Managing in a Turbulent Market

I think there is an interesting sense in which people are always over-optimistic at the same time they are also over-pessimistic. I've said often that the Internet is the most over-hyped technology in the history of the world, but it's also the most under-estimated. Not only does the market swing from extreme to extreme, but also people's sense of what's going to happen swings from extreme to extreme. And there's a kind of counter-intuitive way you should manage particular technology investments because of that.

When things are just blowing the lid off, like during the go-go days of the dot-com bubble, rather than going out and hiring like crazy and making more investments in wilder and wilder things, you should start to pull back, start inspecting everything you do with a much sharper eye, start cutting back programs, and be much more skeptical about what's going on.

Conversely, when everything is in the dumps, pour on the coal. Now that the Internet bubble has burst, it's time to hit hard with investments in technology. Things are cheap. Innovation has slowed. What we do now has a better chance to win because it's not as obscured by clutter and nonsense, if we're doing smart things. You need to be counter-cyclical to the way the world thinks things are happening. This is the very best time to invest in the market. It's the very best time for venture capital, the very best time for technology.

People will be successful in this market - just not this month. But this is the time decisions are being made, technologies are being developed, investments are being placed on things we'll be talking about in three years. It doesn't happen over night. Nobody invents something as complex as the things we're working on now in an afternoon. What's being invented now will be suddenly important when they are mature, and it will look like an explosion of creativity and innovation again, but it is really happening very quietly right now.