By Peter Coy
What's the matter, buddy? Did you buy Priceline.com at 160 and ride it down to 3? Did the New Economy leave you battered, bruised, in the red, and short on sleep? Do you sometimes wish the term "New Economy" had never been invented?
Silicon Valley knows how you feel. Techie marketers who once poured on the phrase New Economy as liberally as hot sauce at a barbecue are running away from it now. Not only that, they've come up with something they think you'll like better. It's not the New Economy anymore. Now, it's -- get ready -- the "Next Economy."
The Next Economy. It has a nice ring, right? Next is even newer than New -- so new that, if you want to get literal, it doesn't even exist yet. That means the Next Economy is untainted (so far) by association with other terms that have acquired a bad smell recently, like "Nasdaq," "growth stock," and "widely quoted Internet analyst."
Sensing a new term entering the linguistic mainstream, I did a little research to find out where the Next Economy came from and how exactly it differs from the New Economy. I turned first to one of the phrase's earliest and most aggressive expositors, Christopher W. Lochhead, chief marketing officer of Scient Corp. "As far as I know, we were the first company in the world to use the term," Lochhead said last month -- a claim I was to hear later from several other companies. Says Lochhead: "If you still think there's a New Economy, you've got to be smoking dope."
This rap against the New Economy sounded funny coming from what seems to be a paradigmatic New Economy company. Scient, which is based in San Francisco, provides e-business services -- that is, it helps companies with their Web sites. But Scient's stock has fallen from 130 last March to about 3 lately, so by aligning Scient with the unsullied Next Economy, Lochhead may be hoping to get investors to look at the company in a new light.
What exactly is this Next Economy? According to Lochhead, it's a hybrid of the new and the old. Startups are more mature than they were in the New Economy, when, he says, "three Webmasters and a dog with 15 slides could get venture-capital funds." The Next Economy is built on new technologies like optical networking, and it's more global than the New Economy, Lochhead explains.
But that's not the last word, because Lochhead doesn't have a lock on the phrase's paternity. It has been used repeatedly over the last 20 years to meet various literary needs. For example, Paul Hawken, the environmentalist entrepreneur, wrote a book called The Next Economy in 1983, describing a planet-friendly future. In 1988, Robert Reich, then a teacher at Harvard University, wrote an essay called Dick and Jane Meet the Next Economy, about competing against low-wage, foreign countries. In 1998, there was an economics essay about the thing we call the Next Economy by J. Bradford De Long of the University of California at Berkeley and A. Michael Froomkin of the University of Miami School of Law.
More recently and more relevantly, starting last year a bunch of other tech executives started using the Next Economy in the same way Lochhead does -- namely, to distance themselves from the New Economy and yet still appear to be on the cutting edge of technological change. Says Jim McCann, CEO of 1-800-Flowers.com (its stock is off 75% from its peak): "There's no more New Economy or Old Economy. They have crashed together. And now, there's only the Next Economy." Mark Bruneau, the CEO of privately held Adventis Corp., has a more complicated worldview in which the New Economy and Next Economy are the bad and good faces, respectively, of something larger and ongoing that he calls the Information Economy.
CALL IT A PRUNE.
But let's face it: There's a problem here. Lochhead, McCann, Bruneau, and the rest of the neologists have set up a punching-bag version of the New Economy that's rather silly. In their telling, the New Economy is all about growth for growth's sake, disdain for profits, and how much money we can give to the next dude on a skateboard who says he knows Java. In reality (remember reality?) the whole idea of the New Economy, at least as put forth by BusinessWeek, is that it features higher risks along with faster growth. There are ups, and there are downs. People who say the New Economy promised the end of recessions never got the idea in the first place.
In the end, of course, the Next Economy is more about marketing than economics. Recently, California prune growers won official permission to rename their product dried plums. It was a brilliant stroke because comedians don't tell jokes about dried plums. But euphemisms last only so long. Count on it: Some day, the jokes will be about dried plums. And some day, people will be dissing the Next Economy, if the phrase ever makes it into the lexicon. What's next after Next? The spinmeisters who coined the Next Economy had better start planning now.
Coy covers economics for BusinessWeek in New York
Edited by Douglas Harbrecht