The Problem with Truisms

Posted by: Heather Green on December 07, 2006

One of the most fascinating nuggets from a recent university report on the dotcom bust wasn’t that companies survived longer than the researchers expected. I mean, it’s interesting that University of Maryland and University of California, San Diego found a five-year survival rate for 48% of the startups. But they also found that that was about par for other fledgling industries like the auto industry. So that makes sense to me. (via Inc.)

But what caught my eye was their analysis that what cause the bust wasn’t a creation of too many companes, it was the creation of companies built on the Get Big Fast model. “The ‘Get Big Fast’ strategy had businesses and venture capitalists sinking large sums of money into dot-coms that had yet to turn a profit. They believed that these investments would preempt competitors,” says David Kirsch of the University of Maryland in a press release.

So that got me wondering. Which of the truisms today are likely to turn out to have been huge traps? If there are good ideas founded on bad beliefs, how does that end? One truism that Scott Kirsner recently shot down is the triumph of amateurs over professionals (at least in video). Rather than amateurs riding the Long Tail to victory as plenty of folks believe, Kirsner argues that what’s more likely to happen is that the established media companies, who are already cottoning onto the potential of video, will be the majority of video that folks watch. (whether its for big hits or niche shows and channels).

That’s to say that small may be the new big, but it might be the old biggies who coopt small. Which then leaves you wondering, what happens to all the folks building businesses on upsetting traditional media?

So what other truisms might end up being toppled? There are plenty of beliefs running around. Engagement replaces brand building. But what if people like a combination of both, rather than one or another. There are plenty of metrics around brand building. What exactly does engagement mean? Another is that Walled Content is worthless. Maybe, but isn’t Apple showing that proprietary systems and walled content (IE iTunes) actually works. And then there is the notion of the rise of freeconomics. Maybe, but what if many of these companies that adhere to freeconomics don’t actually come up with a way to make money, other than using Google Adwords. As some bloggers including Dave Winer are beginning to say, so many startups building a business solely on Adwords might not be such a smart strategy.

File this under thinking outload. Would love to hear your thoughts.

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