OPINION
Visit to the Echo Chamber: A Day at MIT

Earlier this fall an MBA student from MIT's Sloan School gave me a call. He wanted to invite me to be a panelist at the Seventh Annual MIT Venture Capital Conference. The conference was run by students and is part of something called MIT Innovation Week.

This is a big deal in the Boston venture capital and technology circles and beyond. For example, one of the other highlights of the week was a $50,000 entrepreneurship competition in which students' business plans are judged and the best get some funding. There was also a lot of attention given to China and India.

They wanted me to sit on a panel that discussed the future of the software industry. I was impressed and flattered, and of course I said yes.

This year's overall theme was "The Challenge of Convergence: Winning in an Uncertain World." While there were tracks and panels on software and biotech, the real buzz was about the idea of converging products around multiple forms of media and tie-ins with the entertainment industry.

From the venture capital perspective, I learned that software and biotech are topping out -- either cyclically, in the case of biotech, or as long-term propositions, in the case of software.

On my panel, where I was the only panelist not sitting on millions of investment dollars, the general consensus seemed to be that all the good ideas are already taken. It's hard to find good places to put money because there aren't any really interesting business processes left that are waiting to be automated. At least that's the way it was presented. Hosting might offer some interesting opportunities, but of course the economic model is a challenge. I had a different take on the subject, but I was the minority voice. Oh, well.

Group Dynamics

For me, the conference was at least as interesting for the cultural dynamics on display, and I learned quite a lot. First, there were the venture capitalists. My idea of a VC is of someone who keeps his or her own counsel, who uses the tools of financial and technology analysis to find investments in emerging companies and makes an investment based primarily on a belief in the company's vision of the future. While I have no doubt that that's true to a degree, at the conference the VCs sure seemed to be engaging in pack behavior. But I guess it's necessary to understand the dynamics of the pack if you need to time an investment so that it matures at the peak of a market cycle.

I sat through a session on the biotech industry, and toward the end they took questions from the audience. One of the last questions was a real eye-opener for me. Someone asked the panel when in a company's life cycle it was best to seek venture funding. The group's considered opinion was that it was never too early. "If the money's available, why not take it?" one of the VCs on the panel said. I had always heard and believed that getting venture money was something like having sex in high school -- it's a nice thing to brag about, but there are downstream ramifications that you need to consider carefully.

Another dynamic that was fun to watch was the subtle inculcation of a healthy disrespect for regulation. Several times I heard phrases like, "This event was organized by the students without any 'help' from the faculty" or "the so-called administration" -- and this was from senior faculty members. It's amazing how little time we waste indoctrinating bright young students with the idea that private infrastructure is always good and public infrastructure is always bad. I bet the faculty thinks differently about the so-called administration on pay day or when they need to have an office painted.

Convergence

But the main event was convergence, on which I am a skeptic. There are many types of convergence, and quite a few don't make much sense. My bible on the subject is a recently published book by Al and Laura Ries, two acclaimed marketing experts with a long track record to give them credibility. The book is The Origin of Brands, and its thesis is that great new products get started not through convergence but through divergence.

Convergence products are like the Swiss Army knife. Lots of people have them, but rarely are they used. The knife has a knife and fork, but they are always a last resort because regular knives and forks work a lot better. It seemed to me that this conference was a little too taken by its anticipation of the brave new world of digital convergence -- the Swiss Army knife of multi-media and entertainment or "content."

Convergence of digital media will make entertainment ubiquitous. But, frankly, I worry about a society whose growth industry is entertaining itself. One VC said that if you want to know about the future of converged technology, you should look at a teenager sitting in his or her room simultaneously surfing the Web, instant messaging, and talking on the phone. I have teenagers and can attest to that reality. For me perhaps there's a remedial course available, maybe called Stress 101.

Personally, I wish all of us had attended the workshop called "Global Ties 2004: India and China's Entrepreneurial Trajectory." There we might have glimpsed another future, and we might not have liked it. Maybe it's available on DVD.