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Businesses The Almighty Buck

Have We Learned from the New Economy? 237

Posted by michael from the short-answer:-no dept.
prostoalex writes "The new issue of Fast Company magazine looks at the so-called New Economy in retrospect. There were some myths about the Internet that were not true, or could be considered true only partially in the brief history of the Internet boom, there were people who got burned and those who nicely cashed out and then there were those who had to start a new life because of the Internet."
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Have We Learned from the New Economy? More

Have We Learned from the New Economy?

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  • I know what I learned (Score:5, Insightful)

    by mekkab ( 133181 ) * on Thursday February 19, 2004 @12:23PM (#8327361) Homepage Journal
    1)Internet Hype
    2)???
    3)Profit!

    Actually, World of End's What the Internet Isn't [worldofends.com] (previously featured on slashdot [slashdot.org]) has the ideas that can be applied to the "new economy."

    the people who grasped these ideas are the long term winners.

    Sure, spammers claim that they make money, but just like intrusive telemarketers [slashdot.org] their days are numbered!

    Some domain name speculators made out. Some vapourware employees made out. But these are flash in the pan events.

    Jeff Bezos and Co turned a profit! How? By aggregating their shipping (that free shipping option that allows them to pack more onto a truck) they are using tried and true business methods to stay profitable.

    So what have we learned form the new economy? If you don't have a sustainable business model (i.e. 1)hype 2)??? 3) Profit!) then cash out quick! (however I think that business model is pretty old; Con-men have been around for years!)

    • Re:I know what I learned (Score:5, Informative)

      by master control progr ( 654310 ) on Thursday February 19, 2004 @12:26PM (#8327399)
      Another book discussing the wonders of the "new economy" (post-industrialism) is Unsustainable [amazon.com]. I just finished, it's excellent.
      • It may be an entertaining read but it is far from true. Using science and technology the wasteful and consumerist American lifestyle can be enjoyed by every man woman and child on Earth without wrecking the planet.

        The key to saving our world is not reducing consumption but making consumption less costly to the environment.
    • Article [joelonsoftware.com] on speed-to-market that's necessary in some markets. Gives a different view than amazon=traditional (or at least a different aspect).

      Reinout

    • Re:I know what I learned (Score:5, Insightful)

      by wiggys ( 621350 ) on Thursday February 19, 2004 @12:30PM (#8327453)
      Sure, spammers claim that they make money, but just like intrusive telemarketers [slashdot.org] their days are numbered!

      I really wish that were true, but I don't think we'll see an end for a long time, if ever. I cannot think of a way to ever eradicate spam... even if 99% of us installed and use mail filters, kept our machines as secure as possible so they couldnt get hijacked and refused to buy from the spamming arseholes it doesn't matter: the less-than-1% who do the opposite will ensure the spammers go on being retarded, deluded money-grabbing fuckwits.

      Charging for emails won't work either, in fact they will make it worse - the spammers will use other people's computers to send email, resulting in other people being charged for the privilege!

      • the spammers will use other people's computers to send email, resulting in other people being charged for the privilege!

        Yes, but this is not a steady-state result; do you really think the recipients of the spam bills are just going to smile and pay them forever? Or do you think they will do what they need to do to prevent them from continuing to come in?

        Not to mention once spam crosses the line into out-and-out theft like that the law will become more interested (and not have First Amendment or free spee
      • I think you're right, but that's because your analysis of the spam problem is on the "defensive" side (adding anti-spam this and that to our own systems). The solution isn't "defensive", it's "offensive". We need a new, different email system all together. I'd propose that instead of trying to re-work our existing system, we should write a new system and allow admins to add that to their servers, then allow for new email clients to be written & tested, then finally allow users to switch over to the new

    • Re:I know what I learned (Score:5, Insightful)

      by Bull999999 ( 652264 ) on Thursday February 19, 2004 @12:32PM (#8327494) Journal
      Most people use this system.

      1. Hype
      2. ????
      3. Profit
      4. Greed
      5. Lose everything

      Or

      1. Wait until it's "safe" to invest (when the market's near the top)
      2. Invest
      3. Lose everything
    • Yeah, and at one point during the boom times internet hype was taken for granted and the process became:

      1) Profit!!!! (via stock shares)

    • Re:I know what I learned (Score:4, Informative)

      by Jeff DeMaagd ( 2015 ) on Thursday February 19, 2004 @02:49PM (#8329394) Homepage Journal
      (however I think that business model is pretty old; Con-men have been around for years!)

      That's exactly what it is. The "new economy" people tried to shoo off the concerns of "old economy" people by calling them outdated. "Business model?" shoo! "revenue?" shoo! In the end, it was something like a pyramid scheme.

      What happened was much like the online DVD retailers, many of them bled themselves dry by trying to undercut each other, then ultimately themselves by selling too close to actual cost or even below cost, so it was a race to see who can get bankrupted last. Bargain hunters jumped on loss-leading promotional coupons in droves, but they never did form an ounce of customer loyalty like the coupon issuers probably expected. Attracting this type of customer is bad because price differences as low as 1% made or broke deals with some people.

      After a while, investors started demanding profitability and started cutting off the cash flow to the "new economy" flushing toilets.

  • Duh... (Score:5, Funny)

    by ackthpt ( 218170 ) * on Thursday February 19, 2004 @12:25PM (#8327390) Homepage Journal
    I just picked up a package from the Post Office this morning. I placed the order on the internet and when it arrived the From address was about 10 miles from where I live, I drive past it twice every day and ride my bicycle past it on Saturdays and Sundays. I paid shipping and waited, when I could have just nipped in and got the item I wanted right away. Truly, I've taken the internet for granted. Anywhere to order from might as well be another country, for the way I simply point and click.
    • I drive by them all the time. I hand deliver to their post office box (well, I give it to the guys and ladies behind the counter, THEY put it in the box!)

      But by not having to support a brick and mortar Netflix lets me keep DVDs for as long as I want. And since I can drop it off at their box my turn-around time is phenomenal (a monday morning drop off results in a Wednesday delivery. A Thursday drop off can result in a Friday delivery. Kewl.)

    • Re:Duh... (Score:5, Funny)

      by wibs ( 696528 ) on Thursday February 19, 2004 @12:58PM (#8327807)
      I have a similar story... when I used to live in Long Beach, CA, I ordered a package that I soon found out was originating in Long Beach, CA through the online tracking. A week later it was in Nashville, TN, not long after that Illinois, and almost 2 weeks later it finally arrived having seen more of the US than I have. I know it's still cheaper than having an actual storefront, but the cost effectiveness of giving a box a vacation eludes me.
  • Dont be fooled into investing in something just because it uses the internet!

    Actually look at the business model first! Just because it has .com behind the name isnt a magic formula for success!

    Be aware of what the internet can and cant do, ebay is a wonderful perfect use of the internet, you pay for the servers and maintenance and everyone who uses it does the rest, however on the other hand an idea to sell toothpicks over the internet is not a good idea, even if it is a .com!

    • Re:dont be fooled (Score:4, Funny)

      by dave420-2 ( 748377 ) on Thursday February 19, 2004 @12:31PM (#8327469)
      Thanks, but we could really have used that nugget of wisdom in '97 :-P

      • I was talking in '97, but everyone called me some sort of Luddite who didn't understand the new economy. (Though not in those words) The only difference is some (few) of them got their money out in time, most lost a lot of money, while I never had money in it; and now nobody understands the new economy.

        If you had been listening there were plenty of people talking about how stupid a lot of these online businesses are. So, will you pay attention to my new words of wisdon: Pay attention to the nay-sayers

    • Re:dont be fooled (Score:4, Insightful)

      by globalar ( 669767 ) on Thursday February 19, 2004 @01:31PM (#8328257) Homepage
      You don't even need to mention the Internet in this kind of thinking. In general, there is no magic in business. If you think there is, you don't know what's really going on.

      Avg Investor: "But that's where the money was!"

      Exactly. That's where the money was. It didn't seem to stick in many places, not even in this hemisphere.
    • No no no -- it's the companies whose names look like ***tronics that are sure bets. Look at revenue growth, too, just to be safe.

      If that doesn't work, invest in gold.

      (I think that was the 1963 mantra. Did I get it? Did I miss something?)

  • GI Joe (Score:5, Funny)

    by lukewarmfusion ( 726141 ) on Thursday February 19, 2004 @12:27PM (#8327415) Homepage Journal
    I've learned that Slashdot provides a lot of resources for procrastinating at work, reading articles about how much money is lost because employees surf the web at work...while surfing the web at work.

    And knowing's half the battle!
  • ...as soon as I finish my proposal for a new social networking app crossed with an ITunes like music store...

  • Lesson Number One (Score:5, Insightful)

    by rm007 ( 616365 ) on Thursday February 19, 2004 @12:27PM (#8327424) Journal
    The big lesson to learn from the new economy was that the basic rules of economics still applied. Sure there were a lot of innovations that transformed many industries, but the basic laws of supply and demand still held true. The basic requirement that businesses had to generate revenue in order to survive still held true. It seemed that every time you looked around during the 90s there was another new economy: the information economy, the digital economy, the attention economy, the experience economy etc. etc. but these were all put forward by people who didn't know anything about economics.

    • Re:Lesson Number One (Score:5, Insightful)

      by master control progr ( 654310 ) on Thursday February 19, 2004 @12:43PM (#8327621)
      Exactly right. What makes this situation worse is that we abandoned "Old Economy" (Capital intensive, like manufacturing) in favor of these "New Economy" industries (which require almost no capital to get into), and now we're getting our asses kicked by India and China. It's going to get worse, too.

    • Re:Lesson Number One (Score:3, Redundant)

      by jo42 ( 227475 )

      I kept saying back theen that there never was no "New Economy". That it was all full of hot air. Everyone at the time thought I was not a 'team player' - an idiot. Billions of dollars of losses later, after the bubble burst, and the talking heads on TV still don't get it.

      Nothing changed, just a bunch of syshters bamboozled many people out larges amounts of money. Rich got richer, poor got poorer and the guy in the middle got bent over.

    • Re:Lesson Number One (Score:4, Interesting)

      by tbone1 ( 309237 ) on Thursday February 19, 2004 @12:58PM (#8327813) Homepage
      ... these were all put forward by people who didn't know anything about economics.

      Like economists and journalistic 'experts'.

      Think about it, folks. If such people knew as much about economics as they thought they knew, they'd be on a yacht, not in a TV studio.

      • Re:Lesson Number One (Score:4, Insightful)

        by nelsonal ( 549144 ) on Thursday February 19, 2004 @01:13PM (#8328011) Journal
        Just as mathmaticians and pool sharks are usually two different groups with some crossove, economists and rich people usually have some crossover but remain distinct groups. My favorite dilbert leads with an economist beginning his talk with "I will now explain to you how even though I know all about money, I still dress like a flood victim." But yes you are generally right when you say that people on TV either aren't the best at finance, or if they are, don't really have time to give you the all the information you need to make a good decision.
      • Like economists and journalistic 'experts'.

        I feel like I should defend economists seeing as that is what I started out as, however, defending the talking heads that you see on TV is not a task that I would want to take on.

        It never ceases to amaze me what people will say when they get a chance to be on TV. There are 2 or 3 areas in which I would see myself as having some expertise and whenever I come across something about them in the media it is almost invariably rubbish. When you consider that mu
    • I'm still in business. I started building content-rich websites in 1996.

      1. I saw that "information" on the web is still just "information". I'm a librarian so I knew I could do something with it.

      2. I hired sharp, 20-something MLIS grads, promised them that they wouldn't get rich but that they might get to do something interesting, and told them, "throw out the rules you learned in Library School, but keep all the concepts."

      3. I tried *very hard* not to spend more than I brought in in a given year and

  • What I Learned (Score:4, Insightful)

    by Anonymous Coward on Thursday February 19, 2004 @12:28PM (#8327430)
    Meet the new economy. Same as the old economy.

    People unwilling to relocate, who thought customer orientation was beneath them, who only wanted to work on leading edge technology, funded by venture vultures got burned bigtime.

    Those of us in other locations (say philly), who focused on customer-oriented services, and did work on boring old accounting systems and automating boring old work flows did fine. We were customer funded. We did fine. As a matter of fact we had to turn down work just to preserve our sanity.
  • strangely enough, the titles of the magazines devoted to the internet boom: "fast company", "red herring", "wired": these were cautionary roadsigns, titles picked perhaps unconsciously as signposts of what we were all really dealing with

    we were all... "slashdotted" ;-P

    • Re:what i learned from the internet boom (Score:4, Interesting)

      by happyfrogcow ( 708359 ) on Thursday February 19, 2004 @12:52PM (#8327740)
      it's funny looking through old editions of Wired. The first few issue I have, back when Doom 1 was becomming mainstream popular and BBS's still thrived, the page count was pretty low compared to the following years. Around 1997, the pages were crammed with all kinds of craploads of advertising and the magazine was about twice as thick, and less interesting. I stopped subscribing then, and now I only pick up a copy whenever I am at an airport. It seems the page count is back to it's early days. What my point is, i don't know. Maybe just slightly defending Wired. The were able to adapt with the time, sucking in advertising revenue when it was possible, but still being able to slim down after the boom->bust. Though at the cost of losing the devotion of a few readers, like myself. I wonder if they still have their Wired stock index... i think it's value was like $2M at the time i stopped subscribing. It'd be interesting to see how their investor managed the bust.

  • the roaring nineties (Score:5, Informative)

    by gimpboy ( 34912 ) <john,m,harrold&gmail,com> on Thursday February 19, 2004 @12:30PM (#8327462) Homepage
    for further reading i would suggest: the roaring nineties written by josepth stiglitz. stiglitz, who won the nobel prize in economics, was part of the clinton administration. i just finished it and i think it gives a great overview of what went wrong and what went right with the "new economy". he is fairly balanced-being critical of both bush and clinton. also, you dont have to be an economist to appreciate the arguments presented in this text.
    • he is fairly balanced-being critical of both bush and clinton.

      Interesting that he can be balanced when he's being critical of a man who wasn't President during the "roaring nineties" (#41 had little, if anything, to do with the new economy, #43 was elected after the bubble burst).
    • You might want to have a look at Manias, Panics and Crashes by Kindleberger (ISBN: 0471389455). I thought it lended some insight to the process, although from a broader context. It has nothing to do with the latest crash, of course, but looks at financial irrationality.

  • What does it matter? (Score:5, Insightful)

    by gowen ( 141411 ) <gwowen@gmail.com> on Thursday February 19, 2004 @12:34PM (#8327511) Homepage Journal
    It doesn't matter what we've learned, because like every other economic bubble, by the the next one has come along everyone will either:
    i) think they know why this one is going to be different or
    ii) will have forgotten the lessons of this one anyway

  • What I learned from the New Economy (Score:5, Insightful)

    by KarmaOverDogma ( 681451 ) on Thursday February 19, 2004 @12:34PM (#8327513) Homepage Journal
    As far as politics, money and corruption is concerned:

    The more things change, the more they stay the same (ref: "Golden Rule" - he who has the gold, makes the rules).

    I know the above comment is cheap, but IMO, one thing that *hasn't* changed in the "new economy" is that (white-collar) crime still pays for too many high powered execs and that corporate accountability is hard to enforce.

    Again, IMO, this is one of the reasons more people lost their jobs, in high-tech or anywhere else, than was neccessary.

  • New Economy is the myth (Score:5, Insightful)

    by b-baggins ( 610215 ) on Thursday February 19, 2004 @12:36PM (#8327541) Journal
    The whole notion of a "new economy" is the myth. Economics will be what it always has been: People offering something that other people want/need. The only thing that changes is what is offered.

    Those who understand that have successful internet businesses. Those who don't have failed internet businesses.
    • My take was always that the internet is a way to communicate *really* *quickly* with another location.

      If you couldn't explain how your .com business leveraged that 'paradigm shift'[1], then your .com business was going to be titsup.com real soon.

      Justin.
      [1] First time in ages that phrase has been used correctly.

      • My take was always that the internet is a way to communicate *really* *quickly* with another location.
        So's telephone. So's fax.

        What makes the Internet 'special' is that you can communicate with MANY people easily and cheaply directly in their homes. And with the web, those people get to do it at their convenience.

  • Learned about mirror images (Score:3, Insightful)

    by Tablizer ( 95088 ) on Thursday February 19, 2004 @12:36PM (#8327547) Journal
    Lesson: The size of the poppage will be AT LEAST as big as the bubble.

  • This is well known stuff (Score:5, Insightful)

    by fruey ( 563914 ) on Thursday February 19, 2004 @12:37PM (#8327554) Homepage Journal
    The business paradigm didn't change overnight, bad business didn't become good because of a web site, and you still had to make more money than you were spending in the reasonably short term...

    The whole phenomenon was down to greed. I worked on a big project, and it happened like this:

    1. A good idea started
    2. Good people got hired
    3. Investors dumped in a load of money
    4. Stuff got too big too quick
    5. People on stupid salaries started thinking they had to change stuff all over the place, new logo new this new that
    6. The web visitors just said no thanks had enough - it wasn't working like it used to
    7. The site that is left is no more, but you can see the changes here:
    Links: what was left [archive.org] The new look [archive.org] The old look [archive.org] country site [archive.org]

    The idea was OK, but by the time a load of stupid shit like free email, instant messaging and all that was tacked on, it just didn't work any more, cost way too much money...

    But we had a great launch party for Orientation Morocco, let me tell you!

    • Nor is the phenomenon necessarily new - didn't the roughly the same thing happen around the turn of the (last) century with the automotive industry? I remember reading somewhere that hundreds (if not thousands) of automobile companies were formed and went bust in a matter of years, taking lots of investors' money with them.

  • What I've learned from all this: (Score:5, Insightful)

    by michael path ( 94586 ) on Thursday February 19, 2004 @12:38PM (#8327573) Homepage Journal
    The one thing I get to take with me after taking a job in 1999 at age 19 to make more money than I ever expected to, through being both fired and laid off in 2003, is that continued education and awareness of the outside world have been paramount towards any career success I have.

    The Internet continues to be my preferred source of education. I've taken online classes through a community college. Newsgroups have helped me solve most of the problems I have at work, and I look sharper for it. I've regularly used online news sources to keep me aware of what's new in the world, given that local news anchors have more brilliance in their smile than their skulls.

    Aside from my service costs, the Internet remains as free as Al Gore intended :)

    -m.

  • it grabbed media attention .. (Score:4, Interesting)

    by psycho_tinman ( 313601 ) on Thursday February 19, 2004 @12:40PM (#8327592) Journal

    made technology startups mainstream news; focused public awareness and attention on the internet and what it can allow you to do. All of these are good things. It showed people what would work and what wouldn't. Sometimes in a stark and brutal fashion. I can't say it was an era that should have never happened, because sometime, somewhere, you need to make that leap of faith from merely thinking about a business to actually starting one. The new economy gave lots of budding entrepreneurs the chance to get their feet wet, chances that they may not have gotten before..Google came from the dotcom era, didn't it?

    The best thing to come out of the whole "new economy" for me was the experience that I got.. Never jump into a project without a cold blooded analysis of risk vs reward, never go into a company because they "look" exciting; check the fundamental things out first. Feather your nest, because you never know if things could change for the worse tomorrow. In short, be conservative.

    All the same, I wish I had graduated just a couple of years sooner (1997-1998) because regardless of competency or suitability, being called an "architect" fresh out of college gives you experience at that level that would otherwise take years to achieve.. Good times, good times.

  • Lessions learned (Score:5, Insightful)

    by Bull999999 ( 652264 ) on Thursday February 19, 2004 @12:41PM (#8327604) Journal
    I think that people who wants to play the market should take a class in accounting or similar courses to learn to read financial statements. I took several accounting courses in hopes of opening my own business someday and I was suprised to find that GAAP allows enough flexablility to inflate or deflate the "earnings" by the companies. I also learned that Statement of Cash Flow often times are more important the Income Statement or Balance Sheet. (A company yachet may be counted as an asset but does nothing to brining in money and most likely to be sold under the book value if company needs cash).

    All the day traders I knew during the boom didn't know how to read the financial statements. They just relied on advises of some hot shot, other day traders who knew no better, and their gut feelings.

    • All the day traders I knew during the boom didn't know how to read the financial statements. They just relied on advises of some hot shot, other day traders who knew no better, and their gut feelings.

      Almost by definition, day traders are NOT going to be interested in financials. The basic premise of day trading is that you can make money on short-term trades. Depending on the strategy, short-term can mean seconds, minutes, or days, but almost never weeks or months. Such strategies do not care about u

    • Very true. Particularly with the introduction of 'pro forma' earnings, the income figure now borders on useless. I'm am currently in several advanced financial analysis classes, and the only use the income statement really has is to provide some insight into the firms expense ratios, and those are usually error adjusted for forecasting anyway. Many people incorrectly believe stock value is based on future earnings, but this is incorrect. It is actually the present value of future cash flows.

      Another goo

  • True Story... (Score:4, Insightful)

    by Noryungi ( 70322 ) on Thursday February 19, 2004 @12:42PM (#8327614) Homepage Journal
    I remember reading Wired Magazine about " The New Economy ". Yes, the one with a big green Godzilla on the cover.

    Closing the magazine, I thought: "Either these guys deserve a Nobel Prize in Economics, or they just don't understand anything about Economics".

    Late 1999, I remember talking to a friend about Yahoo and other companies offering free services over the World Wide Web. He could not understand how these companies could offer a valuable service (email, personal web space, etc) for free and (a) make money, (b) have a stock price that went through the roof.

    I remember telling him: "This is not going to last. The stock market is going to crash really badly and most of these companies are going to go down in flames".

    Today, I am really happy most of my money was not invested in stupid schemes such as pets.com or any other "new economy"/Internet company.

    Bottom line? Here are my most basic rules for economy, new or otherwise...

    1. There ain't no such thing as a free lunch. If it looks like a free lunch, there must be a catch.
    2. Whatever goes up (especially stock price) will eventually go down, because everything in economy is based on cycles. It does not matter if you sell pork rinds, soda or personal computers.
    3. Do not invest in a company when you can't understand its business model (or what it sells) because it is probably a scam. That's how Warren Buffet made a fortune and it's always a god rule of thumb.


    One last thing: 90% of all the people who made money in the new economy where insiders, people who knew if a stock was going to go up or down. Think about that for a second.

  • Sendmygift.com (Score:5, Interesting)

    by thejuggler ( 610249 ) on Thursday February 19, 2004 @12:43PM (#8327623) Homepage Journal
    Anyone ever heard of that company? I used to work for them back in 1998-2000. It was supposed to be a huge (as Amazon) online store where people could by gifts chosen from our catalog that had thousands of gift items from jewelry (high end stuff) to home and garden, business, kids gifts, kitchen and food items to flowers. There was a gift reminder service (a personal event calendar where you enter event b-day's, etc.) that would remind you to buy a gift for the scheduled event, it would even provide a few suggestions based on info you provided.

    The only problem was that the owners allegedly sold private shares of stock illegally. (A court Minnesota ruled against the company is several lawsuits brought by shareholders). The bankruptcy still lingers on. The thousands of shares I received for being an employee are worthless. My belief now is that the owner never intended to make money or operate a successful business. All he talked about was 'going public' and how rich we (he) were going to be.

    The "New Economy' taught me a lot. After working to two other companies with the same business model I now work for an 'Old Economy' business that actually believes in making a profit, serving it customers and taking care of it employees. There is no IPO in sight for this company and that's fine with me.

    I'll take a steady paycheck today instead of the promise of stock pay offs tomorrow.

  • We were conned - had nothing to do with technology (Score:5, Insightful)

    by SmilingMonk ( 583609 ) on Thursday February 19, 2004 @12:50PM (#8327698) Homepage
    This may come as a bit of a surprise, but the "new economy" was a ruse. It was a way of separating your investment dollars from your wallet and giving it to the IPO underwriters, investment bankers, and Vulture Caplitalists. PBS Frontline [pbs.org] ran a series of programs that illustrate this point very well.

    One of the key indicators of just how well the ruse worked is that 60% of the working public was in one way or another invested in "Wall Street" during the late 1990's. The last time this many of the "regular working public" invested was during the 1920's.

    Another, perhaps clearer indicator of how well the ruse worked is looking at just how much money was drained from the US economy (ie: your wallets and mine): $3.3trillion.

    It's tragic, really. The technology was in some cases quite good. eBay roars along. Dell digitized their entire business model. And governments around the world have started to adopt Open Source works as the foundation from which to build upon. But greed extracted a huge price on the economy and our ability to reinvest those dollars in continued Research and Development.

    • Re:We were conned - had nothing to do with technol (Score:4, Insightful)

      by Cyno ( 85911 ) on Thursday February 19, 2004 @01:42PM (#8328356) Journal
      Greed and the media. When they were running the "dotcomcrash" financial news it convinced enough people to pull enough money out of the tech sector to make it collapse, so only the large players would survive and buy up all the little guys.

      If you look at human nature, I mean really look at it and how it behaves in a system that advertises to them, teaches them how money works, expects them to be greedy and spend money to make money, then turns the whole economy upside down on them we see that this is natural for capitalism.

      It will happen over and over and over again until we either decide to value eachother more than money or get rid of money itself. Personally I feel like managing all this money is inefficient in a digital world. But most people don't understand what it means to live in a digital world where a computer connected to the internet can replace a TV, telephone, Postal service, library, newpaper, and many other things for most common uses. And these internet-connected computers can be made smaller than a cellphone or a walkman.

      That's why we're in such bad shape. We've got everything, but no incentive to use it because we only wanted the money.
    • Blame the 1995 Private Securities Litigation Reform Act. It relaxed the rules enough to allow much of this fraud.
      It's detractors warned about this.
      The president vetoed it.
      Money-grubbing market fundamentalists paid off their congressmen to override the veto.

      And the result?
      Enron. Tyco. Worldcom. etc.

  • HELLO (Score:2, Funny)

    by Anonymous Coward
    Me and some expert internet technologists are starting a revolutionary new company called e-BS. This new company will revolutionize how the world uses and produces BS. Our website BS distribution system will allow BS generators from accross America to deliver their BS to the masses at cut rate prices. If you would like to invest in this great new company please contact me immediately. The intial blocks of shares are going to be sold for 1 million USD each. Thank you.

  • Kim Polese (Score:5, Funny)

    by asr_man ( 620632 ) on Thursday February 19, 2004 @12:52PM (#8327743)

    7. Kim Polese, cofounder and former chairman of Marimba

    Then: To put it crudely, Polese was one hot chick in a room full of nerds. ...

    Really? Judge for yourself [typepad.com]...

  • Speculation bubbles are not modern inventions (Score:5, Interesting)

    by poszi ( 698272 ) on Thursday February 19, 2004 @12:58PM (#8327808)
    Nothing beats the 17th century tulipmania [wikipedia.org]. The power of human greed is always amazing.

    • Re:Speculation bubbles are not modern inventions (Score:5, Interesting)

      by afeeney ( 719690 ) on Thursday February 19, 2004 @01:14PM (#8328029)
      You are so right, but there's one thought that I would add.

      Just like the tulip mania or the South Sea Bubble [www.dal.ca] or all the other bubbles since, once all the attention is on the stock rather than the intrinsic value of the product or service, then winning or losing depends on timing the market. (Or on having insider information.)

      One thing that I think made the Dotcom Bubble a different twist was that it coincided with the rise of daytrading, the ubiquitous information age, and the age of easy credit card debt, so it was even easier for the people who have only the foggiest notion of evaluating and forecasting a stock's value to get into the market.

      Certainly during the previous bubbles, lower-income people could still get in on the speculation, but there were several new forces converging to add to its capacity to reach investors.

    • Re:Speculation bubbles are not modern inventions (Score:4, Interesting)

      by nelsonal ( 549144 ) on Thursday February 19, 2004 @01:20PM (#8328117) Journal
      One hobby of mine is financial history, it was pretty funny to read the sages of Tulipmania and compare their stataments with analysts in 1999-2000, if you had replaced tuplips with IT, telecom, or the internet and put a company on the top, you could have saved a whole lot of cost, and put out investment research surprisingly similar to major investment banks.
    • Gotta get on the phone and buy $10,000 worth of tulips. If the price went that high before, it's sure to again. I'll be a millionaire in months.

      Rich

  • What I learned during the bubble... (Score:5, Interesting)

    by ubiquitin ( 28396 ) * on Thursday February 19, 2004 @01:05PM (#8327903) Homepage Journal
    ... is that self employment is the safest way to build a career. Why? The fundamental unit of trust is another person, not another company. As self-employed, I've insulated myself from most, if not all, of the stupid crap that companies do. While I have friends who have been laid off and rehired several times, I'm now for the first time confident in my financial future because I have a list of clients who all really need my services. They now trust me to get the work done. I trust them to pay on time. And that (to me) is worth more than a fat 401k because in ten years my work will be inflation-adjusted and grows with my clients (all of whom have been selected in part because they are likely to grow and already have a good pattern of it.)

    And when I get ready to hire? The number one thing I'll be looking for on those resumes is a history of self-reliance and individual responsibility. There are a lot of professional committee-manipulators out there who like their comfortable BigCorp positions, and good for them. I'm confident that in twenty years, when we both look back and to see where we stand, my contributions to the world will be both worthwhile and significant.

    Really, it all boils down to trust. That's what underlies the economic viability of open source: you're dealing with people and standardized network protocols and not organizational entities or proprietary lockin.

  • what goes around comes around (Score:5, Interesting)

    by mabu ( 178417 ) on Thursday February 19, 2004 @01:09PM (#8327961)
    Interesting topic, though I would characterize Fast Company as the "Cosmo" of tech/business publications. I found some of the articles non-researched, ill-conceived and sophmoric. In one section [fastcompany.com] Fast Company continues to propagate the myth that Al Gore claimed he 'invented the Internet' [snopes.com].

    I was one of the folks who stood around scratching his head at the explosion of IPOs for "dot coms" that had no legs to stand on. Why the imposion occurred shouldn't have surprised anyone who was paying attention, but it played on many peoples' sense of greed at the expense of their common sense.

    I was one of the people who was there in the early days with technology and services that were way ahead of their time. OTOH, I was one of those that didn't run out, sign up a bunch of pimply-faced MBAs for a management team and then rush to do an IPO. Today, my company is far from the largest, but we're very stable and have a solid client base. I don't have a personal helocopter, but I did get my small slice of the dot-com pie when I sold a domain I registered in 1994 for an insane amount of money. That was exciting and depressing at the same time. It wasn't what I ever imagined would be one of the big payoffs relative to what we were doing. I suspect there may have been at least a few other companies who really wanted to build an honest solid net-based business model, that were overshadowed by the parade of spineless, over-hyped dot-coms run by people who perhaps a month before were selling life insurance.
    • I was one of the folks who stood around scratching his head at the explosion of IPOs for "dot coms" that had no legs to stand on. Why the imposion occurred shouldn't have surprised anyone who was paying attention

      You and me both. Back during the boom I'd gotten a job as a telecom technician. My father kept saying "get out of that crappy job. Any monkey who can turn on a PC is making $50K." (this from a guy who worked for one company all his life and always managed to sell his bonus-acquired company stock a

    • Interesting topic, though I would characterize Fast Company as the "Cosmo" of tech/business publications.

      That is a compliment. At least Cosmo gives good fashion advice and more than one girlfriend has got some interesting bedroom ideas from it (why this is ok for women and men's entertainment mags can't be displayed in public is another issue)...

      FastCompany is written for 30 something middle managers at large corporations. Not surprisingly, it's a vehicle to sell big hats to the no cows crowd (act ric

  • Lesson #1: Don't Believe the Hype! (Score:3, Insightful)

    by mojoNYC ( 595906 ) on Thursday February 19, 2004 @01:13PM (#8328013) Homepage
    the internet boom was fueled by high-flying hype and boosterism, from industry analysts and especially the media--basically, the people who stood to gain the most hyped the internet way beyond its immediate potential...

    the list is huge, but here are a few leading contenders: Fast Company, Wired, Henry Blodgett, Mary Meeker, any VC firm, Wall Street, and on and on...

    i think the lesson to take from the internet boom/bust is don't get taken for a ride by some body who wants to build a next-generation, new-paradigm ecommerce portal (or a monorail) with other people's money...

  • I made out ok... (Score:2, Interesting)

    by Anonymous Coward
    Never had a net worth of $500 million dollars, or anywhere close, but was able to sell a Web site I had built in the latter part of 2000 for a shade over a million dollars - all cash. Not too bad, especially considering the whole NASDAQ market came tumbling down a couple months later and the ompany that paid me all in cash - it came tumbling down too.

    There was some grave apprehension "selling out" at the time, like I was going to lose what I had worked on for three years. Also, I was making low six figure

  • No new economy... (Score:3, Interesting)

    by Fulg0re- ( 119573 ) on Thursday February 19, 2004 @01:26PM (#8328181)
    There was a significant amount of underpricing during the "dot con". There was no "new economy" working, but rather we had institutional investors taking advantages of noted problems in the system.

    For example, there was (and still is) clear preferrential allocation of shares, thereby allowing only a select few to gain the benefits of an IPO. What we need is non-preferrential allocation of shares, akin to what Bill Hambrecht is doing with the OpenIPO system.

    Nonetheless, the (historical) "new economy" was a lot more riskier than the "old economy", not less. There is a lot more reliance on innovation and high-risk investments to drive growth, which is great when the innovations work out in the long run. However, when big gambles, such as the dotcoms, fail to pay off (eg: no revenues, or costs exceeding profits), then the whole economy suffers.

    This is likely the largest mistake that investors made. They failed to understand the high-volatility nature of the "new economy", and took far greater risks than they should. They failed to realize that by investing in new IPO's, they were effectively taking the same risks that venture capitalists do.

  • There will always be booms and busts until The State stops inflating the monetary supply. In other words, until we get The State out of money, and go back to allowing the free market to choose money. This would almost certainly result in a gold and silver standard, with banks issuing bank-notes redeemable in certain weights in gold or silver. Fraudulent note-issuing would be checked by bank-runs (banks would no-longer be protected) triggered by customers and other banks. Also, fractional reserve banking is

  • At least in the USA, and probably in other developed countries, is the demise of the old model where a widespread increase in the standard of living was not only possible, but economically sound, as long as wage increases were no larger than worker productivity increases. Letting wages rise faster than productivity was a recipe for inflation.

    Lately, productivity has been climbing spectacularly. That's good, very good. But the benefit has not been translated into increased wages.

    Why?

    Because of globalizat

  • To those interested in this "new economy" ; you might be interested in The Economist free newletters. They're great summaries.

    http://www.economist.com/email/

  • Its about time someone finally wrote an article discussing what went wrong with the .com bubble.
  • The lesson I learned is IT changes in the blink of an eye. One year theres a shortage in networking, the next a major surplus. One year programmers get paid 60k, 5 years from now probably 1/2 that. The lesson I'm taking from this is to pay off my house early and save everything I can. My job in IT may not exist in 10 years.
  • this page [fastcompany.com] seems to be missing some important dates. Anyone know (yes, ITLTG*) when eBay, Amazon, and Yahoo! had their IPOs?

    * I'm Too Lazy To Google
  • During the .com boom I invested heavily in NASDAQ and watched my stock go up significantly. However, I only invested in viable companies with an actual product (primarily Cisco), and I COULD smell the trouble with the insane IPO's of the .COM's. I knew they would crash. How could they not? They had lots of VC, fancy buildings, scooters, arcade rooms, and free soda...but no business plan.

    What I DIDN'T count on what that they'd take the rest of the NASDAQ with them. I lost quite a bit of money, but that
  • "I'm still not happy with my last chapter," That would be chapter 11, I presume?

  • A Fable About the Interweb... (Score:3, Insightful)

    by qtp ( 461286 ) on Thursday February 19, 2004 @03:12PM (#8329809) Journal
    The people who designed the internet technology were not running about with stories of how much money was going to be made, nor were they talking about "revolutionary economies" or other such crap.

    The system that evolved was not and is not, and hopefully will not be, designed as a system for the generation of enormous amounts of profit. It is designed to be a communication, publishing, and media-distribution system that enables all comers to take part based on their willingness to learn the techniques.

    The internet bubble was not created by techies, it was the creation of assholes from wall street and their MBA bearing offspring who saw the geeks working late on something they did not understand. Being typical assholes, they figured that there must be a lot of money to be made, otherwise why would Poindexter be spending all of his spare time and losing so much sleep over this hobby of his. So they came forward with offers of money, and Poindexter, surprised as he was, accepted the money in return for writing code to implement these poorkly though out and vague ideas.

    The MBAs began to get restless during the mid 1990s, wondering when the return on this interweb thing was gonna come rolling in. They began sending their offspring to college for CS degrees, because obviously Poindexter was doing something wrong. He seemed happy whenever his code worked well, but never seemed concerned about the money (why should he be, he was getting paid). The MBAs figured it must be a cultural thing, and seeing that they knew what clothing was in style (and Poindexter did not), and they drove the right SUV (and Poindexter did not), that their own children would be better for running this interweb thing, and they would have to find a way to take it away from Poindexter (because he was obviously not doing it right, as he ghadn't made them their billions like that other Poindexter out in Redmond had). Their children came back from school and began starting internet businesses left and right, they knew how to talk to venture capitalists (as that was their culture) and how to play the media. Their businesses gathered money from investors and they paid themselves (and each other) high salaries until the money ran out.

    A few of them, who had somhow discovered a clue by spending tiome with their classmates (in the process discovering their own inner Poindexter), created strong businesses that were based on rather mundane things, like selling fasteners or books, or providing usefull services for free to the public that could be sold a specialized services to companies, such as non-biased searches.

    The rest of the children of the MBAs folded their companies, while wiping a crocodile tear from their eye, fired all their Poindexters on short notice, and drowned their sorrows in the huge amounts of money they had scammed from their parents and their parents business partners (because, of course, that was the way of their culture). And they complained about it. Obviously, Poindexter must have done something wrong.

    Now the investors, the MBAs, the venture capitolists are all crying "foul! foul! Where are the billions you promised? Why did you not make me even more rich than I am already? There must be something wrong with that internet thingy, and I'm gonna get my congressman to fix it for us."

    Poindexter shrugs. His code is working fine. It does exactly what it was intended to do, and given enough time it might possibly be possible for a guy to make a living without being harassed by a bunch of venture capitalists and MBAs wearing the latest ugly suit and driving those ugly road hogs. Meanwhile he'll just sit at his computer, and design yet another application protocol or device that the assholes will finance never understanding that the internet is not designed to make the money people rich.

    It is designed to diminish their control.

  • lesson learned (Score:3, Interesting)

    by jwsd ( 718491 ) on Thursday February 19, 2004 @03:43PM (#8330406)
    Worked for a CEO who spent most of his time bashing Microsoft, instead of running a business. He claimed to be a victim of Microsoft's evil business practices. He ridiculed other dot coms for being mere hypes. In the end, fake business, accounting scandal, CFO bailed right before the fallout (Fastow?!), COO fired and under FBI investigation (scapegoat?!), company collapsed, $400 million wasted, CEO ousted. The ex-CEO, $30 million dollor richer for running a company into ground, is still bashing Microsoft, at least this time he can't blame Microsoft for his business failure. Lesson: a lot of anti-Microsoft heros are human scums.

  • The gold rush model (Score:2, Informative)

    by plopez ( 54068 )
    Looking back at the internet boom, various mineral (including oil and gas) booms in the Western US, here is what I have learned:

    1) Early on a number of folks find potential. E.g. a new gold field or new technology.

    2) Usualy at that point enterance barriers are low, so a lot of small organizations enter, flooding the field.

    3) Large organizations tend to be risk averse and slower so they may miss the initial 'pop', but they have huge resources.

    4) The survival stragegy for a small outfit is 2 fold:
    a) get b

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