new economy

In tech speak, it's a buzzword created in Silicon Valley referring to the profit margin gains that were made once monies invested into the commercial Internet sector panned out. In general, it refers to new industries, such as the Internet and biotech, that are characterized by cutting-edge technology and high growth.

Historical perspective: A 1983 cover article in Time, "The New Economy", described the transition from heavy industry to a new technology based economy. By 1997, Newsweek was referring to the "new economy" in many articles. Prior to the Nasdaq crash on April 14, 2000, many VC firms believed that Internet technology was, in fact, creating a new economy (based primarily on B2C, e-commerce, and B2B applications). But stock market analysts disagreed, stating that since no profits were being made, many dot-coms were overvalued. The concept of the new economy, which once promised an exciting and profitable future, has been all but cast aside as nothing more than hype. In fact, 75 percent of B2C dot-coms ceased operations in the year 2000.

Many execs and researchers believe that information itself is as valuable as money. They suggest that once the wash-out of bad business models clears the way for some real players, investment into the tech sector will continue and the industry will eventually become profitable (again). It is generally agreed upon that although the industry got a little ahead of itself, a strong Internet-based sector of the economy will reemerge, which subsequently happened with Web 2.0, big tech and GAFA.