State of the New Economy

That is also what keeps me up at night. It's the truly powerful challenge of the scale: Even as you grow from an idea and a few people into a global company with millions of customers, you have to service your Web site and satisfy your customers. And that requires the ability not only to deal with complex software but also to develop that software with teams who haven't worked together for very long. It is a managementand leadership challenge of the first order -- one that I suspect will keep Internet-company CEOs up at night for years to come.

Jay Walker (walker@walkerdigital.com) has more than 40 issued patents to his credit and roughly 325 pending U.S. and international patents -- all of which emanate from Walker Digital, an intellectual laboratory that he founded in 1994. At Walker Digital, some 60 inventors develop proprietary business models that use the new tools of the Digital Age to solve business problems, apply for patents, and then spin those models into companies like priceline.com.

Nathan Myhrvold

Cofounder and Copresident
Intellectual Ventures LLC
Bellevue, Washington

Of all the great historical revolutions, I prefer the Internet Age -- because it's a revolution of the mind. The new economy is about rethinking and reshaping what has already happened. It's about producing fertile ground for radically new ideas. Workers with good ideas, or the ability to generate ideas, can write their own ticket. We're talking about the democratization of power.

I'm excited about the overwhelming sense of human potential in the new economy. Of course, for every good idea, there's a glut of bad ones. We'll see a boom-and-bust cycle that's caused by less-than-good ideas. The result? An unsettling phenomenon: Companies go public when they should be rethinking their business models. When those companies fail, some people write off the whole revolution. They punish the legitimate companies, thereby hurting their ability to attract capital.

We can't claim victory -- not yet. We must first revolutionize the economy, and we're less than 10% of the way there. What we've created is a new approach, a new set of tools, a new model that can be applied to almost anything. Ten years ago, we didn't have the technological leverage to change human interaction totally. Now we do. If we look at where we are today, we'll see that in 20 years, we will have transformed human behavior.

Nathan Myhrvold (nathanm@intven.com) cofounded Intellectual Ventures LLC, a private partnership that explores entrepreneurial pursuits in technology and in biotechnology. Previously, he worked for 14 years as chief technology officer at Microsoft.

Paul Saffo

Director and Roy Amara Fellow
Institute for the Future
Menlo Park, California

As a technology forecaster, I feel like a seismologist who has the good fortune to be standing in the epicenter of the 1906 San Francisco earthquake.

What excites me most about the new economy is that we're in the middle of a fundamental change in the nature of commerce, in the nature of capitalism. Commerce isn't about buying stuff -- it's about interacting with people in different ways. And that's happening everywhere.

Digital technology has enormous potential to bring communities together in absolutely unheard-of ways. It's the solvent leaching the glue out of our economic structures. As we build new economies, we create a whole renegotiation of culture. We forge new systems, new industries, and, above all, new relationships. And that's what makes commerce so fascinating.

If there's a rule for the new economy, it's to keep your head about you, because we're in the midst of exhilarating change. And that kind of excitement inevitably leads to a sobering downside.

My fear? Overexuberance. And it has already happened. Too much excitement too early inevitably leads to an overreaction in the form of disappointment -- hence the danger. Technology may be getting more sophisticated, but humans are as crazy as ever. If you scratch the surface of every "normal" person, you'll find that everyone has some crazy passion for something irrational -- such as Beanie Babies. And the Internet allows that madness to multiply. We've seen it with urban legends. We've seen it with unrealistic pricing on eBay. We've seen it with Internet valuation. Economically, such a forum can lead to enormous foolishness. We may have shiny, new computers, but we're still capable of the South Sea Bubble and Tulipmania.

Despite rapid change, we can't repeal the laws of gravity and common sense. Even in moments of tremendous excitement, we must remember that when monumental change is afoot, a revolution doesn't happen overnight. Brace yourself: We're at the beginning of a transformation that will continue for a couple of decades.

Paul Saffo (psaffo@iftf.org) is a technology forecaster and the director of the Institute for the Future, a 30-year-old nonprofit foundation that provides strategic-planning and forecasting services to blue-chip corporations and government agencies. In 1997, the World Economic Forum named Saffo one of 100 "Global Leaders for Tomorrow."