Wednesday Nov 08, 2006

Solutions in Search of Problems

We often demean "solutions in search of problems" and send people packing to better define what problem it is they are trying to solve. However, every solution, if it is user-driven can lead to the serving of new markets. See Clayton Christensen's The Innovator's Dilemma for several examples. For an excerpt, see here.

The history of independent inventors speaks a similar story:

The independents reserved their enthusiasm and primary creative thurst for the act of invention; they performed the entrepreneurial function of establishing companies because they wanted to bring their inventions into use. They had to establish companies because they found that firms busily presiding over well-established technologies were usually not interested in nurturing radically new technologies with which their employees had no experience and for the manufacture of which their machines and processes were not suited. The independent inventors also found that others did not nurture their inventions with the tender care and undivided attention they themselves lavished on their brainchildren.

Thomas P. Hughes, American Genesis: A Century of Invention and Technological Enthusiasm, 1870-1970

The Archeology Of The First Internet Bubble

In his Wall Street Journal "Portals" column ("The Dot-Com Bubble Is Reconsidered," Nov. 8, 2006), Lee Gomes points us to an archeological study of the Internet bubble, some of whose findings contrast with conventional wisdom regarding the boom which is "normally dated from the Netscape IPO in August 1995 to March 2000, when Nasdaq peaked at above 5100": 

A recent paper suggests that rather than having too many entrants, the period of the Web bubble may have had too few; at least, too few of the right kind. And while most people recall the colossal flops of the period (Webvan, pets.com, etoys and the rest) the survival rates of the era's companies turns out to be on a par, if not slightly higher, than those in several other major industries in their formative years.

The paper is being published in a coming issue of the Journal of Financial Economics. As noteworthy as the findings are, even more interesting is the process that led to them. The work is an outgrowth of the Business Plan Archive at the University of Maryland. Its goal is to become a kind of Smithsonian Institution of the Internet bubble, saving for posterity every business plan, PowerPoint presentation and venture-capital term sheet -- the more frothy and half-baked, the better -- that it can get its hands on.

 

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