Bits of destruction(avc.com)
avc.com
Bits of destruction
http://www.avc.com/a_vc/2008/12/bits-of-destruc.html
2 comments
This analysis is fair from a VC's point of view but incomplete.. not to reuse political slogans but there are really 2 Americas.. there are very fundamental problems faced by millions of people like lack of health care, education, and jobs (jobs people can do with their skills and culture) and then there are problems in terms of "top-line" growth.. In terms business opportunities and the "top-line" growth stories, they are going to come back in very short time and those stories do not necessarily need this "creative destruction" but just innovation and speculative greed in fields such as utilities/energy, commerce, and computing. The main problem here is - this destruction is going to push behind great many people more and more and these people are not not going to be part of next growth cycle and many of them were already not part of it for last many years (but people ignored assuming America is great.and all Americans are in great shape.. the problem is going to be even more severe now).. This destruction can be called "creative" only if it creates new business opportunities as well as social uplifting.. it is not going to be the case as there are going to be huge social issues through this destruction so we need to consider the whole picture
The thing is, most of the "bits" companies survive courtesy of the "atoms" companies, either through advertising (Google) or through selling to them (shrink-wrap software). Any shakeout in the atoms sector is going to hit the bits sector pretty hard. The sale of pure digital products (i.e. with no physical components at all) is pretty damn tiny.