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What Tableau and Tulips Have In Common…
By Enabliser Richard Blakemore
In 1637, what is generally reckoned to be the first modern market bubble occurred…in tulips.
The Dutch had won their independence from Spain 50 years before and the Dutch Golden Age was in full swing. A confluence of circumstances including the slow growth of tulip bulbs, a bulb virus, and a thriving futures/options market conspired to drive tulip bulb prices to insane levels. Then on the 5th of February, 1637 buyers failed to attend a routine bulb auction in Haarlem (possibly due to an outbreak of bubonic plague), and the bottom literally fell out of the market.
At the height of the bubble, 12 acres of land were offered for a single bulb and a sailor was jailed for munching on a bulb believing it to be an onion. Yet at the end of the bubble, bulbs sold for little more than onions.
During the boom, many buyers subscribed to the “Greater Fool Theory” i.e. the price of an item is determined by speculative expectations of the market rather than any intrinsic value, and that a purchase today can be sold tomorrow to a “greater fool” with profits taken on the way through. The only problem with this is that one day, someone says “I don’t get it, and I’m not playing anymore”. At that point, as in the Tulip crash, the market corrects back to the intrinsic value of the asset.
Which is what happened to Tableau overnight.
Or should I say, BEGAN to happen overnight. While not as significant a fall as the tulip crash, a net 48% in one day is a pretty serious haircut in anyone’s language. And it is just one day. To be fair, the tulip crash took a couple of months. So the market waits to see whether this is just the beginning of a continued dive, or just the establishment of a new “normal” level.
Either way, it points to some serious questions about the long term value proposition of Tableau in an increasingly congested market place. Known for its stunning self-service visualisations over curated data, questions have always existed about its ability to effectively connect to and transform multiple, disparate, and sometimes dirty data sources in its own right. For Tableau to really shine, this task has typically been left to specialist ETL tools. Which means that a purchase of Tableau really becomes a purchase of Tableau AND an additional specialist ETL tool. It could be argued that this is somewhat of a hidden cost in the Tableau offering.
Some would suggest that this type of business model is the triumph of form over substance.
Unfortunately, no matter how enamoured the market becomes with a company or a class of assets, history shows that markets ultimately settle back to a basic multiple of the asset’s intrinsic value. It seems that form always gives way to substance.
Sorry Tableau, but the market is saying that you are going to have to do better than pretty pictures…