The Coming Depression

by John C. Dvorak, PC Magazine26 April 2000 - Youth rules.

by John C. Dvorak, PC Magazine

26 April 2000 - Youth rules. One venture capitalist even went so far as to say publicly that he wouldn't invest in any company started by anyone over the age of 27.

Meanwhile, we're starting to hear more and more complaining from men and women over 40 about how difficult it is to get a job, even at a time of nearly full employment. You can be sure anyone over 40 can't get funded in today's market. If you're over 40 and have already been successful a few times, you can fund yourself.

Everyone assumes that if you're over 40 and haven't already made millions, you're simply a loser. Dead wood. We won't discuss how guys like Ray Kroc, founder of McDonald's, made his move as an entrepreneur at age 52. Times have changed, they say. Have they?

Funding isn't the only difficulty. The job opportunity situation worsens after 50, and I can't even image how people over 60 find work, other than as trainees at fast-food restaurants.

The problem isn't ability. It's style. Older workers and many older executives don't work like younger workers and these child executives we keep reading about. They don't or won't work routine 16-hour days. Many have families and real responsibilities. A recent college grad probably isn't even dating if he or she is in high tech. Zero personal responsibilities and no life. Perfect! Life is better at the office anyway, with its gym and high-speed Internet access and free Coke and juice. Besides, that fat guy down the hall always overorders pizza, and you get free leftovers. This is the life.

We're led to believe that old-fashioned companies, the kind that accommodate older employees who look forward to retirement, can't compete with companies filled with overworked kids who dream of stock options.

I constantly hear the speech about how these kids come straight out of school with no preconceived notions as to how things should be done, and how that's a clear advantage. These go-getters are not burdened by the old ways of thinking that hurt old-fashioned companies. The kids do things a new way! They think out of the box. Blah, blah, blah. Of course, once things get going, they have to turn to a seasoned veteran to make things run smoothly or to even stay in business. (Yahoo! did this the right way.) And all that talk assumes that the business ideas are sound in the first place. As you go through dot-com business plans, it's obvious that some are more likely to do well than others. Some schemes are just plain baffling. Flooz comes to mind. I also think that all the money giveaway sites are daft. But maybe I'm just an old-fashioned geezer (cough).

In fact, what we're witnessing is a period of prosperity and decadence that's reflected in the investments and the success stories. It has nothing to do with youth. The youth issue is bogus. If the stock market crashes and we go into a real bear market, all this talk will end. The dot-commies know that, and that's why they're so panicky during these stock market lapses. Watch them whine! Watch their eyes bulge! Despite the cockiness born of youth, even they know that they're playing in a house of cards.

What we fail to see is that booming economies are historical anomalies. They happen every so often but they aren't the norm any more than a wartime economy is the norm or a depression is the norm. They are all extremes.

My theory is that when people go through their formative years or early maturity--and I'll guess those years to be between 17 and 30--they get imprinted with the theme of the period. Many of us have parents who went through the Depression, for example, and we get to hear tales of woe as if it never ended, or as if it will happen again any minute. "When I was your age, we worked for a nickel a day--and that was good money back then!"

So what happens to these young dot-com executives when the scene tanks and they have to get real jobs? Few, if any, will take their pots of cash and put them in municipal bonds; of that I'm sure. They'll plunge it back into what they know best: the crapshoot, go-go, dot-com scene or something that feels the same. They'll be in the best position to benefit the next time a boom comes around, if it comes around again in their lifetimes. But until then, I'm predicting that these people will become some of the worst investors and worst managers in the history of business and will take the country to ruination when times change. (I just need to get this on the record before the competition does!) The result: a depression that will rival 1929. Okay, I've said it.

We keep forgetting that in a hurricane, even pigs can fly. We have a lot of flying pigs around us, in case you haven't noticed.

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