GO
Loading...

The Internet...The New Brain

Wednesday, 23 Sep 2009 | 12:46 PM ET

I gotta admit it - the Internet makes me feel a bit like Gomer Pyle.

"Gaaw-aawl-ly"

"Shazam!"

"Surprise, surprise, surprise!"

I am in total awe of how the Internet has changed my life:for the better, and yeah, even at times, for the worse.

But the Internet is our new world and as Cortes would instruct us: our boats are burned, there is no going back. We have no choice but to embrace and thrive in this new world of constant evolution at warp speeds.

And brace yourself-the Internet is getting smarter - way smarter than us.

Wired For Thought
Wired For Thought
Wired For Thought

Author and brain scientist (of course he's a brain scientist!), Jeffrey Stibel writes in WIRED FOR THOUGHT How The Brain is Shaping the Future of the Internetthat business leaders must think of the Internet as a 'thinking machine' - the first real replication of the human brain OUTSIDE the human body.

In the book, Stibel writes how the Internet is evolving into a brain and those companies, networks and Web sites that are able to leverage this insight will own the future.

The book goes on to make some compelling predictions including thelooming dangers that threaten social networking sites like Facebook and Twitter .

I asked the author to write a guest blog for Bullish to share his theory.

Guest Blog: "The Brain Behind the Internet Outperforms the Stock Market" by Jeffrey Stibel, author of "WIRED FOR THOUGHT."

You’ve heard this argument more than once, I’ll bet: Internet stocks are a risky investment. Having served as President and CEO for more than one publicly-traded Internet company, I have heard the cynical rhetoric of those who skim financial headlines: “Sure, Internet stocks perform miracles during boom years, but they always seem to come crashing down during bad economic times.” As a scientist, I’m hardwired to seek out proof, so I decided to see if the “fair weather” investment reputation that Internet companies and their stocks have been tarred with since the dot com bubble can be substantiated.

It turns out that Internet stocks are now some of the best (dare we say safest?) investments around.

Take for instance, a comparison of the recent performances of both theDow Jones Internet Composite Index and the Standard & Poor’s 500 Index. The DJINET is up 57% year- to-date, compared to 16% for the S&P 500. On a rolling 12 month basis (Sept 08-Sept 09), the Internet Index is up 6% as compared to a loss of 16% for the S&P 500. Even across the past two years (Sept 07-Sept 09), Internet stocks outperformed the traditional indices: down only 11% versus 30%.

To be sure, different indices will have different results but this is not a “just noticeable difference”: Internet stocks are outperforming their mainstay stock counterparts by a large margin.

And the reason, while hard for most people believe, is simple: The Internet is a brain!

We have forged swords to extend the length and power of our arms; telescopes and cameras to extend the power of our eyes; artificial hearts to mimic the organic pumps that beat in our chests. But as outlined in my forthcoming book—Wired for Thought—with the Internet, we have created something unlike anything humankind has built before.

Sure, this may all seem like science fiction, but I assure you there is far more science than fiction to this analogy. The brain is one of the most complex networks in the world, with more neurons than there are stars in the galaxy. Its hardware is a complex network of neurons; its software a complex network of memories. The Internet is also a network. Its hardware is a complex network of computers; its software a complex network of websites. The brain has neurons and memories; the Internet has computers and websites.

(The Internet is pictured here below on the left, the brain is pictured here below on the right)

Companies that possess the foresight to understand the flexible and evolving nature of the Internet are successfully leveraging this new “brain” to build better businesses, in good times and bad. And we have seen that trend gain increasing momentum over the last couple of years. As President of Web.com during that period, I had an opportunity to interact with scores of small business owners who came to view the Internet as more of a living, thinking business partner.

An understanding of the similarities between the Internet and the brain is what helps many Internet companies outperform the overall market. Just as the brain powers every part of our body, so too does the Internet improve the performance of companies who have the foresight to allow the Internet to power their company’s operations.

You may argue that is a brain and is like a brain is merely a matter of semantics, but either scenario allows you to navigate an unforeseen future.

Just as the battle cry in the mid- 19th century gold rush was “Go west, young man,” this century’s entrepreneurial battle cry is, “Go online!”

Entrepreneurs who view the Internet as a brain know where the Internet is headed and what it can mean for their long-term fortunes. The inevitability is no less obvious than that of the railroads pushing West. And by absorbing these ideas, it has allowed Internet companies to position themselves a few miles down the track—set up a depot and a water tower—and have it ready when they get there.

So, yes it may sound off-the-wall at first blush, but seeing the Internet as a brain has helped my teams develop companies worth hundreds of millions of dollars. It's an insight that will lead to the development of future businesses worth far more than that. More importantly, it is going to change the world as we know it, revolutionizing the way we think about the Internet and the way we think about ourselves.

______________________________

Jeffrey Stibel
Jeffrey Stibel
Jeffrey Stibel

Jeffrey M. Stibel, author of Wired For Thought, is a brain scientist and entrepreneur who has helped build numerous public and private companies. He is currently President of Web.com, a public company which helps entrepreneurs launch and grow their businesses on the Web. Stibel was the recipient of a Brain and Behavior Fellowship while studying for his PhD at Brown. He serves on the boards of a number of private and public companies, as well as academic boards for Brown and Tufts University.

Stibel is the author of the forthcoming book, Wired for Thought: How the Brain is Shaping the Future of the Internet, published by Harvard Business Press.

Questions, comments? bullishonbooks@cnbc.com

  Price   Change %Change
INTERNET
---
S&P 500
---

Featured