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Dutch Tulip Mania of the 1630s is a classic example of hype-driven speculation, similar to recent tech bubbles like NFTs, the dot-com boom, and metaverse investments. Product managers must balance excitement for new trends with sustainable, data-driven product development to avoid falling into these traps. Understanding the Hype Cycle helps PMs gauge when to invest in technology and when to stay cautious. Prioritising real user needs, setting metrics for true value, and knowing when to say 'no' are key strategies to ensure long-term product success without succumbing to unsustainable hype.
Technology evolves at breakneck speed, with new trends emerging constantly across the software development sphere pushed by tech giants like Meta, Google, Netflix, and Amazon; alongside newly emerging and disruptive start-ups. A day in the life of a product manager is hugely exciting and often packed with new ideas and innovations pushed by investors, stakeholders, and paying customers. But, when does this become a danger? How can the biggest trends flip and become product liabilities? And, most importantly, how can product managers steer their ship through these turbulent waters?
In this article we discuss tech trends, drawing lessons from a financial fallout happening over 400 years ago with actionable lessons for product managers in managing development trends to ensure product stability.
In the early 1630s, the Netherlands experienced a period of wild speculation around tulips, known as the Dutch Tulip Mania. Tulips, initially imported from the Ottoman Empire, became a highly sought-after luxury item in the Dutch Republic. Their vivid colours and exotic appearance made them a status symbol, sought after by the wealthy and admired by all. The fascination with tulips grew rapidly, and soon, they became a symbol of wealth, success, and prestige. Owning rare and exotic tulip varieties was seen as a sign of sophistication, and the demand for these flowers began to skyrocket.
As tulips became increasingly popular, traders began to deal in tulip bulbs as a form of speculative investment. People weren't purchasing tulips because they genuinely wanted the flower; instead, they were hoping to resell the bulbs for a higher price as demand continued to rise. The market for tulip bulbs shifted from a typical buyer-seller exchange to a speculative environment where buyers were essentially betting on the future value of tulips. This led to the introduction of futures contracts, where individuals could buy or sell tulips at a predetermined price in the future, expecting to make a profit as prices rose. The value of tulip bulbs became disconnected from their intrinsic worth as flowers, driven largely by people's perception of how valuable they could become, rather than any practical use.
Tulip bulbs began to be traded at escalating prices, often changing hands multiple times before they had even bloomed. By 1634, even middle-class citizens were drawn into the frenzy, seeing an opportunity to gain wealth quickly. People mortgaged their homes, sold valuable possessions, and pooled resources to purchase tulip bulbs, hoping to sell them at a higher price later.
By 1636, tulips were being traded on futures markets, and their prices reached staggering heights. Individual bulbs, especially the rarest varieties like the striped 'Semper Augustus,' could cost as much as a house in Amsterdam. The allure of making a fortune from a single bulb led to widespread participation in the tulip market. This frenzy led people from all walks of life, from farmers to merchants, to engage in speculative buying, driven by the belief that prices would continue to climb indefinitely. People began to trade tulip contracts, agreeing to buy bulbs at a future date, and this further fueled the speculation, pushing prices to absurd levels.
However, the market was unsustainable, and by February 1637, the bubble burst. A single failed auction caused panic, and prices plummeted almost overnight. As the first buyers refused to show up to honour their contracts, panic quickly spread throughout the market. The collapse was swift and brutal—investors who had taken out loans or traded away valuable assets found themselves bankrupt, and the entire market for tulips collapsed. The once-priceless bulbs became virtually worthless, serving as a stark reminder of the consequences of unchecked speculation. Many who had once seen themselves on the brink of great wealth were left with nothing but worthless bulbs and insurmountable debts. The aftermath of the Tulip Mania left a lasting impression on the Dutch economy and became one of history's most famous examples of an economic bubble.
The story of Dutch Tulip Mania is a striking reminder that perceived value can often be misleading, and that diversifying investments or product strategies is crucial to avoid undue risk. The question for product managers becomes how to find balance in developing exciting features based on customer hype vs sustainable growth. Particularly for young start-ups looking for seed funding, it is incredibly tempting to chase the latest trend in a bid to attract investor dollars, but when does that move from an opportunity to a threat for continued business?
Technology hype is of course something which all product managers crave! To have a market excited about your biggest feature or product launch is a hard-sought-after goal for any development team regardless of size. There is however a darker side of this hype potentially causing disproportionate resource allocation, team focus, and investor attention.
This isn’t to say that overhyped technology isn’t useful or valueless, rather it is running through the stages of over-expectation, under-expectation and finally real valuation. To help understand the lifecycle of technology hype and adoption, product managers can use the “Hype Cycle”. It consists of four main phases: the Innovation Trigger, the Peak of Inflated Expectations, the Trough of Disillusionment, and the Plateau of Productivity. These phases illustrate how enthusiasm and expectations around new technology often rise and fall before stabilising into sustainable value. Product managers can use this framework to anticipate the peaks and troughs of hype and make informed decisions about when to invest in a technology.
Even with retrospect, it’s easy to see how the excitement and hype of a new commodity can take society by storm. The Dutch Tulip mania presents a clear example of how products or features can become inflated based on a perceived value only to rapidly drop as investor confidence falls. This may be a very early example, but hearing the phrase “the bubble burst” isn’t dated with several modern day examples being ever present.
The rise and fall of tulips were marked by inflated value based purely on perception rather than any real utility. Product managers must avoid speculative product development, which can lead to "bubbles" that burst when reality falls short of expectations. Instead, they should build features and products based on strong, data-driven insights that fulfil user needs and bring long-term benefits. For product managers, sustainable value means developing offerings that genuinely solve customer needs, making the users' lives better. These developments need to be supported by evidence rather than hype, with product managers recognising when to say no based on data-backed insights.
Rather than chasing perceived future value without validation, product managers should focus on features that align with their product vision and are backed by data. Utilise methods like user interviews, surveys, and market analysis to ground development in real needs. Prioritise initiatives that will endure market fluctuations, not just those that shine brightly in the short term before fading away. Avoiding the temptation to ride waves of speculation ensures that product development is anchored in true user value and aligned with a strategic vision.
Even when genuine user need drives product development, it’s vitally important to establish clear metrics that measure real user impact and feature success. With new products or features it's important to continually monitor hypothetical product-market fit and deliver an initial MVP version quickly. Define what success after deployment looks like in tangible terms, whether that’s increasing user retention, reducing friction, or boosting conversion rates. Measuring these aspects both during development and after release ensures that the value being delivered is concrete and sustainable, avoiding an over-reliance on trends that can’t be substantiated.
As product manager, having the ability to say ‘no’ is a powerful skill. Learning to recognise when the hype around a new feature or trend outweighs its real value takes time, but is essential to driving sustainable development. Saying ‘no’ requires the ability to critically assess whether an idea aligns with the core goals of a product or is merely riding a wave of excitement.
Learning how to say ‘no’ is as equally important as being able to say ‘no’. Product managers often face pressure from investors, stakeholders, and users to deliver new features or meet ambitious demands. Here are a few strategies for saying no effectively:
The story of Dutch Tulip Mania serves as a powerful lesson for product managers, reminding them to focus on sustainable value, avoid speculative hype, and diversify product strategies. Product managers must understand the Hype Cycle, make data-driven decisions, and learn to say no to maintain focus on meaningful goals. Establishing metrics for real value, understanding user needs, and staying grounded in market reality are crucial to prevent wasted resources. By recognising when to pull back, product managers can ensure that their products continue to provide genuine value and thrive over the long-term.
The Hype Cycle is a framework that helps explain the rise and fall of interest in new technologies. For product managers, understanding this cycle is crucial for knowing when to invest in a trend, and when to be cautious of over-hyped technologies. By anticipating the phases of the cycle—such as the Peak of Inflated Expectations and the Trough of Disillusionment—PMs can make informed decisions and avoid wasting resources on trends that may not yield lasting value.
Product managers can avoid hype bubbles by:
Focusing on Real User Needs: Prioritise features and products based on genuine user requirements backed by data, rather than perceived trends.
Setting Metrics for Real Value: Define metrics that reflect actual user impact, like increased retention or reduced friction, to ensure the product delivers true value.
Learning to Say No: Recognise when an opportunity is purely hype-driven and doesn't align with the product's core goals. Use data to support decisions and be clear on the opportunity cost of chasing trends.
The Hype Cycle includes:
To communicate a 'no' effectively:
Align with Product Vision: Explain how the decision aligns with the long-term objectives of the product.
Use Data to Support Decisions: Provide data or insights that justify why certain features are not prioritised.
Highlight Opportunity Costs: Clarify what other initiatives would be delayed or jeopardised by diverting resources to the suggested feature.
Offer Alternatives: Suggest more feasible or strategic options that address the request without compromising product goals.
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