Tech expert: Twitter is fun but ‘overhyped’
By PURVA PATEL
Copyright 2009 Houston Chronicle
Jason Pontin, of Technology Review, says it’s hard to find venture funding.
Jason Pontin, editor and publisher of MIT Technology Review, was in Houston recently to talk about emerging technologies. The magazine has published its list of top 10 emerging technologies for 2009.
Chronicle reporter Purva Patel talked to Pontin about the list and the state of technology amid the recession. Here is an excerpt from that conversation.
Q: Which of the new technologies you’re presenting could impact Houston soon?
A: I think alternative fuels, health care and nanotechnology trends are going to affect Houston the most. I was just at Shell and they were talking with great interest and excitement about their biofuels initiative. In terms of health care, the Obama administration has mandated $14 billion be spent on medical electronic records. That’s a huge amount of money. And technology and consulting firms here will be responsible for taking that money and turning it into usable products. Nanotechnology trends will have a broad impact across a variety of industries. I think it’s reasonable to expect Houston will be, with other areas, one of the alternative energy capitals for the U.S.
Q: What technologies didn’t make the list?
A: I believe the most overhyped technology in America right now is micro-blogging, like Twitter and status updates on Facebook. I know it’s popular and Oprah endorsed it on her show the other day. But what I look for in a technology is, is it really going to have a broad commercial impact? Does it have real market pull? It has to be solving an actual real problem, a pressing need in the world. The technology has to represent a breakthrough in some way. There has to be a real reinvestment over the years to create an elegant solution to whatever the problem was. And finally, it needs to be defensible because of technology patents or a long-term investment by one party that would make it hard for anyone to compete. If you look at Twitter, I don’t know how important a need it is to be able to post 140-word microblogs ... I think Twitter will survive as some part of a communication company and be bought by Google or Facebook.
Q: Wouldn’t some claim you’re just saying that because you’re a journalist?
A: I’m on Twitter. I think it’s a lot of fun. I just don’t understand how it’s a sustainable business. Twitter doesn’t release how many people are using it, but it’s somewhere between 10 million to 13 million. By contrast, Facebook has 200 million users, and it isn’t even profitable.
Q: What’s the state of tech startups during this recession?
A: This is not the dark night of the soul, but it is very challenging for many technology startups, at least for those who took venture funding. Venture capitalists expect their investments to outperform the market on an aggregate basis for every year of their investment, and they expect to see an exit strategy in the form of an IPO or an acquisition within two to seven years. At the moment companies aren’t buying because their cash reserves are low and because they don’t want to do stock swaps. ... In the absence of any exit strategies, venture capitalists are not investing in any new companies at all. The investments they are making are in their existing portfolio companies and they’re being very mean spirited about it.
Q: What do you mean by that?
A: They’re not putting much money in. They’re telling companies to “live off the money we’re giving you, cut your expenses way back and change many of your ambitions. And … we expect you to start creating revenues now.” That’s really difficult for companies that thought they had a long development cycle.