Fast Talk: Lessons From The New Economy

Sue Bostrom

Senior vice president, Internet Business Solutions Group and Worldwide Government Affairs
Cisco Systems Inc.
San Jose, California

At Cisco, we have stayed close to the core of the technologies and products that we want to bring to market, and also to our culture. That was a stabilizing influence during the telecom meltdown. I look at the team we have now, and our focus and our orientation, and I think it has been quite a reaffirming experience. I'm not saying I want to go through it again, but it has been fulfilling to see things play out in the way that they have.

What we learned: Internet productivity is real. Internet technology can produce huge returns. Even in challenging economic times, business leaders found that phenomenal levels of productivity were being generated by many of the Internet applications they experimented with in the late 1990s. The growth in U.S. productivity tracks at about a 99% rate with the growth in IT investment and capital investment.

When I got my MBA here in Silicon Valley in the mid-1980s, you maybe had to take a programming course. But you didn't think about technology in the same way you do today. Much like human resources, physical plants, and finance, information technology is a real way to change your business and enable your competitive advantage. That is a phenomenal shift. And we're just at the beginning of it.

At the end of the day, what really matters is your competitive differentiation, your human capital, and your financial capital. Companies are differentiating themselves by how they use technology to supercharge the assets they already have. Over the past five or six years, companies have been experimenting--and seeing success--with specific applications, and I think that will continue. The opportunities we see over the next five years could be even more significant.

Cisco calculates its own bottom-line impact from the Internet at $2.1 billion for fiscal year 2003.

Robert Shiller

Professor of economics
Yale University
New Haven, Connecticut

What we had in the 1990s was a classic bubble. It's the biggest one we've ever had. You would think that people would have learned about bubbles by now. But they're hard to see as they're happening.

The essence of a bubble is that people sense something is fundamentally different now than before. And they tend not to appreciate past advances. So they think things are going to grow much faster now than they have in the past. The history of the past couple of centuries has been one of enormous technological progress. Every decade shows advances over the previous one. The question is whether the pace is accelerating now.

It could be that this time the technological revolution is, in fact, different. The ability of computers to do what people used to do is accelerating very fast. It's amazing how much our lives have changed in the past 5 or 10 years. We're spending our days sitting at these computer terminals now. But it's hard to know where that's going. I think that new business methods are gradually going to be discovered that rely on this new technology. I say "gradually discovered" because realizing the impact of info tech for a business is something that takes time. It's just hard to understand what's coming up.

I worry that the acceleration of computer technology is finally taking a bite and eliminating jobs. Improved information technology could create a winner-take-all effect. I'm sure there will be more Bill Gateses--really rich people who are not rich today. But I don't know if that is going to affect the whole economy favorably. I worry about millions of people being left behind and falling in their standard of living. I think that widening gap may be the most important issue of this time.

Shiller's latest book is The New Financial Order (Princeton University Press, 2003).

Jeffrey Dachis

Cofounder and former CEO Razorfish Inc.
CEO, chairman, founder, and managing director Studio Holdings LLC
New York, New York

We had the best company in the world. Period. The fastest growing, the most profitable. But I had to learn about humility. Telling everybody we were the best--that worked really well in the beginning and then it worked absolutely against us in the end. If you come off as too aggressive, you risk this backlash.

The time was right to start Razorfish because people needed the services that we were offering. I was like a shovel salesman in the gold rush. I didn't care what you were trying to do with your B-to-B, or whether your VCs were funding you, or whatever. Just pay me cash--that's how it worked.