In
the mid-90s, the world got its first glimpse into the huge boom, or big bang,
that the Internet began to experience as it was on the rise to becoming a
prevalent part in many peoples’ daily lives. In the business and stock world, the period between 1995 and
2000 is known as the dot-com bubble, where a tremendous amount of money was
invested in technology and Internet-based business ventures. This period of time was saturated with
a great deal of Internet startup companies that ranged from primitive web browsers
and search engines to auction and shopping sites, plus gaming and early social
media sites. On the business side,
the stock market saw many publicly traded sites who’s stocks boomed from just a
few dollars each to well over one hundred dollars in just a few days. A few years later as 1999 and 2000 came
around, it seems that just as fast as such startups came into existence, many
of their stocks crashed dramatically and many went out of business. A good example of such a dot-com bubble
startup that went from rags to riches then back to rags between 1995 and 2000
is the early social media and gaming entity known as theglobe.com.
Stephan
Paternot and Todd Krizelman founded theglobe.com during their undergraduate
years at Cornell in 1994. Within a
year they had a team of employees and by 1998 their company began being
publicly traded. According to an
interview by ABC Australia, Steph Paternot had high hopes and revolutionary
feelings at startup, but now he’s worth no more than your average Joe. The company’s shares opened at $9 a
piece and boomed to $97 within their first day of trading. The 23 year-olds were worth close to
$100 million for a relatively short period of time, as their stocks closed out
at just under 20 cents apiece.
Evidently, their business idea was not self-sustainable, as it seems
that they attracted millions to their business but never worked out how to turn
a profit.
You
may ask, “what could they have done differently?” For one, they could have done something that would have made
them a sustainable income!
Theglobe.com was a social media site that featured chat rooms and
customizable pages that were each geared toward a specific interest. In addition, the site featured a host
of video games and other social things to do. It seems that as long there is web traffic, there will be
advertisers; and where there are advertisers, there are advertising
dollars. Not a bad plan. However, this means that the website
must stay up-to-date and prevalent in millions of people’s Internet surfing
routines on a regular basis. At
the time of conception, I suppose there was no way of knowing, but looking back
it seems obvious that it would be just another fad that comes and goes. Even from the beginning, however, as
the ABC Australia bit shows, some analysts saw that is was a business based on
hype that held no sustainable business plan, and therefore was sure to
pass. In addition, it did not help
that in 1999 the site got some bad press as CNN filmed Paternot at a Manhattan
nightclub at his financial peak wearing shiny leather pants and dancing on a
table. He was coined “the CEO in
plastic pants” and was passed off as a symbol of the excess of young dot-com
millionaires at the time.
During
the dot-com bubble, investors were extremely excited about the potential of
this new medium for business known as the Internet and all of the brilliant and
booming startup companies available for investments and hopeful returns. It is hard to say if this boom proved
to be overall beneficial in the long run, but it surely did have an impact on
today’s marketplace. Many Internet
giants got their start during this bubble including amazon.com, eBay, and
Google. It seems that on the
Internet, the idea of major corporations ran their course similar to how it
happened in the physical world, but in a highly condensed time frame. By this I mean that at its conception,
the Internet hosted a multitude of small, independent businesses with
specialized purposes and new, original ideas. Within a few years, many smaller businesses were weeded out
by competitors, which grew dramatically in size and popularity. As these now mega-sites continued to
grow, they bought out competitors and a variety of smaller startup sites, which
they would add to their brand and domain.
This process, to me, is very reminiscent of how startups and
already-established businesses are bought up by giant conglomerate corporations
that feed on their competition and thrive on their spread and sheer domination.
We see many examples of this today,
with just the first one coming to mind being Time Warner. This company came about with the fusion
of Warner Communications and Time, Inc., plus Turner Broadcasting Systems, Inc. The spread of this corporation includes
subsidiaries that are making Hollywood movies, broadcasting original television
shows, providing homes with cable and internet services, plus much more. Another major one is NBC
Universal. With all its
subsidiaries, this company is feeding both our entertainment and our news
sources. Just to name a few
functions, they make movies, have branded theme parks, give us local, national,
and political news, and a whole lot more.
Okay, digressive rant over.
The dot-com bubble in the latter half of the 1990s surely had lasting
effects on our business market and especially Internet business market today.
Many
investors saw how Internet businesses were on a dramatic rise and were more
than eager to invest their money with the hopes of seeing plenty of returns for
years to come. Did they learn
their lesson? Will this sort of
thing ever happen again? It seems
that to an extent it already is. As
new media develop, there will be folks ready to capitalize, and thus plenty of
exciting booms for investors for years to come. Just recently with the advent of Smartphones and tablet
computers, nearly every established entity has an “app”. In just its first year, Apple sold over
1.5 billion apps in their App Store.
As more people across the globe obtain this new and exciting technology,
they will continue to purchase such digital perks that improve their experiences
with their various devices.
So
the dot-com bubble happened. We
certainly see a host of surviving entities as well as improvements in the way
business is conducted over the Internet.
With new technology, it takes some time to work out kinks and make
improvements based on how people interact with it in real-life
applications. For example, making
payments online is much more safe and secure than in the past and many
Internet-based businesses are very efficient and customer friendly. Websites are far more organized, employ
sleek designs, and look very professional. Some websites are indeed very fascinating and have
revolutionized how we obtain information, such as Google, YouTube, Wikipedia,
and more. With the freewheeling
nature of the Internet, it must also be noted that in recent times it has been
much more governed. Many file
sharing websites have been shut down and videos removed from the web due to
copyright laws and other implications. It is hard to say whether the economic impact of “bursting
the bubble” is outweighed by the improvements that came about as a result. Regardless, it is certain that the
virtual interconnected web we refer to as the Internet is here to stay, at
least for a while, and where there are people, there will be commerce. Commerce is good.
ABC Australia video:
