Fred Wilson says what I’ve been thinking: That we’re in more than a financial crisis, we’re in a fundamental restructuring.
Clearly the economic downturn is the direct cause of most of these failures but I believe it is the straw that broke the camel’s back in most cases.
The internet, now closing in on 15 years old in its mainstream incarnation as the world wide web, is in many cases the underlying cause of these business failures.
Bits of information flowing over a wire (or through the air) are just more efficient than physical infrastructure….
This downturn will be marked in history as the time where many of the business models built in the industrial era finally collapsed as a result of being undermined by the information age.
Fred outlines fundamental changes in retail, banking, and auto sales, to name three industries, and then is kind enough to plug my book for more.
I also argued in a recent Guardian column that not only will specific industries be overtaken by this change but so will the structure of the economy as – post-crisis, post-Google – companies and sectors will no longer grow to critical mass through vast ownership funded by vast debt but instead, Google-like, by building networks atop platforms. Industries will change and so will the structure in which they operate.
The point in any case is that it would be a mistake to think that we will come out of this financial crisis soon wounded but still seeing the world the way we saw it before. In the graveyard of camels with broken backs, we will see a new world newly structured and we’re only beginning to figure it out.
In this sense, media – music, newspapers, TV, magazines, books – may be lucky to be among the first to undergo this radical restructuring. Communications was also early on because it – like media – appeared close to the internet and Google (though, as I say in the post below, it’s a mistake to see the internet strictly as media or as pipes; it’s something other). Other industries and institutions – advertising, manufacturing, health, education, government… – are next and they, like their predecessors, don’t see what’s coming, especially if they think all they’re undergoing is a crisis. The change is bigger, more fundamental, and more permanent than that.