A Newtonian Look at the Internet Bust

“For every action, there is an equal and opposite reaction.”

I have always loved physics. (I am sure that statement alone just turned off half the audience.)

The thing I most love about physics is that it helps me to define what is happening around me and gather a better understanding of the world I live in. I also think almost any principle in physics has a bearing on almost any aspect of your life if you are willing and able to take a different perspective. My favorite law in the world of physics is Newton’s Third Law of Motion, which I give above. It is this short, quick statement that I think has a great bearing on the state of the Internet economy.

First There Was the Boom

Can you remember the good old days of the Internet economy? You know, 12 months ago or so when everyone was getting rich or was already rich from their inflated stock evaluations? If you had the word “Internet” in your company plan, you were a golden child and could do no wrong. Companies like Yahoo, eToys, CyberCash, and NBCi were flying high. All of this booming growth came in a relatively short period of time, over just a handful of years.

A few people questioned this growth, and a few people built businesses that failed; but, in general, everything was an economic gravy train.

Then There Was the Bust

Then the Internet gravy train came to a screeching halt. Companies suddenly started going out of business. Now it seems as if no one in the Internet space is hiring. Stock portfolios that were once measured in the millions are now measured in the thousands. And anything even remotely connected to the Internet is seen as an instant failure.

So there are two sides of the coin. Newton’s Third Law once again is rearing its mighty head. You can’t have peaks without valleys. You can’t touch without being touched. You can’t be worth billions of dollars with vaporware and not have that paper money eventually go up in smoke. That is exactly what happened to the Internet economy. It had an amazing run of fast growth, but, eventually, the world had to pay for that fast growth with a fast decline. Newton’s Third Law dictates that this is the expected course of events.

Not a Bad Thing

The interesting thing about the recent implosion of the Internet world is that it should not be viewed as unhealthy. One of the beauties of our economic system is that it always comes out of any sharp decline stronger. The companies, ideas, and people that are the true leaders will find a way to thrive in this environment. Eventually, the world will find a middle ground, and there will be business to be done. The Internet will again become valuable (maybe not to the inflated extremes it was before), and companies will start investing resources into the development and production of this medium.

I think the world is amazed at the fury of the Internet economy’s fall. Most people have never seen riches made and lost this fast in their lifetimes. They have never seen a true revolution take place in the economy, but that is what the Internet story was all about. A true revolution must also have its chaotic time afterward when no one is truly leading and everything seems to be in turmoil. Remember high school history and what you learned about the French Revolution? At least the Internet revolution didn’t cause anyone to lose his or her head literally.

What Do I Do Now?

The Internet and the online business society it has produced are hitting a bad stretch right now. I don’t know exactly when things will clear up and settle down. But since I lean on Newton’s Law to guide me, I would have to say it would be equal to the time it took for the Internet’s meteoric rise to occur (about five years).

This doesn’t mean you should just sit around and wait for this time to pass. You should adjust your plans to this environment and work to make yourself, your company, and your ideas stronger. If you can succeed in this downtime, you can succeed anytime.

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