Great Expectations

With all that's being written about investment bubbles, I have been thinking about a key difference between '10 and '00 in New York. The foundation of my thinking is based on a wonderful book on Urban Planning by Jane Jacobs "The Death and Life of Great American Cities".

In this seminal work, she explains how a city's lifeblood is its diversity. She highlights diversity in its broadest sense, diversity of housing stock, income levels, pathways to commute to work, etc. In short the combination of diversity and people density leads to a dynamism that makes cities great. I believe this thinking can be extended to markets too.

In '00 the NY Internet economy was precariously perched, like an inverted pyramid resting on three fragile letters; C P M. We had an advertising centric model that collapsed with the implosion of advertising based metric. Today's market is stunningly different. Of course, we have a host of firms in advertising related businesses, however, it's a diverse group of video, infrastructure, SEO, and PPM oriented technologies. But it doesn't stop there. Complementing the advertising arena are paid mobile applications, free to play gaming, communications and payment firms. Adding to this are destination sites in commerce, banking and pharma. You get the picture, diversity in its broadest sense of business models, customers, technologies and infrastructure.

In the past decade a combination of diversity and density has emerged that's led to a dynamism which is making the NY internet market great. Of course, markets will continue to ebb and flow, but with thousands of young companies, complemented by thousands of GOOG, AOL and Gilt Group employees makes today far different than yesterday.