By Michael Lewis
Norton -- 236pp -- $23.95
If there's one thing about the dot-com boom that really struck a nerve with businesspeople and the general public, it was the sheer hubris of its young leaders. After all, a bunch of arrogant know-nothings was trying to use the Internet to hijack industries that took decades or centuries to build. When these upstarts failed, the Establishment rushed to conclude that it would win the Net spoils.
But if author Michael Lewis is right, and he almost certainly is, the kids will triumph--sooner than we think. In his new book, Next: The Future Just Happened, the author of the 1989 best-seller Liar's Poker contends that the Internet is already spurring much bigger changes than anybody realizes, not just in business but in society at large. He views it as a potent new weapon for amateurs of all stripes, especially the young, to wield against what he sees as the crumbling hegemony of professionals such as lawyers, stock analysts, and media executives. In a world that is rapidly being changed by technological forces such as the Internet, Lewis contends, the kids have a huge leg up on old fogeys over the age of 30.
And when he says "kids," he's not kidding. Lewis' 1999 book, The New New Thing, explored the psyche of Netscape Communications Corp. cofounder James H. Clark, concluding that entrepreneurship depends on a profound indifference to the past. In Next, Lewis follows the surprising exploits of several teenagers with virtually no past at all, as they blithely chip away at the foundations of multitrillion-dollar industries. "The Internet had made it possible for people to thwart all sorts of rules and conventions," he writes, and no one noticed this sooner than children.
Jonathan Lebed, for instance, is a 14-year-old New Jersey kid whom the Securities & Exchange Commission accused of profiting by fraudulently manipulating stocks through aliases on online message boards. The case was settled last September, but what the SEC didn't reveal at first was that Lebed got to keep most of his profits--some of which he used to buy a $41,000 Mercedes SUV he couldn't yet drive--because it wasn't clear that most of the trades were illegal. Indeed, given that Lebed apparently did firsthand research on many companies, it's not even clear to Lewis what he did wrong. In the author's view, financial firms are paid big bucks to do much the same thing: Recommend stocks and profit on their rise.
The upshot: If a 14-year-old with a Net connection could move markets and make a killing, all that supposed training and experience of financial analysts was an elaborate fiction. What's more, Lebed isn't unique. Another teen, Marcus Arnold, incurs the wrath of lawyers by setting himself up as a legal expert on the Web site AskMe.com and offering advice solely from what he learned watching court television shows. Yet his "clients" largely didn't care; they apparently found the advice sound.
Lewis contends that these children, and the unschooled masses in general, are dealing the final blows to the already fading notion that experts know best and thus deserve legal and financial privileges. It's clear where Lewis' sympathies lie. He provides a devastating account of a meeting with just-retired SEC Chairman Arthur Levitt, who has been widely portrayed as a crusader for the small investor, during which Levitt admits that he doesn't know what Lebed actually did online. Nor did Levitt's staff even ask; they just assumed Lebed must have cheated. Lewis also skewers Bill Joy, Sun Microsystems Inc.'s (SUNW
) accomplished chief scientist, for his alarming Wired magazine article about the dangers of runaway technology. With obvious disdain, Lewis suggests Joy is afraid that Internet-empowered youngsters will make him obsolete.
Maybe. But here Lewis' foundation feels a little creaky. In an era when humankind seems on the verge of manipulating its own genes as if they're bits and bytes to be debugged, a little caution by techdom's leading lights seems welcome. Even harder to swallow is Lewis' apparent acceptance of Lebed's and Arnold's behavior simply because adults are doing the same thing under the cover of respectability. Fact is, Lebed took advantage of people, and Arnold lied about his age and qualifications.
To Lewis' credit, even as he defends the teens' use of the Net to reinvent themselves, he's clearly dismayed at what it says about our changing society: Experience no longer has any value, and career growth often effectively ends at age 30. Lewis quotes Stanford University economist Paul Romer: "It's the pro athlete model, extended to everyone." Problem is, in the book's somewhat murky conclusion, he leaves us wondering what to do about it. "There is no solution to the lack of mercy toward the aged flushed out into the open by the Internet," he grimly writes. "The best one can aim for is to be a case of arrested development, and remain forever a child." Yikes.
Still, Lewis is on the mark in seeing that the Internet will cause even further disruption because it empowers people already inclined to challenge the primacy of experts. That's why his book is a wake-up call at a time when many believe the Net was a flash in the pan. It turns out the dot-com boom and bust aren't just anomalies of runaway capitalism. They're the first, unsettling glimpses of capitalism's ruthless new future. Hof covers the Internet.