In the 1990s, one of the greatest economic expansions in human history hitched a ride on a tech wave. The spread of computers and Internet software created a rare productivity burst that lifted incomes at almost every level and thrust the government into surplus. In the early 2000s, a tech bubble and a terrorist attack muted economic growth for a few years, before the United States discovered another engine in the housing market. Skyrocketing home prices increased wealth, encouraged middle-class Americans to borrow against the value of their abodes, and elevated the financial industry.
The tech bubble burst and the housing bubble detonated. Do we need something to replace them, and if so where will the next boom come from?
If you talk to mayors and urbanists around the country, they'll probably tell you one of three things will drive the new economy: green energy, health care, or high-tech innovation that we can export. Those might all be correct. But the United States is, above all, a service economy. In fact, if you want to talk exports, we run a trade surplus of over $100 billion in services. The next boom might be another tech boom -- in the service industry.
The most read story on the New York Times website this week is a trend piece (yes, caveat emptor, etc) on young graduates starting their own companies straight out of school. Entrepreneurship tends to increase in weak economies because it's less risky to start your own company when other companies won't hire you, anyway. Still, it's the character of this entrepreneurial spike that caught my eye. Most of the companies profiled in the piece live at the center of two Venn diagrams: the tech revolution and the service industry. Take a look:
The [Young Entrepreneur Council] consists of 80-plus business owners across the country, ages 17 to 33. Members include Scott Becker, 23, co-founder of Invite Media, an advertising technology firm recently acquired by a Google unit; Lauren Berger, 26, founder of the Intern Queen, a site that connects college students with internships; Aaron Patzer, the 30-year-old who sold Mint.com to Intuit for $170 million; and Josh Weinstein, 24, who started CollegeOnly.com, a social networking site that is backed by a PayPal founder.
One story that could emerge from the rubble of the recession is a generation of new Web entrepreneurs harnessing the Web's low-barrier, wide-access potential to create ever cheaper, easier, more efficient ways to participate in the service economy. That means monitoring our money, monitoring our health records, finding an internship or job, communicating with friends, making presentations for work, managing work flow and worker productivity, and the list goes on. Even better, in a global economy, an American edge in Web-based service products could make us tens of billions every year in licensing and service exports overseas.
At least two developments make the Web service revolution inevitable at home -- one professional and one personal. In the professional world, the move to the cloud invites developers to design software that organizes and analyzes data that lives online. In the personal world, the rise (and rise) of mobile Web access could change the way we interact with news and advertising. After all, imagine a world where sites and sponsors know what you like and where you are, and you can imagine a world where premium advertisement revenue can support almost any popular mobile phone app.
Nothing makes writers look silly more than guessing about the future, so I'll stop ... just after this point. Our friends at 24/7 Wall St. run a program that calculates the nation's largest companies by market cap based on daily stock trades. Today, three of the top four companies in the country are Apple, Microsoft and Google -- three firms that represent the pinnacle of mobile hardware and software for the home and office. You don't need to be a futurist to see the potential for another tech-powered recovery.