InformationWeek

York City to Albany completely under steam power, and a skeptical crowd gathered one summer day to view the 1807 version of the Next Big Thing.

When the Clermont's crew had trouble getting the ship's engine started, the crowd, described by one historian's account as "jeering and incredulous," began to yell, "It won't go, it won't go!" Indeed, after the steam engine was initially fired up, the ship started--and suddenly stopped, much to the skeptics' delight. But a few minutes later, as the Clermont began to plow through the water, the crowd of observers changed its chant to "It won't stop! It won't stop!"

Needless to say, the Clermont successfully completed its journey, heralding a new era in technology and transportation. So the crowd of observers, reacting way too quickly to its initial impressions, was wrong--twice.

Parts of the riverbank-gathering tale may be apocryphal, but that crowd's response sounds to me a bit like reactions to the dot-com economy of today. Having covered the Internet and E-commerce for InformationWeek for the past six years, I've seen a lot of "E-hype" waves come and go. There's a tendency to turn 180 degrees against the latest Internet trend that can be just as irrational. A few weeks ago, Cisco Systems, arguably one of the best-managed, solid-growth companies on the planet, beat analysts' already-optimistic quarterly earning forecasts--and still watched its stock drop on a day of "massive sell-offs of technology stocks."

What causes such wild, now-you're-hot, now-you're-not swings of perception?

There are three different factors at work here, all playing off one another. One is our celebrity-driven culture's tendency to build 'em up and then tear 'em down--a pattern we've seen with everyone from Bill Gates to Whitney Houston to your favorite sports team. Second is the sound-bite-driven mass media, which loves to squeeze complex issues into one-line teasers for the late news.

Television news (especially the local version) gets most of the blame, but the Internet has also played into this phenomenon. When the Web began growing, many hoped that online news sources could bring depth back to news coverage. Despite many excellent online news sites, the Web's overall effect of shortening attention spans has perpetuated and exacerbated the sound-bite culture.

The third factor is the daily (and hourly) scoreboard of the Internet economy--the stock market. Talk about culture-defining behavior. In his wildest dreams, fictitious 1980s "greed is good" originator Gordon Gekko couldn't have envisioned the day-trading frenzies and 100-point swings of the Nasdaq and the Dow in the year 2000.

Here's the point: Don't let your E-business efforts be run by the day-trader mentality--or the mentality of the modern-day equivalent of that Hudson River crowd back in 1807. In the Internet economy, hype is even more dangerous than just noise. Hype drives venture-capital investments and the formation of new companies, which results in way too many businesses all chasing the same latest "hot" market. Then when simple mathematics and economics cause the inevitable shakeout, the money and the hypesters fly out the door and latch on to the next wave. That's been the way of the computer industry for years, but Internet-based business, with its lower-than-ever barriers to entry and time to market, has kicked the phenomenon into hyperdrive.

What too many people forget, however, is that even though barriers to entry have come down, the barriers to success haven't. The Internet affords tremendous opportunities to reach and serve customers--but in the end, it's really just a new channel for conducting sound business.

By the same token, be wary of the anti-hype--the swings of backlash against E-commerce. If Nasdaq investors are hammering business-to-business plays this week, for example, that's not a reflection of your efforts to bring your indirect goods or raw materials suppliers online.

So plow through the waters of E-business, but try to ignore the crowd on the shore--whether it's jeering or cheering.