You're going to see some other speakers today, I already know,

who are going to talk about breaking-bones stuff,

and, of course, with technology it never is.

So it's very easy, comparatively speaking, to be resilient.

I think that, if we look at what happened on the Internet,

with such an incredible last half a dozen years,

that it's hard to even get the right analogy for it.

A lot of how we decide, how we're supposed to react to things

and what we're supposed to expect about the future

depends on how we bucket things

and how we categorize them.

And so I think the tempting analogy for the boom-bust

that we just went through with the Internet is a gold rush.

It's easy to think of this analogy as very different

from some of the other things you might pick.

For one thing, both were very real.

In 1849, in that Gold Rush, they took over $700 million

worth of gold out of California. It was very real.

The Internet was also very real. This is a real way for humans to

communicate with each other. It's a big deal.

Huge boom. Huge boom. Huge bust. Huge bust.

You keep going, and both things are lots of hype.

I don't have to remind you of all the hype

that was involved with the Internet -- like GetRich.com.

But you had the same thing with the Gold Rush. "Gold. Gold. Gold."

Sixty-eight rich men on the Steamer Portland. Stacks of yellow metal.

Some have 5,000. Many have more.

A few bring out 100,000 dollars each.

People would get very excited about this when they read these articles.

"The Eldorado of the United States of America:

the discovery of inexhaustible gold mines in California."

And the parallels between the Gold Rush and the Internet Rush continue very strongly.

So many people left what they were doing.

And what would happen is -- and the Gold Rush went on for years.

People on the East Coast in 1849, when they first started to get the news,

they thought, "Ah, this isn't real."

But they keep hearing about people getting rich,

and then in 1850 they still hear that. And they think it's not real.

By about 1852, they're thinking, "Am I the stupidest person on Earth

by not rushing to California?" And they start to decide they are.

These are community affairs, by the way.

Local communities on the East Coast would get together and whole teams

of 10, 20 people would caravan across the United States,

and they would form companies.

These were typically not solitary efforts. But no matter what,

if you were a lawyer or a banker, people dropped what they were doing,

no matter what skill set they had, to go pan for gold.

This guy on the left, Dr. Richard Beverley Cole,

he lived in Philadelphia and he took the Panama route.

They would take a ship down to Panama, across the isthmus,

and then take another ship north.

This guy, Dr. Toland, went by covered wagon to California.

This has its parallels, too. Doctors leaving their practices.

These are both very successful -- a physician in one case,

a surgeon in the other.

Same thing happened on the Internet. You get DrKoop.com.

(Laughter)

In the Gold Rush, people literally jumped ship.

The San Francisco harbor was clogged with 600 ships at the peak

because the ships would get there and the crews would abandon

to go search for gold.

So there were literally 600 captains and 600 ships.

They turned the ships into hotels, because they couldn't sail them anywhere.

You had dotcom fever. And you had gold fever.

And you saw some of the excesses

that the dotcom fever created and the same thing happened.

The fort in San Francisco at the time had about 1,300 soldiers.

Half of them deserted to go look for gold.

And they wouldn't let the other half out to go look for the first half

because they were afraid they wouldn't come back.

(Laughter)

And one of the soldiers wrote home, and this is the sentence that he put:

"The struggle between right and six dollars a month

and wrong and 75 dollars a day is a rather severe one."

They had bad burn rate in the Gold Rush. A very bad burn rate.

This is actually from the Klondike Gold Rush. This is the White Pass Trail.

They loaded up their mules and their horses.

And they didn't plan right.

And they didn't know how far they would really have to go,

and they overloaded the horses with hundreds and hundreds of pounds of stuff.

In fact it was so bad that most of the horses died

before they could get where they were going.

It got renamed the "Dead Horse Trail."

And the Canadian Minister of the Interior wrote this at the time:

"Thousands of pack horses lie dead along the way,

sometimes in bunches under the cliffs,

with pack saddles and packs where they've fallen from the rock above,

sometimes in tangled masses, filling the mud holes

and furnishing the only footing for our poor pack animals on the march,

often, I regret to say, exhausted, but still alive,

a fact we were unaware of, until after the miserable wretches

turned beneath the hooves of our cavalcade.

The eyeless sockets of the pack animals everywhere

account for the myriads of ravens along the road.

The inhumanity which this trail has been witness to,

the heartbreak and suffering which so many have undergone,

cannot be imagined. They certainly cannot be described."

And you know, without the smell that would have accompanied that,

we had the same thing on the Internet: very bad burn rate calculations.

I'll just play one of these and you'll remember it.

This is a commercial that was played on the Super Bowl in the year 2000.

(Video): Bride #1: You said you had a large selection of invitations. Clerk: But we do.

Bride #2: Then why does she have my invitation?

Announcer: What may be a little thing to some ... Bride #3: You are mine, little man.

Announcer: Could be a really big deal to you. Husband #1: Is that your wife?

Husband #2: Not for another 15 minutes. Announcer: After all, it's your special day.

OurBeginning.com. Life's an event. Announce it to the world.

Jeff Bezos: It's very difficult to figure out what that ad is for.

(Laughter)

But they spent three and a half million dollars

in the 2000 Super Bowl to air that ad,

even though, at the time, they only had a million dollars in annual revenue.

Now, here's where our analogy with the Gold Rush starts to diverge,

and I think rather severely.

And that is, in a gold rush, when it's over, it's over.

Here's this guy: "There are many men in Dawson

at the present time who feel keenly disappointed.

They've come thousands of miles on a perilous trip, risked life, health and property,

spent months of the most arduous labor a man can perform

and at length with expectations raised to the highest pitch

have reached the coveted goal only to discover

the fact that there is nothing here for them."

And that was, of course, the very common story.

Because when you take out that last piece of gold --

and they did incredibly quickly. I mean, if you look at the 1849 Gold Rush --

the entire American river region, within two years --

every stone had been turned. And after that, only big companies

who used more sophisticated mining technologies

started to take gold out of there.

So there's a much better analogy that allows you to be incredibly optimistic

and that analogy is the electric industry.

And there are a lot of similarities between the Internet and the electric industry.

With the electric industry you actually have to --

one of them is that they're both sort of thin,

horizontal, enabling layers that go across lots of different industries.

It's not a specific thing.

But electricity is also very, very broad, so you have to sort of narrow it down.

You know, it can be used as an incredible means of transmitting power.

It's an incredible means of coordinating,

in a very fine-grained way, information flows.

There's a bunch of things that are interesting about electricity.

And the part of the electric revolution that I want to focus on

is sort of the golden age of appliances.

The killer app that got the world ready for appliances was the light bulb.

So the light bulb is what wired the world.

And they weren't thinking about appliances when they wired the world.

They were really thinking about --

they weren't putting electricity into the home;

they were putting lighting into the home.

And, but it really -- it got the electricity. It took a long time.

This was a huge -- as you would expect -- a huge capital build out.

All the streets had to be torn up.

This is work going on down in lower Manhattan

where they built some of the first electric power generating stations.

And they're tearing up all the streets.

The Edison Electric Company, which became Edison General Electric,

which became General Electric,

paid for all of this digging up of the streets. It was incredibly expensive.

But that is not the -- and that's not the part that's really most similar to the Web.

Because, remember, the Web got to stand

on top of all this heavy infrastructure

that had been put in place because of the long-distance phone network.

So all of the cabling and all of the heavy infrastructure --

I'm going back now to, sort of, the explosive part of the Web in 1994,

when it was growing 2,300 percent a year.

How could it grow at 2,300 percent a year in 1994

when people weren't really investing in the Web?

Well,