In Silicon Valley, it’s hard to breathe.com without being reminded in some way that you are in the epicenter for the Information Revolution. Driving down U.S. Highway 101, drinking in a seedy bar, waiting for the bus-conversations, ads, everything seems to be about the Internet.

Depending on your personal preference, this is a wonderful or horrible quality. One thing’s for sure though: If you fancy yourself an Internet entrepreneur, there’s no better place to be (provided you can afford the sky-high real estate prices) than Silicon Valley. AnnaLee Saxenian, author of Regional Advantage, puts it best, noting that the area has in effect become one large, distributed company.

Case in point: Canadian Kevin McCurdy, co-founder and executive vice president of bamboo.com, which produces 360-degree virtual tours for real estate sites on the Web. After toiling for a couple of years on R&D and crafting a business model, he realized that if he was going to achieve his vision of becoming a big player, he’d have to head south — and west. “I thought we’d have to go someplace where we could raise capital, find engineering talent, be close to networking hubs third, and also gain visibility…. It wasn’t long before we realized the only place that combined all those things was Silicon Valley.”

Two months after moving to Palo Alto, the company closed a first venture round of $13.5 million. In August 1999, bamboo.com went public. And while it was hardly a blockbuster IPO, the company had a market cap of roughly $300 million in mid-November, and some 300 employees. “Honestly, I believe if we hadn’t made the move to Silicon Valley, we might still be trying to raise funds in Canada,” McCurdy says.

Hundreds of other entrepreneurs, some M.B.A.s bred at Stanford University and other graduates from established high-tech companies, tell similar stories. The numbers speak clearly; according to San Francisco-based venture capital research firm VentureOne, 439 Bay Area Internet-related companies garnered financing from VC funds in the first nine months of 1999, raising a total of $5.5 billion. That’s double the amount raised in all of 1998. And nearly three times the amount that Southern California, the next most popular hub for entrepreneurs, nabbed over the same period — less than $2 billion.

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This opposition was exact on Monday; two days later, veteran FBI agent Robert Hanssen was indicted on 21 counts of espionage for over a million dollars in cash and diamonds.

Because one of the counts accuses Hanssen of providing information to Moscow which resulted in the deaths of two KGB agents recruited by the U.S., the government may seek the death penalty.

However, Hanssen allegedly revealed the agents in 1985, at the beginning of Pluto’s transit through Scorpio, when the federal death penalty was not in effect.

Also, the agents’ safety was already compromised by Aldrich Ames, a veteran CIA officer who in 1994 pled guilty of spying for the former Soviet Union and is serving a life sentence.

Although the government wants Hanssen to outline his crimes, it has not agreed to waive the death penalty in exchange for the information. Yet the indictment still allows for further plea negotiations. Stay tuned.

Second, retailers are going to have to wrestle with the challenge of “channel-partner competition:” they’ll find themselves faced with the bizarre situation in which the suppliers of the products they sell are also choosing to compete with them via a Web site. How does a retailer react? What do they do? It’s a difficult question: Home Depot has responded by advising Black & Decker that it will choose to carry the products of those who decide not to compete with it. Most other retailers don’t have the same weight that Home Depot does.

Retailers must also wake up to the fact that perhaps the most revolutionary thing about the Internet is that it does lead us to the era of customer empowerment. Many of my most recent purchases have been heavily influenced by the research I have done online. I know what I want to buy, what I’m willing to pay for it, and what I don’t want. I’ve recently wandered away from several stores in disgust, as a result, quite aware that I now know more about the product being sold than the sales floor staff do. I’m in control of the purchase, a fact that will present some tremendous challenges for retailers over time.

Finally, retailers must assess whether they should establish a “clicks-and-mortar” strategy. Most realistic Internet/e-commerce experts are concluding that the real online business model is one which involves a successful integration of an online store with a chain of retail stores, as has been done by HMV Canada, Sears Canada and Chapters. That means that every retailer will eventually have to ensure that they have an online shopping capability that enhances their local or national retail presence.

Bottom line? Retailers who approach the Internet with glossy-eyed expectations are doomed to disappointment, while those who ignore it are set to learn some unpleasant realities in the years to come. Every retailer needs to be there, but must approach it with caution, with a clear sense of business strategy, and a clear understanding of what it is all about.

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There is no doubt that we live in a world of incessant, relentless, non-stop Internet hype. We’re being amazon.commed to death, with a picture being painted that in order to survive, every single Canadian retailer must immediately and without caution, establish an online Web site through which they can sell their products. Online hysteria rules the day!

From my perspective, the drumbeat of e-commerce hype causes two problems. First, for some retailers, it results in rather over-inflated expectations, causing the merchant to think that it is easy to set up a store on the Internet and garner instant riches. Yet it also causes the converse problem for other merchants, who deal with the hype by ignoring the Internet altogether.

Let’s deal first with the hype around the world of online shopping. Inherent to the message is the myth that the average retailer is a dinosaur, soon destined to the dustbin of business history, because the world of online shopping is set to decimate everyone with a “real” retail store. Such thinking is driven by a belief that the mass of society, bound up in e-enthusiasm, is soon to collectively abandon the real world. We’ll conduct every sales transaction through our Web browser, becoming a bunch of cyber-dweebs glued to our computer screens. Groceries, blue jeans, a sofa set, cow manure! – we’ll soon buy everything and anything online!

The prediction that the retail sector is set to soon be replaced by the world of online shopping is best assessed in light of other past predictions of a similar nature: VCR’s were to spell doom for the movie theater, television was to destroy the radio industry, and the Internet was supposed to make newspapers extinct by 1999.

The fact is, online shopping is real, and it will be big, but lets keep it in perspective: the Wall Street Journal recently suggested that online sales will total but 7% of total retail sales by the year 2005. From my perspective, that’s definitely a big number indicating that the retail sector is in for a rough ride from this new competition, but we’d best assess e-shopping hysteria in light of just how big it might be.

Of course, retailers must also carefully assess the myth that an on-line store offers instant riches. Simply click a few buttons, put some products online, and the customers will flow in! Hah! The reality is that the brave retailers who have ventured online have found it tough going. In my own case, I’ve established a site by which I sell my many books online, and can tell you that my I’ve sold about several hundred thousand books through the retail sector, while just a few online.

Finally, we must come to grips with the promise that e-commerce is easy. I’ve seen advertisements that boast that it is possible to create an online store in under an hour. I’ve come to wonder, if we don’t try to do that in the real world, what would ever possess us to try to do the same thing in the online world? The fact is, e-commerce is hard, very hard. A retailer, whether they are virtual or not, has to deal with customer support, fulfillment, product delivery, sales and marketing strategies, customer loyalty programs, financial and credit card matters, and all the other complicated issues and challenges that go with a professionally run business. An online strategy needs just as much effort as an offline one in order to be successful.

Of course, a retailer can take my comments above, and presume that they don’t need an online strategy at all. That is a dangerous attitude to have, since the fact remains that the Internet and e-commerce has significant implications for every retail business.

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Of course, the backlash won’t be surprising — after all, lots of these folks have lost lots of money in the recent tech stock collapse, and they have to do something with their anger. Why not lash out at the Internet itself?

It’s over, they will say. The dot-com economy was a hoax, they will suggest, and off they’ll go looking for the next big thing.

Goodbye and good riddance, I’d say to these people. Quite simply, the Internet will be better without you.

If there is one positive benefit to the market meltdown, it is this: Sanity will return to the Internet. Thankfully, we will see the disappearance of much of the dishonesty that has crept into the dot-com world. Companies will come to be judged on basic business fundamentals and their ability to make a profit, rather than some
fanciful, wishy-washy measure dreamed up by an analyst eager to take his skim of the Internet froth. Startups will come to be managed by folks with basic business skills, rather than promoters who are experts at fleecing gullible investors.

Thank goodness for the recent market meltdown.

No, the Internet won’t disappear. Its role in our day-to-day lives and in the global economy will continue to grow. If you think that is not the case . . . well, you probably believed in the shaky fundamentals of many of the dot-com startups that are now rightfully on their deathbeds.

There are many undeniable realities related to the Internet that aren’t affected by any type of meltdown.

First and foremost, the Internet will continue to grow as it weaves itself into our daily lives. Simply because the market has had a long-overdue correction doesn’t mean that people are going to stop using a tool that has become an integral part of what people do every day. To suggest otherwise is to ignore reality.

Second, the role of the Internet in restructuring the global economy is undeniable. It will become the backbone for a huge amount of business interaction. Exxon Corp., for example, estimates it can save $50-million (U.S.) in the first year of its on-line ordering initiative.

Third, Internet technologies continue to evolve, and will have a profound impact on broadcasting, telecommunications, publishing and countless other industries. Despite the meltdown, telephone companies still realize the technology of the Internet — IP, or Internet protocol — will be the backbone to the global elecommunications network in a decade. We’ll still see the emergence of the IP-chip, a microchip with built-in Internet connectivity that will link a lot of the everyday devices around us to the Internet. We will still see organizations struggle with the massive competitive pressures introduced by the Internet. Yes, the pace of innovation might slow down a bit as the business plans of many technology startups are put under a finer microscope, but technology will continue to rapidly develop.

And finally, and most important, millions of people worldwide still believe in “Internet religion.” They still believe that we are in the midst of something big here.

And you know what? I’d hazard a guess that many of those folks are like me. We’ve secretly cheered on the market collapse, and are thankful that it is finally here, for it helps to return honesty to a world that has become quite dishonest as of late.

Let’s face facts. In the past few years, we’ve seen the raw and naked ugliness of the stock promotion world come to the Internet world. We’ve seen folks eager to take virtually any type of Internet play out to an all-to-eager public, regardless of the complete lack of basic business fundamentals.

The collapse means that the end game for Internet investments won’t be selling out at some inflated stock price, but instead, building a real business that has real sales, real customers and real profits.Bottom line? The Internet doesn’t go away — just the stock market silliness that has surrounded it for too long.

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Kaiser also released a companion study that shows that TV programs that discuss sexual health can have a positive impact. A series of scientific national surveys done by UC/Santa Barbara found that knowledge of emergency contraception or the sexually transmitted disease human papillomavirus (HPV), which causes genital warts, doubled after the TV drama ER addressed the issues.

The study shows “that entertainment shows can effectively deliver health information even when that’s not the primary focus of the show.” Asher says. “We looked at two instances that did not involve major story lines, major characters of a major portion of the show, and we still found that viewers still retained a significant amount of information from the brief exposure.”

But viewers need repeated exposure to the messages, Asher says. “The information that people get does not always stay with them for a long time without repetition. But it does not mean that TV is the only answer to important sexual information.”

The study was released yesterday at Kaiser’s Sex on TV conference in Los Angeles.

None of the findings are surprising, says Ed Dunkleblau, director of the Institute for Emotionally Intelligent Learning in Hoffman Estates, Ill. “I think that sexual messages are prevalent not only on TV and in advertising, but in magazines, on the radio, and certainly on the Net.”

Dunkelblau says using sexual messages in situational comedies “is a way to get people to attend. You see, sexual stuff is a little edgy, so it raises anxiety just a little, just enough to want you to have the release of laughter.”

Are Americans losing their puritanical attitudes and getting more comfortable with sex? “That’s a dangerous assumption, just because we are seeing more sex on television,” says Dunkelblau. “What it does mean is that some of our restrictions are becoming more relaxed.”

What To Do
The prevalence of sex on TV is a red flag for parents, Dunkelblau says, “especially when it comes to children who are exposed to these messages in the media, on the Net, on TV, in music. Parents have to become much more vigilant about what their children are seeing.”

“And if they can’t be 100 percent vigilant when their children are guests at someone else’s house, for example, then parents have to be able to talk to their children about what they’ve seen and help them understand and process those messages,” Dunkelblau says.

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If you think there’s a lot more sex on television lately — you’re right, a new study shows. But before you change the channel, consider this: Television can also educate people about responsible sex and sexually transmitted diseases, a second study says.

The number of programs with sexual content — everything from touching and kissing to joking and actual intercourse — jumped from 56 percent during the 1997-1998 season to 68 percent in the 1999-2000 season, according to the study by the Kaiser Family Foundation. When the study ended, three out of four prime time programs on the major networks broadcast sexual content, compared to two out of three, two years ago.

“We pay particular attention to the context in which the sexual content is presented,” says Lauren Asher, director of communications for the Kaiser Family Foundation in Menlo Park, Calif. “And we conduct the study to provide a benchmark for those who are concerned about what’s on TV.”

Sex on TV 2, conducted for Kaiser by Dale Kunkel, a professor at the University of California, Santa Barbara, analyzed 1,114 shows on 10 channels — public, cable, independent, and premium — during the 1999-2000 television season, looking for a sexual emphasis during a scene. The researchers then marked the scene for sexual content if there was talk about sex or actual depictions of sexual behavior. All scenes containing sexual content were then analyzed for any mention of the possible risks or the responsibilities of sexual activity.

Among the study’s findings:

While movies were most likely to contain sexual content, 84 percent of situation comedies referred to sex, as did 80 percent of soap operas. Only 27 percent of so-called “reality” shows were likely to feature sexual content. The largest increase in sexual content showed up on situation comedies, which jumped in the two-year period from 56 percent to 84 percent.

Two years ago, only 7 percent of TV shows depicted or strongly implied sexual intercourse. When the study ended, 10 percent of the shows did. Almost a quarter of the couples in scenes with intercourse appeared to be young adults (ages 18-24), while 9 percent appeared to be under the age of 18. In 16 percent of all scenes with intercourse, the couples had just met.

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