My friend Daniel and I were recently discussing Douglass Coupland’s 1996 novel Microserfs, and this led to a discussion of the dot-com boom and bust. Like many people who rode the dot-com wave, I felt that the story was ultimately about the crash, and about the combination of naivety and irresponsible greed that led so many of us to spend the money of venture capitalists, and then of ordinary investors, on free sodas, catered Friday beer busts, Razor scooters and overblown interior decor.
Daniel took me to task for overlooking the enormous success of the dot-com era and the accuracy of many of the most extravagant predictions. (He also accused me, unfairly in my opinion, of preferring to sneer rather than think just because I happen to believe that a May 2001 article called Boo! And the 100 Other Dumbest Moments in e-Business History, originally published by Business 2.0, is really funny.) Yes, there were a lot of 24/7s and Boo.coms that spent themselves out of existence without ever coming up with a viable product, but they were just a sideshow. The real story is the way that the Internet has transformed politics, social relations, media access, business operations — our whole society, in other words. Nonsense about new paradigms of social organization, which already sounded silly by 1998, has come true: look at Friendster, Tribe.net, Craig’s List, MoveOn. Grandiose predictions of productivity gains also came true. Blogs have given ordinary people unprecedented media access. And shopping online has become ordinary.
So what happened? Henry Blodget, former stock guru (who makes it into the Business 2.0 article for declaring that “unlike with other famous bubbles … the Internet bubble is riding on rock-solid fundamentals … Just because the Internet stock phenomenon looks like a bubble, it isn’t a given that the bubble will burst”) and now a regular contributor to Slate, argues in an op-ed piece in today’s Times that the bubble phase is actually a natural part of a four-phase cycle of “boom, bust, mature growth and decay” that most industries go through. It’s a smart way of thinking about what went so spectacularly wrong and so spectacularly right during the dot-com era of the late 1990s.