The financial Internet “bubble” was inflated on August 5, 1995, when a company called the Netscape Communications Corporation held its initial public offering. On that day, Netscape’s stock rose 107 percent. Netscape ended the trading day with a market capitalization of $1.03 billion on quarterly pre-IPO revenues of $11.9 million and losses of $1.6 million. At the time, that made Netscape’s IPO the most successful in history. Over the next five years, hundreds of Internet-related companies went public, raising billions from the public markets.
Netscape is an apt symbol for how quickly the Internet raged into public consciousness. After all, it was only two years earlier, in the summer of 1993, that Netscape’s cofounder, Marc Andreessen, an undergraduate computer science major at the University of Illinois, had released Mosaic, the free beta version of the first Internet browser. A simple piece of software, it instantaneously mutated the Internet’s look and feel, from arcane Unix commands to the point-and-click world of WYSIWYG (What You See Is What You Get). Two years later, as the bell closed on Netscape’s first Nasdaq trading day, Andreessen’s stock was worth $58 million.
Just as it was easy to justify the wild valuations and IPOs of the period from August 1995 to the Nasdaq crash in April 2000, today it is equally easy — and naive — to claim that the whole Internet phenomenon was merely some sort of bubble economy, fueled entirely by greed and the willful naiveté of investors looking for one sure bet after another. Anyone involved in the New Economy, be it journalists like myself (at the time, and still, a contributing editor to Wired), new Internet startups, or divisions of “old economy” companies hoping to profit from moving into the dot-com side of business, had an interest in claiming that an economic revolution was at hand. Implicit in this notion of a historic transition to a new economic era was the premise that the Internet was not merely a technology, but rather the next step in human, and social, evolution.
Analysis by Analogy
Today, many of the same cast of characters have an interest in seeming sagacious and prudent: After the orgy, probity rules.
Nonetheless, something happened from 1995 to 2000; it wasn’t just a case of one confidence game after another. Forget the social impact of the Internet for a moment, which is real and ongoing, regardless of what the Nasdaq might have us believe. What, if any, new business lessons were learned from this period? What, if anything, was new in the New Economy? With this in mind, it is time to revisit some of the New Economy books that came out toward the end of the 1990s, when enough publishers, trailing the investment bankers, had figured out that there was something to cash in on.
Where to begin? On Barnes & Noble’s Web site I found 49 titles that matched the criterion of “economic aspects of information technology of information society,” which is a search engine’s way of saying “books about the New Economy.” Even more can be found if you search by “digital” and “business” — 200 titles match that combination. The titles were peppered with the requisite “big change” buzzwords: Practical Strategies for Competitiveness in the New Economy, Succeeding in the Digital Culture of Tomorrow, Unchained Value: The New Logic of Digital Business, and so on.
It all seems a bit suspect by today’s standards; most of these books are embarrassing to carry around. I was seen on the beach reading Evolve! Succeeding in the Digital Culture of Tomorrow (2001), and my companion, whose dot-com went bankrupt, laughed at me, rolled over, and continued reading Vanity Fair.