For all of us who followed the rise and fall of the dot-com there is one major lesson to be learned: those who forget history are condemned to repeat it.
John Cassidy’s detailed account of the rise and fall of the dot-com, in his recently-released book dot.con: The Greatest Story Ever Sold, teaches us several other important lessons, not the least of which is that humans are an inherently greedy lot who, at times, act like lemmings.
In the late 1990s life was a dream. The economy was booming, the Internet craze had touched the masses and there was talk about a completely new business paradigm. Profits, market share and price per earning ratios were for the troglodytes of the past. Now it was about mind share, image and apparently how much money you could burn in the shortest period of time.
Create a money losing company with a problematic business plan, sell it as the future of the travel industry, get the backing of a heavyweight investment bank like Morgan Stanley and watch its market capitalization hit US$10 billion over night. At one point Priceline.com’s market cap was greater than the entire U.S. airline industry. Twenty-four months later it couldn’t buy two 747s.
What in the hell were we thinking?
As it turns out, not a whole lot. Cassidy explains in great detail the creation of the late 1990s bubble market driven by the Internet. From the fact Amazon.com purposefully started in a garage (so Jeff Bezos could brag that it had) to the questionable influence of Internet investment analysts, there is no shortage of intrigue to tell the story of what was arguably the greatest speculative bubble of all time.
The sensational rise of the Dow Jones and NASDAQ was fuelled by millions of Americans gleefully investing with the hopes of striking it rich. This in turn forced mutual fund investors to buy Internet stock or face being replaced. The technology analysts lead the charge while the Feds, for the most part, did little but stand idly by.
The fact Cassidy is a New Yorker staff writer guarantees two things. One, the book is extremely well written, and two, there are more details than you could possibly need. The book is entertaining, informative and self affirming in that there are greater suckers out there than you and me.
– Reviewed by Chris Conrath
