Bubble or Revolution: Why Not Both?

Bubbles in Short term, Revolution in Long term.

Sahil wrote: “When millions are buying to sell: bubble.

When millions are buying to own: revolution.”

https://twitter.com/shl/status/1370798254930104323

Dotcom Boom in 1999 is a great example. Definitely a Bubble and completely imploded in 2001 as I lived through the painful aftermath. But fast forward 20 years later, the internet has been a revolution that has affected almost every business and person on the planet.

Having participated, operated and invested in numerous categories and technology markets, trends can be both. A Bubble in the short term but a game changing Revolution in the long term. Using the Gartner Hype cycle as a tool, you can pretty much chart every single major technology trend that has happened over the last 2 decades. 3D Printing, Food Delivery Startups, Bitcoin/Crypto, SaaS, Insurancetech, Autonomous Driving, SPACs & the long list goes on.

Phase 1 Innovation Trigger: which has initial heat from the hardcore and fanatics

Phase 2 Peak of Inflated Excitement and Hype where everyone seems to be making a crazy amount of money. Tonnes of new startups join this category. VCs mindlessly invest, followed by Big Corporates and Wall Street.

Phase 3 Bubble Pops and we get the “Trough of Disillusionment”: All the “Get rich quick” type guys leave the market. The Media writes off the space. But the hardcore stay and continue building.

Phase 4 Slope of Enlightenment: Where the technology gets legs and starts being used by the mainstream. Clear winners emerge, a category becomes recognized by the media. People start making money again.

Phase 5 Plateau of Productivity: Everyone is using this that it just becomes standard and normalized.

Very simple, right? Simple but not always easy to execute against. These cycles happen over a very long cycle that usually ranges from 8 to 15 years.

All these steps seem really basic but with our regular human short term-ism, goldfish-like attention spans and lack of discipline, it’s really hard to pay attention to these. We get so burned or scared by the popping of the bubble, that we choose to ignore it. Or more likely we lack the courage to act. As well, shiny new objects continue to show up and distract us with what appears to be easier or exciting things.

This is why it’s the long term players who seem to do well when it comes to the technology industry. As Naval says:

“Play Long term Games with Long term Players, All Returns in Life Come from Compound Interest in Long-Term Game”

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