Traditionally, when the energy price is low, there is much more money available to the other sectors of the world's economy. Among these sectors, technology sector is more attractive and also more frenzied! There is an old belief that the technology evolves rapidly and therefore the tech sector grows rapidly, so it should be a lucrative and somehow a safe target for investment. As the oil price is now under $50 per barrel, we are currently standing in a low-price energy era. So it should not be surprising when we hear that the tech companies like Uber and Slack have received so much VC funds which have currently no plan to spend them!
Although the availability of big funds is a good news for tech savvies, but if there are not enough potent innovations around, we would see another tech bubble burst in not such a long period ahead. To have a simple measure on how is the current situation of creativity, just compare the important inventions of the first 15 years of the 20th century with the important inventions of the same period in the 21st century:
Between 1900-1915, we had invented the airplane (Wright brothers), Ford's Model T (Henry Ford), radio (Ernst Alexanderson), electric washing machine (Alva Fisher), tractor (Benjamin Holt), the X-Ray machine (William Coolidge), and the relativity theory (Albert Einstein) among many other interesting inventions.
In comparison, between 2000-2015, we have invented social networks, the iPhone, and the selfie! A very poor century, is not?!
It seems for avoiding repeated tech boom-busts, we have to do two important things simultaneously:
1. We should adjust our viewpoint on the technology evolution: its speed and its costs. The current speed is far less that what was in the 20th century and the current costs are far more than the previous century.
2. We should renew our current tech sector ecosystem, specially its legal and business aspects, to be more innovative & productive. At ATG, we have been spending more than 15 years of research to come up with a solution to address some issues regarding the old fashioned legal and business models. We will talk more about them in our next posts.