Predicting a long boom, driven by technology

A lot of VCs love Carlota Perez’s framework for understanding technological revolutions, financial bubbles and golden ages. Fred Wilson is a big fan, I wrote about her back in 2009, and now Marc Andreessen was talking about her in an interview he gave last month. He summarised her theory of development, bubble, crash and deployment like this:

First the new technology is not taken seriously at all. Then it’s taken way too seriously way too quickly – everybody gets too excited. Then there’s a gigantic catastrophe; and only then stuff actually starts happening.

That ‘stuff happening’ phase is where we’re at now, and it’s what Perez calls a ‘golden age’. Internet technologies are getting adopted at mass scale for real world functions that make money. Look at AirBnB, Uber, ASOS, King, and many others. Establishing the right regulatory framework is key to establishing a long golden age such as we had in the 1950s and 1960s and you can see governments the world over struggling to get that right now. If they do then we are in for another long boom.

There are many things that might go wrong, to be sure, but overall I’m hopeful. That’s techno-utopia for you.

  • http://www.troglo.net Henning Moe

    Nic, thanks for a good blog. Your short posts are perfect, and you commentary is interesting.

    I am not experienced in raising funds or funding companies, but industries, companies and individuals will always look for frameworks and theories that confirms and validates their decisions. So if you don’t mind me saying so, it seems very convenient for VCs to buy into Carlota Perez at this particular time;) I am not a Carlota Perez expert either though, so I may be speaking out of line… Thoughts, Nic?

  • http://www.theequitykicker.com brisbourne
  • http://www.troglo.net Henning Moe

    True! I am guilty of that in my industry as well… I guess I should add that as an entrepreneur I certainly hope you and many with you are right.

  • nick price

    I am interested in the definition of “right” for the “regulatory framework”. Who is to say what is “right”? Perpetuating a golden age of one technology can inhibit the emergence of the next one or even provoke it.

    In the Information Technology (IT) wave we have seen DVD zoning as a regulatory framework for digital content based on physical media. This framework has subsequently been undermined by another IT wave development, internet technologies. These technologies lead to content ripping from licensed media sources and unlicensed file sharing. The nature of internet technologies is that they allow regulatory frameworks to be overcome.

    A surge of businesses developed using the internet to disintermediate not only traditional business models but also the associated regulation. The power of the internet is that the businesses in that surge can be undermined in turn by new smarter and agile businesses (or even re-centralised services.) A call for regulation from within an industry that developed from smartly avoiding it is an interesting proposition. It might be seen as a signal of wave stagnation and an effort to protect the incumbent.

    To avoid problems of stagnation, regulation to perpetuate a ‘golden age’ would need to be designed to encourage new entrants rather than locking them out through complex compliance (and protection of the compliant incumbents.) Thematically this would also include encouraging contemporary ecosystem properties of emergence (of new), evolution (of existing) and predation (of old).

    Thank you for provocative post Nic.

  • http://www.theequitykicker.com brisbourne

    Hi Nick

    The right regulatory framework is one which promotes growth and well being. It would need to incorporate the elements you describe and more, including a new macroeconomic framework.

    Thanks for the comment.

    Best,
    Nic