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An eye-opening look at the dot-com bubble of 2000 — and how it shapes our lives today

让人大开眼界的2000年网络泡沫以及它如何影响我们今天的生活

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【来源】: 布鲁金斯学会
【时间】: 2018-12-04
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Daniel Fishel

The successful dot-coms of the late ‘90s and early ‘00s had a few things in common: they all vowed to “change the world”, had crazy-high valuations, and were wildly unprofitable. Here’s a look at one company’s rapid rise and fall — and the bubble’s lasting impact, from internet historian Brian McCullough.

If you were looking for a single company that exemplified the dot-com era, you could choose Priceline.com. It was founded by Jay Walker, an entrepreneur with a clever solution to a real problem: every day, 500,000 airline seats were going unsold. Priceline offered these seats to online customers who could name the price they were willing to pay. Consumers got cheaper flights; airlines sold excess inventory; inefficiencies were ironed out of the market; and Priceline took a cut for facilitating the process: your garden-variety win-win-win-win that only the internet could make happen.

Launching in April 1998, Priceline was a dot-com “overnight success,” growing from 50 employees to more than 300 and selling more than 100,000 airline tickets in its first seven months of business. By the end of 1999, it was selling more than 1,000 tickets a day. It attempted to expand into hotel bookings, car rentals, home mortgages, and Walker’s intention was to take the Priceline idea to every applicable market.

Walker intended to get to ubiquity the way Yahoo had done: by building a brand through relentless marketing. In its first six months, the company spent more than $20 million in advertising, the keystone of which was clever ads featuring Star Trek’s William Shatner. All of this succeeded in placing Priceline fifth in internet brand awareness by the end of 1998, behind only AOL, Yahoo, Netscape and Amazon.

In March 1999, Priceline went public at $16 a share. On its first day of trading went up to $88, before settling at $69. This gave Priceline a market capitalization of $9.8 billion, the largest first-day valuation of an internet company to that date. Few investors were concerned that in its first few quarters in business Priceline racked up losses of $142.5 million. Or that it had to buy tickets on the open market — at cost — to fulfill customers’ lowball bids, losing, on average, $30 on every ticket it sold. Or that Priceline customers often ended up paying more at auction than they could have paid through a traditional travel agent. Investors were more interested in grabbing a piece of a company that was going to change the future of business.

The venture capitalists who backed companies like Priceline, eToys, and Kozmo.com were aiming for supernova IPOs because that’s when they got paid.

By 1999, losing money was the mark of a successful dot-com. And few could lose money as prolifically or creatively as Priceline. The head of a rival website named CheapTickets complained that his company couldn’t compete with Priceline’s hype. “We’ve got a policy here at CheapTickets,” founder Michael Hartley groused. “We need to make money. It hurts our valuation.”

So many of the companies that would embody what we think of when we remember the dot-com bubble — Pets.com, eToys, Kozmo.com, UrbanFetch — shared some or all of Priceline’s traits: a business plan that promised to “change the world”; a Get Big Fast strategy to reach ubiquity and corner a particular market; a tendency to sell products at a loss in order to gain that market share; a willingness to spend lavishly on branding and advertising to raise awareness; and a sky-high stock market valuation that was divorced from any sort of profitability or rationality.

It became a joke that the dot-coms that started out promising a grand vision of a more efficient way of doing business were — almost to a company — unprofitable. It’s entirely possible that a lot of them could have focused on the very real efficiencies that selling online made possible, and thereby slowly grown into sustainable businesses. But that was not the name of the game in the late nineties.

The venture capitalists who backed these companies were aiming for supernova IPOs because that’s when they got paid. Any IPO meant an exit for venture investors. Those incredible first-day “pops” that dot-com stocks experienced when IPOing? That was the early money cashing out, selling their shares to the investing public. The dot-com bubble was a fantasy period when a lot of VCs actually didn’t care if a business turned a profit, because it didn’t need to. “We’re in an environment where the company doesn’t have to be successful for us to make money,” a venture capitalist at Benchmark admitted when mulling over a pre-IPO investment in Priceline.

The bubble era engendered a fever for entrepreneurship that probably hadn’t existed in this country since before the Great Depression.

It became imperative to keep the pipeline of new companies — and new IPOs — coming. Fortunately, the bubble era engendered a fever for entrepreneurship that probably hadn’t existed in this country since before the Great Depression. By the spring 1999, one in twelve Americans surveyed said that they were in some stage of founding a business.

In October 1999, the market cap of the 199 internet stocks tracked by Morgan Stanley’s Mary Meeker was a whopping $450 billion. But the total annual sales of these companies came to only about $21 billion. And their annual profits? What profits? The collective losses totaled $6.2 billion. “People come in here all the time and say, ‘The last thing I want to be is profitable,’ ” one investment banker bragged in June of 1999. “‘Because then I wouldn’t get the valuation of an internet company.’”

Over the second half of 1999, it wasn’t a question of whether or not a bubble existed, it was a question of how big a bubble it was, and when it would pop. Most people knew it was unsustainable, but no one wanted to admit it. If you could squeeze your IPO out before the window closed, then you could pick your moment to cash out, hopefully before everyone else got the same idea.

One by one, the weakest of the dot-coms began to underperform. Dot-coms ceased being sure stock market winners — in a trickle, and then all at once. Falling stock prices turned into stock market delistings and then became actual bankruptcies. On January 14, 2000, the Dow Jones Industrial Average peaked at 11,722.98, a level it would not return to for more than six years. The tech-heavy Nasdaq peaked on March 10, 2000, at 5,048.62, a level it would not reach again until March 2015. From that March 2000 peak, all the way down to the trough it reached on October 9, 2002 (the bear market bottom would be 1,114.11), the Nasdaq would lose nearly 80 percent of its value.

By April 2000, just one month after peaking, the Nasdaq had lost 34.2 percent of its value.

Was there any one thing that pricked the bubble? No, there were a myriad of factors. The Fed had finally begun to raise interest rates: three times in 1999 and then twice more in early 2000, the most sustained round of fiscal tightening over the whole of the late 1990s. Just as suddenly, Fed language shifted to an open attempt to rein in equity prices. Added to this was the fact that Wall Street analysts began advising their clients to lighten up on internet stocks, saying the technology sector was “no longer undervalued.” But more than anything else, it was the weak constitution of all those “iffy” dot-coms that had hit the market toward the tail end of 1999 that tipped the scales, companies without a realistic chance to make money over the long term.

By April 2000, just one month after peaking, the Nasdaq had lost 34.2 percent of its value. Over the next year and a half, the number of companies that saw the value of their stock drop by 80 percent or more was in the hundreds. And for most, no recovery ever came, even for the biggest names. Priceline cratered 94 percent.

There are various ways to measure the amount of wealth that was annihilated when the bubble burst. As early as November 2000, CNNFN.com pegged the losses at $1.7 trillion. But that would count only public companies. Beyond them, it’s estimated that 7,000 to 10,000 new online enterprises were launched in the late 1990s, and by mid-2003, around 4,800 of those ha