The New Normal

And because Moore's Law has pushed down prices, almost every new consumer device is priced under the discretionary-spending limit of the average family. Cell-phone penetration is staggering: More than 400 million handsets were sold last year. DVD players represent the fastest penetration ever of a consumer-electronics device. You can buy a good one for $200. My favorite new product is Roomba, a $200 little robot that vacuums your whole house without any human intervention. I gave 10 of them away at Christmas. It's going to get cheaper, and it does something truly useful. We'll never again have to worry about down cycles where nobody buys this stuff because they don't understand it.

This is a very solid foundation to work from. Sure, the cost of marketing is high, because markets are now mass markets. But there are a lot of things in life worse than mass markets. Some of these markets are too big for venture-backed deals. So what? That just means that there will be interesting opportunities for large companies. That's a positive reality. To anybody who thinks that there's no room for innovation, I point to Google. It's one of the five most compelling private companies I have seen in my career. This stuff will continue to happen.

If we can't expect another startup revolution anytime soon, how will all of this growth and innovation happen?

Here's the "normal" part of the New Normal. If there's anything you need to understand about this environment, it's that the time scale has returned to a more rational level. Internet time measured everything in days or weeks. New Normal time is measured in years (probably not 3; more like 5 to 7, or even 10).

Internet time didn't actually change the nature of time; it was a kind of hormonal reaction. There was so much urgency that every standard -- for due diligence, leadership, recruiting, and investment -- was relaxed. Things moved so quickly that even dumb ideas were successful.

The New Normal is all about real life -- and real time. Everything just takes a lot longer now. If Internet time lowered every standard, today there is a compensating amount of selectivity in the system. People aren't sure what the right metrics are, so they pick arbitrary ones, and for now, the metrics are arbitrarily conservative. That applies to investing. It applies to recruiting. It applies to IT spending.

Investors and businesspeople alike have to adjust to that new time horizon. Cisco is a great example of smart thinking in this context. The company may have lost 80% of its stock-market value, but it has a clean balance sheet, a ton of cash, no debt, and respectable growth rates. One thing that Cisco is doing today that reflects a five-year time horizon is using its balance sheet as a weapon. Whenever Cisco competes against a Lucent or a Nortel for big business, it offers to finance those top-tier customers. That's smart.

Even more important than adjusting the length of your time horizon is adjusting your expectations about what the end point is. If the animating payoff of the '90s was an exit strategy that would land you on the Forbes 400 before you were 40, the New Normal expectation is, "Make your life a little better." In the late '90s, people did things that they hated for brief periods of time because they could make a lot of money doing them. When everything takes longer, it's really important to enjoy what you're doing. The question on your mind shouldn't be,

"What's my exit strategy?" It should be, "Why am I here? What am I good at? What work is the best fit for me?"