September 23, 2002

11:52 PM

While it's hard to say when the dotcom bubble began to burst, it's now officially clear when the internet stock bubble ended, which would be today. With the NASDAQ taking the first dip to 1996 levels, it's time to grab a Webvan-delivered 40oz out of your orange Kozmo-surplus bag and tip it in honor of all them Pets who still can't drive.
posted by mathowie (20 comments total)

Time to buy some bargain basement blue chip stock. It can only go up right?
posted by jeblis at 11:56 PM on September 23, 2002

I was curious about the guys featured in Startup.com, but this page says they're still friends and still working together, providing "corporate clients with operational, financial, and strategic advisory services for distressed situations." In other words: They'll never be out of work.

My own dot-com story: I worked with Sidewalk.com from the launch of my local (Twin Cities) branch until the sale to Citysearch. Three fun years, but the end came easier because I always knew it wasn't going to last. Funniest memory: Maureen "Marcia Brady" McCormick was our spokeswoman one summer, and we all got to meet her. Why was she our spokeswoman? Uh, why not?
posted by GaelFC at 11:58 PM on September 23, 2002

Thanks for reminding me of an odd brush with fame I had, GaelFC. While at drugstore.com, I happened to (briefly) meet Martha Stewart, who was visiting our Bellevue, WA offices. Stewart was connected through VC firm Kleiner Perkins, and John Doerr - who is on the board of directors for Amazon.com, drugstore.com and Martha Stewart Living.

Anyhow, there was this air of synergy and the whole Stewart-Amazon-Drugstore.com thing really seemed to make sense... enough so it wasn't an odd sight to see Martha herself navigating our drab little developer's cubicle maze. Martha was gracious and let a few of us take polaroids for posterity.
posted by kokogiak at 12:29 AM on September 24, 2002

Wow, consider yourself a lucky person, GaelFC. The whole topic of .com spokespeople is interesting. If given the choice, I don't know if I would select to meet Marcia Brady or Teri Garr, who was the JackNabbit.com spokeswoman.
posted by gluechunk at 12:34 AM on September 24, 2002

These other ghostsites via your link are a sad reminder of the gold rush mentality during the bubble. Thanks.
posted by jeblis at 12:57 AM on September 24, 2002

If you ask me the entire dot.com bubble/collapse has the smell of one large scam perpetrated by the different underwriting banking houses. They made all their money off of IPO's after their own analysts hyped up the stocks value. Whether the company succeeded or tanked they didn't care as they still made money either way.

I really don't think there was such a thing as a "new economy" or "e-business". It has always been and will always be just the economy and business. The rules never changed as much as people believed they had.
posted by PenDevil at 1:42 AM on September 24, 2002

"During the past two years, the collapse of the bubble has now destroyed $4.4 trillion of wealth in the Nasdaq composite stocks"

Just to put that into perspective:

$4.4 trillion / U.S. population = $15,827.34 per person

The entire U.S. GDP for the year 2000 was $9.963 trillion, so the losses on the NASDAQ over the last two years are equal to approximately 22% of the GDP over the last two years.

$4.4 trillion is equivalent to the total value of all goods and services produced in the United States between January 1st, 2000 and May 9th, 2000... that's a long vacation without pay!

Of course, $4.4 trillion is only equal to the losses on the NASDAQ over the past two years. If we're talking about the NYSE, that would be extra.

Under the circumstances, it kind of makes you wonder whether an invasion of Iraq is really worth it.

"Lawrence Lindsey, Bush's top economic adviser, said last week that the price tag could reach $200 billion".

Admittedly, $200 billion is only a fraction of $4.4 trillion, but a few hundred billion dollars here and a few hundred billion dollars there really starts to add up after awhile...
posted by insomnia_lj at 1:47 AM on September 24, 2002

A good explanation of what was behind the bubble and meant that it was doomed from the outset: Pyramid Scheme Dot Com.
posted by rory at 3:37 AM on September 24, 2002

some people do things right. while the husks of fat dotcom cadavers moulder in the ditches, the porpulent empire of blorticus celebrates it's 2nd anniversary of raking in the dotcash bigtime! i think it's the textads on mefi. that or the incessant comment seeding sparkling personality of it's founder.
posted by quonsar at 4:49 AM on September 24, 2002

That's an interesting analysis, insomnia_lj, but you have to factor in how much of that wealth loss was a component of inertia of overinflated equity value. Stocks prices can and are increased based solely of the potential of future value. No shit, you say, but how much of that 4.4 trillion of valuation was generated during and due solely to the boom itself?
posted by rhizome23 at 5:05 AM on September 24, 2002

My favorite .com spokesperson will always be the Captain. His career as spokesman survived the bubble!
posted by ericableu at 7:12 AM on September 24, 2002

I have a problem with the language being used to describe the effects of stock prices going up and down. We read that the dot-com bubble "created" $4.4 trillion of wealth and the crash "destroyed" $4.4 trillion of wealth. I don't buy it. Wealth is only created when you can produce goods and services which are worth more than it cost you to produce them. Stock prices are not creating wealth, they simply represent the transfer of wealth from the buyer to the seller of the stock. Even if every owner of overpriced stock had been able to sell that stock at the full inflated price, no wealth would have actually been created. Existing wealth would simply have been transferred from the pockets of later investors into those of early investors. Until the companies represented by those stocks start creating goods and services worth more than than the expense of creating them, then no new wealth has actually been created. Much of the dot-com boom was built on companies that were not actually creating value, therefore no wealth was actually destroyed when they went away. (Unfortunately, the overall market slump has affected companies that do produce value, but these should recover over time.)
posted by tdismukes at 7:43 AM on September 24, 2002

tdismukes: I agree. The article linked to above, Pyramid Scheme Dot Com, describes the transfer of wealth from new investors to older ones as the basis of pyramid schemes.
posted by tippiedog at 8:06 AM on September 24, 2002

Tulips here! Getcher tulips here! Don't miss out!
posted by yhbc at 8:06 AM on September 24, 2002

Here's a very off-the-cuff way to think about actual wealth creation or destruction in the tech and telecom bubble.

If we assume that most stocks and bonds today are priced reasonably close to their economically accurate value (and were also accurately priced on, say, October 1, 1994), a good measure of wealth creation (destruction) in the related tech telecom booms of 1994 to 2000 would be this:

(a) the current market capitalization plus aggregate value of outstanding bonds, plus

(b) all dividends and distribtuions and cash and (current value of) stock paid out for companies which were acquired or liquidated between October 1, 1994 and now

minus

(c) the sum of (1) the aggregate market cap and public debt as of September 30, 1994 of all public tech and telecom companies, (2) all venture capital, IPO, secondary, and debt issuance investments in new securities of public and private tech and telecom companies between October 1, 1994 and December 31, 2000, (3) bank loans and creditor accounts written off in bankruptcies and liquidations, and (4) a "risk free" investment return (say, 2% per annum) which all the wealth would have gained from 1994 to 2002 had it been put into T-Bills.

I suspect that this number is well under $1 trillion, and may be as low as $300 billion. Of course, one of the harder issues in this is determining how to deal with companies that in 1994 were not tech or telecom, but which transformed from themselves during the bubble into companies like that (at least for the purposes of the securities market). Enron is the main case and point here.
posted by MattD at 8:25 AM on September 24, 2002

Lisa: Well, look at the wonders of the computer age now!
Homer: Wonders Lisa... or blunders?
Lisa: I think that was implied by what I said.
Homer: Implied Lisa... or implode?
posted by blue_beetle at 9:04 AM on September 24, 2002

Don't forget there are several dot-coms still alive. Not just Salon, but little guys, too. I work for Vault, which is located in the Neighborhood Formerly Known as Silicon Alley, and which dropped the ".com" from its name sometime in 2001. But we're still around, somehow.
posted by risenc at 9:07 AM on September 24, 2002

While it's hard to say when the dotcom bubble began to burst

For me it started in the Spring of 2000. That's when gas prices hit $1.80/gal in the Midwest (normally $1.00) and not soon after the "first" Microsoft anti-trust judgement was announced. The trucking/shipping/travel industry was slammed and the stock market swooned. The beginning of the end.
posted by internal at 9:24 AM on September 24, 2002

Sniff-sniff... It's just not been the same since Kozmo went away...
posted by crookdimwit at 12:47 PM on September 24, 2002

While it's hard to say when the dotcom bubble began to burst

Naah, it isn't hard. It was about a week after my stock options were struck.
posted by briank at 1:01 PM on September 24, 2002