This week, shares in Google, Facebook, and Tesla reached an all-time high on Wall Street, helping push the NASDAQ to its tallest peak since the dot-com crash 14 years ago. These three tech outfits are very different operations, but right now, they have at least one thing in common: each has taken a strong stance on unproven tech. On Wall Street, it seems, risk is in. The question is whether such faith in Silicon Valley’s aggressive optimism will ultimately be rewarded.
Facebook just spent $19 billion on ad-free messaging service WhatsApp. Google is buying up robotics companies and artificial intelligence startups — as well as the smart thermostat maker Nest — in a bid to become the digital mediator not just on computing devices but across the rest of the physical world. And Tesla is positioning itself not as a car company, but an energy company that happens to make cars. In the past, bankers in bow ties and suspenders may have eyed extreme risk with skepticism, but today’s Wall Street is embracing the sunny confidence of Silicon Valley “disruption.”
During the dot-com bubble, investors threw money at everything on the internet, because no one knew the value of any of it. The medium was just too new. But that’s not what’s happening here. Two decades after the web reached the mainstream, the contours of our tech future have become clearer. We have a better idea of which players have the greatest influence over the shape of things to come. This winnowing seems to have inspired a new attitude among investors. These days, the market isn’t betting on everything. It’s not even betting on Apple. But it is making big bets on businesses that are themselves betting big.
Facebook Escapes Friendster’s Fate
Ironically, Facebook’s initial opportunity to define the future came because the company that got there first couldn’t follow through. Friendster launched in 2002, two years before Facebook, and it showed early signs of owning the concept of online “friending.” But Facebook’s superior execution, combined with Friendster’s missteps, allowed Mark Zuckerberg and his band of accidental billionaires to become the internet’s default social network.