I took a piss on one of those dot com golden boys the other day. I couldn't help myself - his life sounded like a bad stereotype of the genre - you know, talking about back in the day, playing his arcade Space Invaders in his office, while turning down an offer to buy Google for a million bucks. That sort of thing.
And that was sort of the profile back then, in 1995, when anyone with a bunch of half-assed ideas and some venture capital could be a dot com golden boy in a matter of months.
The Internet was viewed as the Wild West back then, and people were throwing money at anything, hoping it would stick. And the more geeky and offbeat you were, the more certain they felt you knew what you were doing.
But again, don't confuse brilliance with getting lucky, and like with all other things, the "dot com" bubble eventually burst, when all the silly happy talk about "profits being a thing of the past" deflated in the cold light of a new dawn. And it looks like we are poised to have another "dot com" bubble burst soon.
The dot com kids back then were lauded in the press. Business magazines and television shows loved to report on this quirky new breed of "entrepreneur" - who wore casual clothes to the office (!!) and played nerf football in the hallways with their pals. The businesses had the aura of a college dorm room. And of course their offices had all sorts of memorabilia and toys (preferably of the science fiction variety) and of course, the de rigeur full-sized arcade video game.
Everyone was abuzz about this new type of business model, and these new Geek Gods were seen as the wave of the future - a new future that would transform the way we did everything - by going online. But what we failed to see (or willed ourselves not to see) was that, like in any other emerging technology, there will be a few winnners and a whole lot of losers, whether it was the railroads in the 1890s or the Internet in the 1990s. And most of the companies back then were set up from the get-go to be losers - with no real business plan, other than to spend other people's money as quickly as possible.
And before the end of the 1990's, it all came crashing down.
Part of the problem was that many folks saw the stereotype of the geek genius, and figured if they could copy that, they could make money, too. So people started aping the aspects of these folks - playing nerf football in the halls and trying to act geek-cool. But it was largely a phoney act without the underlying genius to back it up. Just acting the part is not the same as being the part.
I actually went to work at a law firm back then who tried to do this - act all hip and cool and "tech-y" to try to snag some of this business, particularly the Venture Capital placement bits, which yielded hefty commissions right off the top. Everyone would be millionaires, overnight, at least on paper. And yea, we had a young-ish guy nominally heading the place, and he would play nerf football in the halls - at least when the tech reporter for the Washington Post was there - and we had computer screens everywhere as well. But it was mostly just a show - and a phoney one at that.
Once the bubble burst, the entire practice came undone in short order. I think they do Real Estate law now.
In private practice, some of these "entrepreneurs" tried to hire me. Most of them I turned away. They were the worst sort of payers - if they ever paid at all. And the gobbledygook they spoke was the sort of thing that made me nervous.
When someone can't tell you, in 10 words or less, what they do for a living, chances are, they are lying to you. When someone can't explain their business plan to you without resorting to happy-words and meaningless jargon, chances are, the same is true.
I went to a meeting once with a client, to discuss Patents for their new start-up company. The company was going to harvest demographic data from set-top boxes somehow. But how - that was the problem. Whenever I asked pointed questions, they would blather on about a "new paradigm" and a "sea change" and other such meaningless words and phrases that mean nothing whatsoever, but are designed to make the speaker sound wise and make the listener feel stupid (and fear to even ask what they mean).
When I kept pressing them for technical details, they told me that "I didn't get" their vision. And I think the part I didn't "get" was that their "vision" was to attract capital investors whose money they could then spend on a lot of cool stuff. And having some Pending Patent Applications was part of the "cred" they needed to attract the money.
I walked away. I wasn't going to lend my credibility to something that I didn't believe in, didn't understand, or frankly, didn't think even existed. And when they offered to pay me in "dot com" stock, well, that sealed the deal.
And of course, like so many other companies of the era, when I called them back a year later, the phone was disconnected.
The problem with happy-talk is that it doesn't say anything. And being trendy and wild-eyed and enthusiastic is not the same as having a workable business plan that makes money. The Internet is poised to change our lives - and indeed has changed them. But the companies that are sticking around are the ones that have a plan to make money and have a product that can make money - and offer something that people actually want. And a lot of things on the Internet that seem important, end up falling off the face of the Earth in 5-10 years or so, without ever turning a profit.
Google is profitable. Facebook is not. And yet many folks would argue that Facebook is poised to be "the next big thing" and that "social networking" is the next big idea. But if you look at it in the abstract, Facebook has a remarkably primitive platform from which to work, and is hardly poised to be the default platform for everyone on the Internet. And perhaps with a complete overhaul of its platform, it may be. Or it may go the way of MySpace, being more of a niche player, but a profitable one.
But like the "dot com" millionaires of yore, people look to Mr. Zuckerstein like he is the boy wonder of the Internet, and wait, with baited breath, for his next pronouncement of the "next big thing" - conveniently forgetting, for the time, that the Internet is littered with the carcasses of the "next big thing" and former wunderkind of just a decade ago, now just blog on about the glory days.
Of course, we do need these sorts of people in our world, as annoying as they are. And we have always had such folks - inventors we used to call them. And I deal with them a lot, and yes, they all are a little bit crazy. Think about Bill Lear, inventor of the Lear Jet and the 8-track stereo tape player. Or the aptly named "Madman Muntz" of used car and television manufacture fame (and also inventor of the predecessor 4-track tape player). Both colorful individuals who took wild gambles at the time and went from broke to millionaire and back again, several times.
It they were around today, yea, they probably would be Internet whiz-kids, rather than television, electronics, and aviation inventors. They worked with what they had at the time.
And inventors, as I have noted, have that certain flavor of crazy that is necessary to succeed. You see, you and I look at the world at take it at face value. The inventor looks at the world and says, "Nice try, God! Now look what I can do to make it better!" Most of us just don't have that kind of hubris - or daring.
But the problem with the "dot com" folks is that they often squander huge amounts of other people's money on some pretty dubious ideas - ideas that often require that the consumer behave like a sheep and be willing to be slaughtered. And many of these ideas, even if they are successful, can be readily copied or knocked-off (like Groupon) or are just flash in the pan (like Groupon) rather than sustainable business models.
And others, well, they take so much off the top that people eventually figure out workarounds. Orbitz, Travelocity, and Priceline are all poised to fail as more and more travel retailers - from airlines to rental car companies to hotels - find it cheaper and more profitable to sell directly to the public instead of paying huge commissions to "finders" online. Heavy hype advertising (like flashy Superbowl ads) might steer traffic to some sites for a time, but once consumers check and see that the same flight online at the airline's own website is the same price or less, well, they won't come back anytime soon.
And this is basically what I discovered, over time, is that these data aggregation sites are usually a waste of time. They claim to provide you with the best prices, but at most, they just get click-through revenue by steering you to particular sites, or they harvest your data and sell it as "leads" to the sort of retailers who need leads the most - and offer the crummiest bargains.
I think we may be seeing a maturation of the Internet in this regard. If you want to run a website that sells air travel, well, you have to own an airline as well. There is no money to be made in a site that just tries to re-sell airline tickets - or any other middleman activity. Eventually, the supplier figures out that they are leaving money on the table and gets in on the action directly.
In the early days of the Internet, airlines resisted using websites to sell tickets - and offered the worst prices on their websites as a result. But that quickly changed when they realized that they were selling discount tickets to third parties, who were, in turn making a quick profit re-selling them. Why leave money on the table?
Internet models predicated on a lot of people making foolish financial decisions won't stay around for very long. Even eBay and PayPal need to realize this. While eBay might be a cool place to sell your old collectables, when you add up the user fees these days, well, the money you realize isn't a lot - particularly for the time involved in packing and shipping stuff. In many cases, you come out ahead just throwing things away.
So, sorry Mr. Internet Wunderkind Golden Boy. Sorry that it all didn't work out when you had a shot at it. And sorry to make fun of your former lifestyle. But it was so, well, cliche, right? I mean, it was the 1990's, after all. And it never pays to live in the past.
And hopefully, we've moved on since then. Right?