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[IP] The Revolution Is Coming, Eventually




Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Sun, 19 Oct 2003 02:04:50 -0700
From: Dewayne Hendricks <dewayne@xxxxxxxxxxxxx>
.


October 19, 2003

The Revolution Is Coming, Eventually
By KATIE HAFNER
<http://www.nytimes.com/2003/10/19/business/yourmoney/19gill.html>

SHORTLY before noon on a drizzly day in late August, George Gilder had a housekeeping announcement to make during his annual technology conference at the Squaw Creek resort in Lake Tahoe. The weather forecasters had been dead wrong, he said, taking some obvious delight in this pronouncement. Lunch would be served indoors.

Mr. Gilder's swipe at the meteorologists wasn't just an opportunity to elicit a few chuckles from the audience. It was also a subtle reminder to the 350 or so faithful in attendance that he is not the only one who can botch a prediction.

Then again, few people have ever lost their shirts betting on the weather. Investors who believed in Mr. Gilder's wildly optimistic predictions about the telecommunications revolution, on the other hand, spent the last few years watching their portfolios unravel.

Now, slowly but surely, portions of the telecom industry are recovering. Shares of the companies Mr. Gilder recommends in The Gilder Technology Report - a more diverse mix than it used to be - have outperformed the Nasdaq by a healthy margin for the past year, and his adherents are cheering up. And Mr. Gilder is gradually regaining the credibility that nearly vaporized before his eyes three years ago.

Still, a sense of wariness and an air of enthusiasm held in check hovered over this year's Tahoe conference. And if any group has reason to be wary, it is this one.

Perhaps more than anyone else, Mr. Gilder, 63, is - to use one of his favorite words - the reification of all that went right, and then calamitously wrong, in the new economy.

In early 2000, Mr. Gilder presided over a small but lucrative empire that consisted of his newsletter, the Gilder Technology Report, and its various spinoffs - with names like Digital Power Reporter, Dynamic Silicon and the Supply Side Investor - half a dozen annual conferences and a staff of 55.

At the time, Mr. Gilder's net worth, around $7 million, was modest by dot-com standards, but Merrill Lynch and Hambrecht & Co. were vying to take his company, Gilder Publishing, public, valuing it at $150 million to $200 million. His newsletters had 110,000 subscribers.

Then, as quickly as the riches and the promise of more riches came, they vanished. People canceled their subscriptions by the tens of thousands; only the original newsletter survives today, with just 8,500 subscribers. Since the tech bubble burst, all but five staff members have been laid off. A former business partner holds a lien on Mr. Gilder's house. And in a cruel twist of fate, Mr. Gilder, an outspoken critic of the nation's tax structure, finds himself at the mercy of the Internal Revenue Service, as he awaits the agency's final decision on the terms of his tax bill.

Last month, just home from a trip to Shanghai, Mr. Gilder sat in the spare yet elegantly appointed guest cottage next door to his house in rural Tyringham, Mass., and reflected on how he happened to come within an eyelash of losing everything.

George Gilder is a slight, gentle, unprepossessing man. He holds himself with some delicacy, and although he is physically fit (he runs six miles a day), it seems as if a gust of wind could knock him off his feet.

Yet when he opens his mouth to rail against "idiot" American economists, corporate lobbyists and the perniciousness of taxes ("the power to tax is the power to destroy") and government regulation, the mild manner evaporates and Mr. Gilder might be mistaken for a glassy-eyed nut case on the University of California at Berkeley's Sproul Plaza shouting random invectives at passers-by.

Mr. Gilder, however, is no wacko, and his invectives are anything but random. Through the years, he has been building his own version of a socioeconomic unified field theory, integrating politics, sex, economics and technology, with a dose of religion thrown in.

MR. Gilder hails from solid New England stock, if tinged with a "Buddenbrooks" -like air of decay. His family settled in Tyringham in the early 1900's. His great-grandfather was Louis Comfort Tiffany, the glassmaker; a great-aunt, Mary O'Hara, wrote "My Friend Flicka."

When George was 3, his father, Richard, a pilot, disappeared over the Atlantic Ocean during World War II. David Rockefeller, Richard's roommate at Harvard, saw to it that George, who he considered to be like his surrogate son, received a Harvard education as well.

In the 60's and 70's, while a speechwriter for Richard M. Nixon, Nelson A. Rockefeller and George W. Romney, Mr. Gilder branched out briefly into attacking feminism by writing magazine articles and books opposing day care and celebrating a woman's place in the home. In the early 1970's, Time magazine and the National Organization for Women named him Male Chauvinist Pig of the Year. Shortly thereafter, having decided that this was "a triumph I could not exceed," Mr. Gilder migrated to supply-side economics.

He hit his stride with the best-selling book, "Wealth and Poverty," in 1981, in which he argued that capitalism and entrepreneurialism are intrinsically altruistic, oriented toward the needs of other people. Selfishness and greed, on the other hand, pave the way to socialism, as avaricious people petition the state for benefits they haven't earned.

Although the book made Mr. Gilder wealthy, he started looking for a new focus. He hit on computer chips, which he decided were fast becoming the most important development in the world economy. He took some time off to learn solid-state physics, and soon became one of the semiconductor industry's leading pundits.

Next came his infatuation with the "telecosm," a word Mr. Gilder coined to describe the convergence of computers and communications. In the mid-1990's, he argued that the expansion of the Internet was giving rise to demand so great that the so-called big pipes carrying information would need huge capacity to accommodate all the data, voice and video they would be transporting.

<snip>

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