Lessons from the Cambrian Explosion

or Why the crazy funding boom is not a bad thing

Life on earth is about 4 billion years old. Yet the most visible animal species we see around us actually did not arrive until just about half a billion years ago. The period that started the rise of complex organisms started roughly 542 million years ago and is famously known as the Cambrian Explosion. It was during this period that evolution supposedly went crazy. There was a dramatic acceleration in the pace with which new species evolved and it is believed that most animal phyla that are in existence today appeared first during the Cambrian Explosion.

And yet, it was a crazy time. As nature experimented and created this huge variety of species, it developed some terrific features that are with us today. For instance, the Trilobite evolved during this period and was the first animal to display a sense of vision. The species no longer survives but the sense of sight is everywhere. A large number of species perished, having been badly suited, from the start, for the environment they were in. But that is the cost of evolution; the way of nature. This accelerated experimentation gave us almost all the species that are in existence today. And so it must be with the economy.

Usually, the economy and business models evolve slowly. Adapting to changes in technology, society and the world order (and simultaneously changing them too). But every so often, there is an acceleration in experimentation. A time when dramatically new business models are tried out. Some are cross-breeds across industries. Some are patently insane. And some barely this side of sanity. And when all this is happening, there are always those on the sidelines sighing at the madness. For madness it is. But a necessary madness. Lubricated by the mad money accumulated during periods of steady and focused growth.

We saw such a period during the late 1990s. The dot-com boom that everybody said was "different this time". The madness of "valuations for eyeballs". The rush to lay fiber across the planet. The dot-com-ification of the most drab businesses as well. And the inevitable bust. The scandals and the collapses. And while many probably enjoyed the schadenfreude and still suggest that the frenzy was an unnecessary destruction of wealth and careers, it was the same period that gave us Amazon and Netflix and Broadband. Business models that sounded insane then but are sine qua non now. And I'm too young to have personally felt what the 70s felt like, when the computer revolution first took hold.

And so it is now. Business models that are "doomed to failure". Youngsters quitting dream jobs to "try something new". Oldies quitting dream jobs to try something new. Large-scale failure is inevitable. Any given individual experiment cannot be guaranteed to succeed (it wouldn't be much of an experiment if success was assured). But dramatic changes in the structure of society and business is assured. There will be disruption - both positive and negative. And we must brace for it. This funding boom may've been crazy - but its no bad thing.