Return on Intelligence, Part 1: Echoes | rebecca powell

Go back<br>Return on Intelligence, Part 1: Echoes<br>X Facebook Y Combinator LinkedIn Reddit Email WhatsApp Medium Threads Bluesky<br>Published: 16 May, 2026 | at 12:15 PM

Suggest Changes

Series guide

Return on Intelligence<br>AI and the Programmable Firm<br>Part 1 of 8. Dotcom memory, paradigm shifts, and why real technologies produce the most dangerous bubbles.

Open preface

Previous

Continue

Paradigm lifecycle

Invention Wonder Speculation Overbuild Belief break Crash Consolidation Mature infrastructure Extraction

Part 1: Echoes

The business cards in the drawer

I still have two packs of business cards from people I met at investor and founder events in San Francisco around 2000.

I kept them for posterity.

At the time, I did not know quite what I was keeping. I was working with a company inside the dotcom bubble. I spent time around people seeking investment, pitching ideas, trying to explain why the internet would change everything, and why their particular company would be one of the companies that survived and captured the upside.

There was a strange atmosphere around it all. It was not just greed, although there was plenty of greed. It was not just naivety, although there was plenty of that too. It was a feeling that something genuinely enormous was happening and that everyone in the room was close enough to touch it.

The future felt visible. Not clear. Not mature. Not understood. But visible.

Net Gain and the future hiding in plain sight

One of the books that seemed to follow people around the tech and startup scene in San Francisco at the time was Net Gain: Expanding Markets Through Virtual Communities by John Hagel and Arthur Armstrong. It was published in 1997, by Harvard Business School Press, and in the circles I was moving through it had something close to cult status. Not cult in the mass-market sense. Cult in the way certain books move through a scene because they give people language for something they can already feel but cannot yet fully explain. This book was giving the startup and tech communities a blueprint for the future. It described how e-commerce and communities were going to become central to the economy. This was subliminal and nobody had really drawn out such a clear map before.

What made Net Gain strange in hindsight is that it was, in effect, describing social networks before we had the phrase “social network” in the way we use it now. It was not describing Facebook, LinkedIn, Reddit, Twitter or the platform economy directly. Those things came later. But it understood something fundamental: that the internet was not only a publishing medium, a shopping channel or a cheaper distribution mechanism. It was a place where people would gather, identify with communities, exchange information, build trust, form preferences and create new markets around shared interest. Wired captured the mood at the time, noting that the book had been handed around at “digerati summits” and had travelled through the scene by word of mouth.

That is what I mean when I say the future felt visible but not clear. Net Gain was not right about every detail, and the businesses that tried to act on that idea in the late 1990s often had the wrong timing, wrong cost structure or wrong monetization model. But the basis of the argument was largely correct. Communities did become markets. Identity, trust, recommendation, reputation, belonging and network effects did become core economic infrastructure. The book saw the outline of the mature internet while the technology was still in its adolescence.

This is exactly the kind of thing that makes a paradigm-shift bubble so hard to reason about from inside it. The early language sounds overexcited because it is reaching for something that does not properly exist yet. Some of the companies built around that language will be ridiculous. Some will disappear. Some will burn absurd amounts of capital. But underneath the bad timing and the failed companies, there can still be a real prediction trying to get out.

You could feel the shape of something. You could feel that the internet was going to change commerce, communication, media, work, identity, finance, software and culture. The mistake was not believing that. The mistake was believing that this first generation of companies, with their first generation of business models, cost structures, burn rates and investor decks, already knew how that future would work.

I went there as a technical consultant for an M&A, but the acquirer were instead impressed with me enough to ask me to move to Silicon Valley and work for them. Sometimes I wonder what my life would have been like had I said yes, but that was not my story and I stayed in London. Leaving the UK would take another 4 years.

Well, I’m going to be bold and maybe a little arrogant and say, I want this to be my Net Gain moment for AI. I can feel the shape of something real. I can feel that AI is going to...