Despite the fact that the Network has a kind of permanent memory, it’s not very good at remembering certain things. Or maybe it’s just that we aren’t. We see what we want to see.
During the last internet bubble we learned about startups, venture capital and burn rate. There’s a small window for new technology companies to find an exit before they burn up. The more companies in a space, the more difficult the exit.
The last bubble was burst when a list of tech companies was published that compared their cash on hand to their burn rate. Suddenly it was simple to see how much time each company had to make a profit or an exit. It wasn’t a pretty picture.
The unlimited optimism of the time quickly turned into a climate of fear. Investors suddenly wanted to see revenues and profits. It changed everything. Should someone publish such a list today, it would have a similar effect. We’ve simply forgotten that start ups burn cash, and while many things are cheaper, the fuse has just been lengthened a bit.
Another thing we seem to forget is that free communications systems fill up with spam. It’s estimated that 70% of all email is robot-generated spam. Whenever a new social communications hub is created we think that this time it’ll be different. As a social networking system matures it attracts trolls and starts to fill with spam. It’s always worked that way.
If your company is marketing to a free (non-subscription) social network, it’s likely the audience is filled with robots and spam accounts. Free access to a social network lowers barriers to growth, but it also creates a fertile ground for gaming the system.
Recently I read that 80% of mobile apps are used only once. That seems like a high number until you remember Sturgeon’s Law. This law states that 90% of everything is crap. In light of that, 80% is actually an excellent number. The other thing this should tell you is that as the ecosystem of apps matures it will revert to the norm. That means the number of apps used only once is more likely to be headed toward 90% than 70%.
If an app store has 1 million apps, 900,000 of them are crap. That leaves 100,000 that might be useful. That’s actually a pretty big number. Some say that software is going to eat everything. It’s certainly going to try and eat everything. But despite the brilliance of the young engineers writing this ravenous software, 90% of what they produce is going to be crap. It’s easy to forget when everyone’s smiling, optimistic and sure that their new technology is going to fundamentally change the way we do this or that.
It might be more helpful to look at tech start ups as though they were a slot machine programmed to take your money 90% of the time. Some can afford to play games with those odds, most can’t.