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  • When you think about resilience and technology it's actually much easier.

  • 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, it was because that heavy infrastructure had already been laid down.

  • So the light bulb laid down the heavy infrastructure,

  • and then home appliances started coming into being.

  • And this was huge. The first one was the electric fan --

  • this was the 1890 electric fan.

  • And the appliances, the golden age of appliances really lasted --

  • it depends how you want to measure it --

  • but it's anywhere from 40 to 60 years. It goes on a long time.

  • It starts about 1890. And the electric fan was a big success.

  • The electric iron, also very big.

  • By the way, this is the beginning of the asbestos lawsuit.

  • (Laughter)

  • There's asbestos under that handle there.

  • This is the first vacuum cleaner, the 1905 Skinner Vacuum,

  • from the Hoover Company. And this one weighed 92 pounds

  • and took two people to operate and cost a quarter of a car.

  • So it wasn't a big seller.

  • This was truly, truly an early-adopter product --

  • (Laughter)

  • the 1905 Skinner Vacuum.

  • But three years later, by 1908, it weighed 40 pounds.

  • Now, not all these things were highly successful.

  • (Laughter)

  • This is the electric tie press, which never really did catch on.

  • People, I guess, decided that they would not wrinkle their ties.

  • These never really caught on either:

  • the electric shoe warmer and drier. Never a big seller.

  • This came in, like, six different colors.

  • (Laughter)

  • I don't know why. But I thought, you know,

  • sometimes it's just not the right time for an invention;

  • maybe it's time to give this one another shot.

  • So I thought we could build a Super Bowl ad for this.

  • We'd need the right partner. And I thought that really --

  • (Laughter)

  • I thought that would really work, to give that another shot.

  • Now, the toaster was huge

  • because they used to make toast on open fires,

  • and it took a lot of time and attention.

  • I want to point out one thing. This is -- you guys know what this is.

  • They hadn't invented the electric socket yet.

  • So this was -- remember, they didn't wire the houses for electricity.

  • They wired them for lighting. So your -- your appliances would plug in.

  • They would -- each room typically had a light bulb socket at the top.

  • And you'd plug it in there.

  • In fact, if you've seen the Carousel of Progress at Disney World,

  • you've seen this. Here are the cables coming up into this light fixture.

  • All the appliances plug in there. And you would just unscrew your light bulb

  • if you wanted to plug in an appliance.

  • The next thing that really was a big, big deal was the washing machine.

  • Now, this was an object of much envy and lust.

  • Everybody wanted one of these electric washing machines.

  • On the left-hand side, this was the soapy water.

  • And there's a rotor there -- that this motor is spinning.

  • And it would clean your clothes.

  • This is the clean rinse-water. So you'd take the clothes out of here,

  • put them in here, and then you'd run the clothes through this electric wringer.

  • And this was a big deal.

  • You'd keep this on your porch. It was a little bit messy and kind of a pain.

  • And you'd run a long cord into the house

  • where you could screw it into your light socket.

  • (Laughter)

  • And that's actually kind of an important point in my presentation,

  • because they hadn't invented the off switch.

  • That was to come much later -- the off switch on appliances --

  • because it didn't make any sense.

  • I mean, you didn't want this thing clogging up a light socket.

  • So you know, when you were done with it, you unscrewed it.

  • That's what you did. You didn't turn it off.

  • And as I said before, they hadn't invented the electric outlet either,

  • so the washing machine was a particularly dangerous device.

  • And there are --

  • when you research this, there are gruesome descriptions

  • of people getting their hair and clothes caught in these devices.

  • And they couldn't yank the cord out

  • because it was screwed into a light socket inside the house.