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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