After reading today’s NYT article on the divide between “young” and “old” in the tech sector, a singular future of the current incantation of Technology Start-ups proves more perplexing than the social friction NYT has spotlighted: The Next Bubble to Pop.
Unfettered optimism and narcissistic selfishness drowns the industrial complex of start-up culture today, all despite the underlying core values and teachings emanating from this incubate-and-fail-faster focused industry. The question that should be keeping every VC, Angel and author of the next Flappy Bird app up at night should be:
What happens when all this nearly free computing infrastructure that’s available now changes in ways that today’s start-ups are unable to innovate under their current model?
The Internet, Cloud Computing and Open Source Software are all services that can be changed at any time and the structure of pricing and operation isn’t regulated by much more than a digital handshake and some clever, growth oriented idioms. Unlike previous generations of successful businesses, never before has the dependence on non-Government owned infrastructure been so critical to the success (or failure) of this tentative new breed of technological business growth.
Spoiler Alert: My inner tech-geezer is about to come out.
When I was starting out in the business of hosting websites back in 2003, I bought a server. It was loud, obnoxious and caused my house to be far too warm in the summer. I ran hosting out of my house over a 1MB DSL line for a small handful of customers. I wasn’t trying to be Rackspace, Amazon or even GeoCities (if anyone can remember THAT far back). I was simply hosting some analytic web apps that I had written (most of which are strangely still in use today) and a handful of websites for businesses that wanted to work with me.
Fast-forward to today: I still host 90% of those websites and apps from a desktop computer in my hall closet that consumes 1/20th the power and doesn’t heat my house to 100 degrees on an August day anymore. The only thing that separates me from Amazon Web Services is scale, design and business model. Technologically, we have a lot in common.
That’s not a plug for my hosting business. I’m not taking new customers. That business makes me less than $100/month in NET revenue. That hasn’t changed in over 10 years and I like it that way. Let me bring you to the point.
If every website and service provider out there on the Internet tomorrow were to close up shop or double prices (which is worse?), none of my customers are affected. Their websites and apps go on humming along from my hall closet as if the world around us had never changed.
If what the NYT article states is true, the current generation of youthful startups is mostly based on Amazon Web Services. What happens if AWS prices doubled or trippled? Fortunes would be lost in an instant. The startups that were hanging on by a fiscal thread would breathe their last breath as the dev’s frantically backed up all the source from their AWS hosted app before their account (and credit cards tied to the accounts) are cut off for good. That code they worked so hard on becomes nothing more than a paragraph on a resume.
Don’t get me wrong – I love AWS. As a computing platform, there’s a reason it’s on top of the pack. I’ve used it for my day-job working for an amazing Enterprise Information Management solution and I’ve used it for side-projects. Jeff Bezos has built something amazing.
With that said, however, if you are 20-something, dropped out of college and depending on the sweet nature of Jeff Bezos to continue to give you an incredible deal through your IPO, are you really in a position to put it all on the line?
What happens if (and when) it fails?
What next?
What’s your fall back?
Right now, you’re probably thinking two things:
1. Why is this geezer who runs web-hosting out of his hall closet for less than $100/month in NET revenue lecturing me on MY career decisions?
2. If something *WERE* to go wrong with my amazing idea, I can always find another job doing something. Facebook/Twitter/GitHub/Uber or some other Tech Startup will hire me.
I’m not talking about a fallback in the context of who’s hiring for glam tech jobs today. I’m talking hard-core-business jobs. Write code to solve actual business problems. Deploy solutions to drive efficiency (or better) and effectiveness of businesses. Develop end-to-end solutions to address real problems in the real world – hunger, poverty, AIDS, corruption. In other words, bring it back down and start the conversation with something other than “Wouldn’t it be cool if…”
Let’s review what happened in 2000. Dot-Com-BOOM. Sock Monkey’s and little Orange Scooters were all the rage. Anything was possible, thanks to this amazing thing called the Internet, cheap dial-up access, HTML and Internet Explorer. When things started to shake out, there was a lot more talk than walk and things went BUST in a way that few remember (unless you were stung by it or watched people you knew get stung by it).
Fast forward to today. We have all the makings for a new BOOM BUST – but one that stands to leave an entire generation of really smart people out in the cold.
New app ideas are getting valued before a lick of code is written. Social Media has wooed key players in traditional media who were (and continue to be) skeptical of it’s value. Amazon is starting to raise prices (Amazon Prime just went up to almost $100/year). Apple is getting greedy and pushing advertising to it’s devoted followers in new, nefarious ways.
The bubble that’s about to pop isn’t about over-promising on part of innovators. Today’s innovators are very disciplined in their ability to set limits on what they are capable of. It’s about to pop on account of infrastructure providers wanting a bigger cut. A perfect storm is brewing. One that could turn the clocks back (slightly) on innovation in the consumer technology realm and pad the pocket books of the executives who have been watching, waiting and themselves innovating for a future that puts them back in control.
You can’t build amazing things without reliable infrastructure.
Trusting Amazon, Comcast and anyone else to continue to give you what you need to support your innovation is short sighted.
I’m not suggesting that everyone do as I have done and mount a PC webserver in your hall closet so you can expunge your reliance on Jeff Bezos. In fact, I don’t recommend it for a host of other reasons. Instead – consider your life plans, aspirations and the ridiculous amounts of information that you have at your fingertips as a tool to forge ahead with your life when the bubble does pop. Where do you want to be?
Pitching a Flappy Bird clone app or explaining to a perspective employer the value that you can bring to their organization?
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