's the chance you take, as you set your sights on that Wall Street version of Powerball: the initial public offering.
The IPO is the Silicon Valley equivalent of hitting the jackpot. It's even better than being bought by America Online or Yahoo! Either way, forget about moving up the ranks in a traditional company, meticulously putting aside a bit every month, and building up your savings so you can retire with a nest egg, a pension plan, and a gold watch. What you and your friends are after is instant tycoon status. The Big Score. So far things look promising. Your company seems to have people talking; you've got "buzz."
But what will the Big Day bring? You just don't know. So you and your employees sit around the table, and you wait. At first, nothing. The minutes tick by, slow and unforgiving. You get jitters. Then you feel the first nauseous pangs of a panic attack. And then, kaboom! It happens. Your stock price goes up, up, up...it isn't stopping...it's still going up...you can't believe it! By now your employees are cheering and shouting, "Holy shit! Holy shit! This is so insane!" Finally it stops and, almost delirious, you do the math: you are suddenly worth $51 million. Unbelievable! Everyone in the room is a millionaire.
Now you are rich. You can do anything you want with the rest of your life. What a feeling! Now you can afford to fly to Paris for the weekend. You can eat at the Tour d'Argent, and cheerfully pay $3,000 for a bottle of 1982 Château Pétrus to complement your meal. You relish the thought of tossing out a couple of hundred thousand to join that exclusive golf club that your father's boss, the grumpy old fool, still plays at. The there's the Lamborghini you've always wanted. You know you can't do all this right away; after all, your money is tied up in stock. You are, as they say, a multimillionaire "on paper." Even so, it doesn't hurt to plan ahead. What you find most striking is that even in your moment of triumph, you know that neither the French cuisine nor the golf, not even the Lamborghini, will be enough. You're beginning to get the germ of another Big Idea. You crave a second Big Score. In short, you have to do it again.
Yes, it's a new economy. If you read the business papers, if you listen to CNBC, you've heard that before. But if we're going to explore the ramifications of it, it is extremely important to understand what precisely is new about today's economy. Some commentators passionately assert that "interest rates don't matter" or that "stock prices have nothing to do with profits" or that "we've repealed the business cycle." That's wishful thinking. Economic logic and historical experience cut the other way. Others point to a more obvious novelty: technology, and specifically the new frontier of cyberspace. But even cyberspace isn't new. Cyberspace is where you are when you talk on the phone. It's been around since Alexander Graham Bell and his pal Watson had a rendezvous there more than a hundred years ago.
Still, the wishful thinkers are responding to something that is real and new, namely, that this is an economy on Viagra, an economy that is rafting on white water, the best economy the world has ever seen. Forget about the Gilded Age or the Roaring Twenties or the Halcyon Fifties and Soaring Sixties; the United States has witnessed an economic juggernaut that got started in 1983 and, far from losing force, has actually gained force and shows no signs of stopping. Somewhat to our surprise, we are in possession of a perpetual money machine, and it keeps spitting out silver coins and green notes.
Of course, there's been volatility. April 2000 was a very cruel month indeed, when the Nasdaq plunged 30 percent. It was motion-sickness time, especially for those who had invested in technology stocks with borrowed money or money they could not afford to risk. For the first time, there were news reports of Internet companies going under, laying people off. It's been a bumpy journey of late. Within a twelve-month period Internet giant Softbank Corporation saw its shares soar from $100 to $1,900 and then go down to $475. The people who say that markets are inherently rational have a lot of explaining to do.
Volatility is here to stay, especially in the Internet sector. The reason is that it is extremely hard to estimate the current value of companies with uncertain future earnings. Even so, let's keep a sense of perspective: we are in an economy where, most of the time, the bulls have been right. The bears have had their moments of vindication, but these moments have been brief. "See, we told you..." they say, but before they can finish the sentence the market has gone back up. In general the momentum has been relentlessly onward and upward. The last twenty years have seen a tripling of the gross domestic product from around $3 trillion in the early 1980s to around $9 trillion now. And don't forget: in 1982 the Dow Jones Industrial Average fell below 800. It tripled in the 1980s, then lost ground for a year or so, then tripled again during the nineties, surpassing the 10,000 mark. Meanwhile, the technology-heavy Nasdaq Composite Index skyrocketed from under 500 in 1991 to 5,000 before pulling back: that's still a seven- or eightfold increase in less than ten years.
Throughout this period of prosperity, there have been warnings of disaster. More than once I have heard the story about how Joseph Kennedy, upon hearing a stock tip from a newspaper boy, went straight to his office, sold all his stock, and got out of the market, shortly before the Great Market Crash. It's a good story but useless advice as far as I'm concerned. Everywhere I go I hear stock tips from waiters, office interns, non-English-speaking cabbies, and other extremely unorthodox investors. But I've been hearing from these folks for years, and if I had sold my mutual funds and gone into Treasury bills the first time it happened I would have missed several thousand points on the Dow and a virtual quintupling of the Nasdaq.
This is not to deny that many of the dot coms are grossly overvalued. Buying companies with price-earnings ratios in excess of 100 is not a winning long-term investment strategy. Most of these companies surely won't be around a few years from now. But will the market as a whole go down with them? So far, it hasn't happened. In fact, money managers with bearish investment strategies have been badly pummeled. Boom, boom, boom, the market has shot them down and stampeded over their carcasses. Those who have survived have watched in dismay as complete amateurs have whooped their way to triple-digit returns. The ultimate indignity: many of the surviving bears have been humiliated into joining the bulls. Better we all perish together, the bears now say, rather than going belly-up while the bulls stand around and cheer, smoking cigars made of hundred-dollar bills. So it is only a slight exaggeration to say that, in investment terms, we are all bulls now.
Another novel characteristic of our era is the revival of faith in free-market capitalism. Actually, we're seeing more than faith in the capitalist system; we're seeing a surge of confidence on the part of the average American that the system will benefit him directly. The stock market is a good indicator of this. In 1980, only one in ten American households owned stock; now 50 percent do, either directly or through mutual funds, IRA accounts, or 401(k) plans. Financial columnist James Glassman calls this "the rise of the investor class." More Americans own stock than vote in national elections. Even journalists, who have traditionally spurned such bourgeois pursuits, are now chasing big bucks. "I have decided that I want -- I need -- to make a million dollars in the stock market this year," writes David Denby in The New Yorker. Now we can't wait to read whether he did it. Ten years ago if someone had written that we'd have thought he was joking. O tempora, O mores!
You know the capitalist spirit has penetrated the culture when the Ladies' Home Journal features articles about "trader moms" who spend much of their day trying to exploit daily fluctuations in stock prices. Red Herring magazine recently featured investment advice from today's breed of stock picker: a cop, a bartender, the chief doorman of the Sir Francis Drake Hotel, and an astrologer who insists that stocks, like people, have birthdays. A stock's birthday, explains "financial astrologer" Yvonne Morabito, is the date of its IPO. In a mass movement of any kind, you get all types.
Indeed, the free market hasn't enjoyed such broad support for more than half a century. In fact, the twentieth century was the era of the welfare state, of big government. That era, which began in America in 1932 with the New Deal, ended in 1989, when the Berlin Wall collapsed. Now we know that capitalism is the only economic system that works and markets are the acknowledged arbiters of production and value. How ridiculous it seems that, as late as the 1980s, leading intellectuals and politicians were calling for blue-ribbon commissions made up of government bureaucrats, university intellectuals, and captains of industry to meet and decide questions such as how many computers should be made each year. They dubbed it "industrial policy" and modeled it on the supposedly invincible Japanese system. Today no one mentions industrial policy, and even though the government continues to chase down monopolies, any suggestion that state-sponsored committees should set timetables for how much and where to invest in high tech would meet with dismissive laughter. The issue is settled: the market will decide.
The triumph of the market has launched us into a new age: the Age of the Entrepreneur. One measure of the zeitgeist is that a number of senior corporate executives are giving up their careers in order to take the entrepreneurial plunge. The business press is full of reports of traditional gray-suiters jumping ship and joining new-economy companies that give them options. George Shaheen, who used to head Andersen Consulting, is now at Webvan, the Internet grocery service. Heidi Miller, former chief financial officer at Citigroup, is now at Priceline.com. Hey, who cares about being secure and comfortable when there's a chance to get fabulously wealthy? Of course, you're not supposed to say you're doing it for the money. Thus you piously intone, "I just felt ready for a new challenge." Liar!
As usual, young people are more candid about their motives. Heidi Miller has a younger colleague at priceline, twenty-six-year-old Magdalena Mik, who recently told Forbes that her goal was to be "obscenely wealthy by the time I'm 30." Geoff Cook, a Harvard undergraduate who has set up an Internet editing service, reports, "I will feel like a failure if I am not a millionaire by my twenty-fourth birthday." Naveen Jain, who is already a millionaire, left Microsoft to start his own Internet company, InfoSpace, "to make a billion dollars for myself." Given the number of young capitalists, it makes sense to have young venture capitalists. Joshua Newman, a twenty-year-old student at Yale, runs a $6 million venture capital fund that invests exclusively in student-run businesses. A recent Web poll of two thousand undergraduates at recruitment site jobtrak.com revealed that 25 percent of the respondents intended to start their own companies and be millionaires by the age of thirty; another 25 percent were sure they'd get there by forty.
Another sign of the times: talk to the deans of some of the nation's leading business schools. A quarter to a third of their students who enroll in a two-year MBA program don't come back for the second year. Why not? Because they get a summer job with an Internet company, or they have a friend who wants them to come on board at Yahoo!, or they have an idea for a start-up and they feel they've learned enough to make it work. "We've never had this before, never in our history," confesses Edmund Wilson, dean of students at Northwestern University's Kellogg School of Management. One dean who advised a student to complete his education and then shoot for IPO heaven got this response: "Hey, man, the time to attend school is during a recession! Not when there's this much money to be made." And the dean told me he couldn't argue with the kid. Two of his professors are considering leaving teaching to get involved with new-economy companies.
What's new, of course, is not that people want to go into business and make money; what's new is that this impulse is seen as cool. Recall that a few decades ago John F. Kennedy inspired a generation of Americans by saying to them, if you are young, if you are idealistic, you should become a "public servant," you should join the Peace Corps. Millions did. The government worker was regarded as the summit of youthful idealism. By contras...
Les informations fournies dans la section « A propos du livre » peuvent faire référence à une autre édition de ce titre.
