The Tech Bubble

Ben Horowitz and Steve Blank are having just about the most interesting debate via The Economist about whether or not we are entering, starting, exiting, or experiencing a tech bubble.

While I leave this argument to smarter people, I would like to suggest that regardless of whether or not the new starting lineup of tech IPOs - LinkedIn, Groupon, Salesforce.com - are here to stay or are overvalued, the simple fact they are even receiving financial backing is encouraging. Considering the housing market is still tanking and the economy is still sputtering, it is quite amazing that they are going public, and now.

The reason: People are dying to believe that the digital age is just getting started.

So don’t buy, but certainly get on board (I’m not one to speculate, so if you are buying stock in these new IPOs, proceed at your own risk). I am a strong believer of the Digital Tipping Point and these IPOs, for better or for worse, are part of us getting closer to that moment.

The Digital Tipping Point theory says that at some point in time, when even your Grandpa has a smartphone, and Google and Apple and PayPal have finally figured out how they can all make money by having you buy your groceries with your smartphone, everything will change. Like an earthquake releasing all the energy from earth, so will digital technology all the sudden be . . . everywhere.

You might be sitting there thinking – well isn’t it already? Yes, but no. (Consider my Mom still takes out cash without exception on their vacations even though nearly every store she will encounter on her vacation will take all forms of credit. For many like my Mom, they certainly have a way to go; habits are hard to break.)

Even so, for the optimistic, it is only a matter time. What will happen? Who knows. The DTP theory doesn’t look to explain that part, it just suggests that it will happen and when it does happen, you will know. It represents a fundamental change of how we live and interact with each other.

So what’s the point? The point is that despite all of the negativity about our financial futures, people are still using the digital medium to turn ideas into realities in a real and measurable way; the very existence of this new lineup of IPOs proves that. So even if every new IPO is overvalued and fails, the point is that we should be thankful that they even exist.

Their presence asks us to look at our own businesses and wonder how a more digital world can and will impact our bottom lines. Ask yourself: If the DTP started tomorrow would my business have 360-degree readiness?

Remember, the DTP will affect everything: how your product are produced, promoted, and sold.

Does your marketing department utilize digital media to its fullest and most logical degree even today? Do they have a game plan for the DTP of the future? How is your organization using social media and digital promotion? These are the questions you and your business should be pondering and fast. If you are unsure on any of these fronts, consider yourself warned.

This new lineup of tech IPOs is a wakeup call to anyone using the digital medium to build and support a brand. They represent the vast possibilities, and possibly their being overvalued is not a signal that another tech bubble is on the horizon, but rather that the Digital Tipping Point is coming and to survive, you best get ready.  

Dan Hughes is an Account Manager at Atomicdust, working with our clients daily to develop marketing strategy. If you spot a guy wandering around downtown St. Louis in a Lacoste polo drinking iced coffee, say hi. It’s probably him.