The original dot com collapse?

This is a good summary of what happened: http://en.wikipedia.org/wiki/.com_bubble

 

By the time a chair has been baptized in cocaine and bourbon, calling it "unused" seems a bit much.

And I realize I'm old, but we seriously have to recap 1999 for someone?

 

In case anyone forgot Pets.com, here's a brief history (pun intended):

Pets.com aimed to sell pet accessories and supplies over the World Wide Web, analogous to Webvan's attempt to sell groceries, and garden.com's try at selling garden supplies online. Pets.com launched in August of 1998 and went from IPO on a major stock exchange (the Nasdaq) to liquidation in 9 months.

And, who could forget this guy: http://jrandolph.com/selenium/fosdem2006/pix/pets_com_puppet.jpg

 

That dotcom boom was built on the thought that retail shopping at a brick-and-mortar store would soon be a thing of the past. It was soon apparent that there would be some things that people would just not buy online, and that people still liked to cruise the stores.

Now, people are saying newspapers would be a thing of the past. The difference is, it's established ventures (ESPN, Yahoo) that are at the vanguard of that, along with newspapers themselves, not crap like flooze.com or pets.com.

 

Sorry to waste your precious time - I understand that a lot of people lost a lot of money, but it's something that's talked about so much now, yet the Web seems to be doing just fine, with the YouTube guys cashing in big and others looking to do the same. I just wondered how close the Internet came to crash landing before it soared.

 

The Internet itself never really crash-landed, as you put it. It was Internet-based business that crash landed.

 

It was simply a market correction, albeit a ginormous one.

How the tech bubble got that big escapes me. But it did, the bubble burst, people made a pile of money and lost it all in a matter of months. The smart or lucky ones (read: Mark Cuban) got out while the getting was good.

 

The .com silliness was the Dutch Tulip Bulb --350 years later. It was the same mentality.

Still one of the best books on the subject of lemming behavior is "Extraordinary Popular Delusions and the Madness of Crowds" published back in the mid 1800's. You could add a chapter on the .com nonsense of the late 1990's and it wouldn't be out of place.

It was an extraordinary time. Normally intelligent people lost their minds and prattled on about the "new economic model". It was hilarious.

 

Here's how weird those times were. I was 25, six months removed from the Daily Journal of Franklin, Ind., and working for venture capital and IPO newsletters near Wall Street, and suddenly I'm doing TV appearances talking about every IPO under the sun after Netscape (the original hot IPO) burst onto the scene. And there was panic in these interviews. Old-guard business types on these shows would be asking ME if I knew of any funds that got their hands on these stocks, because these hot IPOs were impossible to get a hold of at the original list price. What the hell do I know? I just got off the farm, people! I got calls to my office from investors PLEADING with me to find a way to get them Yahoo on the first day so they could flip it. One was my own mother. I had one reporter asking me angrily why Netscape popped so high based on its flawed fundamentals, and all I could say was, "Because people think it's worth that much."

Pre-IPO boom (I say this because just about EVERY IPO, no matter what the business, was popping in the late 1990s -- one boom stock was premium beer, like Samuel Adams and Pete's Wicked), most people thought of the stock market as someplace you put your money, collected your dividends, and forgot about it. Even now, there are plenty of people who think of the market as a way to play the lottery that doesn't involve getting your hands dirty by standing in line at the local quickie mart.

Looking back, I wouldn't call everyone who tried to jump in on this stupid. Netscape's boom really shook up Wall Street. For a while, it looked like investment banks in San Francisco were going to overtake the old guard in New York (until the New York banks bought them, that is). The stock market is a bet on the future, and there's no doubt everyone was right that the Internet was going to open up all sorts of possibilities, financial and otherwise. However, the lesson (presumably) learned is that you still have to pick your individual investments wisely. And that companies have to spend wisely. There may still be unexplained pops in the future, but at least for now there's more accountability.

 

Not intended as a slam. Just reality slapping me in the face that an event that seems like it was two weeks ago is already receeding into the mists.

 

No harm.

I was probably making $9 an hour in my first job at the time, and the dot com bubble seemed to be so far over my head it wasn't even worth thinking about. I do remember thinking, "So much for all those professors who said the Internet was going to extinguish newspapers. Ha!" Of course, I was wrong there. That's why I guess there's this disconnect in my mind between the wildly successful Internet of today and the fact that people lost millions a few years ago speculating on Internet stocks.

 

I might have to make that my signature line... lol