As celebrations go, it was a muted one. But at 9pm on March 10, anyone who tried and failed to make a fortune in the dotcom boom could be forgiven for sitting back, pouring themselves a glass of millennium bubbly, and thinking about what might have been.
On March 10, 2000, the NASDAQ closed at a dizzying peak of 5,048.62 -- more than double its value just 14 months before. That Friday night, the young investors who had won millions in funding at networking events such as First Tuesday -- and who were pumping much of that cash into marketing their patches of dotcom turf -- probably felt little reason to worry. The net was the future, and they were part of it.
It was all downhill from there. In the next day of trading, the NASDAQ lost 2.8 percent of its value. The day after -- as Lastminute.com floated on the London stock exchange, briefly achieving a market capitalization of US$1.5 billion -- it fell 4 percent. By October 2002, it had plunged to 1,114.11, a total loss of 78 percent against its peak.
ILLUSTRATION: YU SHA
Along the way, companies such as Boo.com, Clickmango.com, Ready2Shop.com, Pets.com, Toysmart.com and many more went from being leaders of a revolution to tombstones in dotcom graveyards chronicled by the likes of Fucked Company -- and the business pages of a delighted tabloid press.
Survivors, of which Lastminute was one, were left battling to turn a profit in a market where business-to-consumer Web sites were as unfashionable as a fur coat in summer.
Rob Hersov, then boss of Sportal -- now vice-chairman of executive plane company NetJets -- says the collapse was precipitated by nothing less than "mass market hysteria."
"Those were incredibly heady days," he says. "Fun -- absolutely. We thought we were making a difference. We thought we were getting out there, shaking things up, doing something no one had done before. We really were pioneers -- buccaneers," Hersov said.
Fellow South African Brent Hoberman, who co-founded Lastminute. com with Martha Lane Fox, and who remains chief executive, describes the atmosphere as frenetic.
"There was a community of young people starting businesses, everybody looking for deals -- a frenetic amount of deal-making and deal activity. It was a time when outsiders from an industry were often more effective than insiders. Not knowing everything about an industry made you able to challenge the rules. New players see the effects of a disruptive technology more easily than a player who is already in the market," Hoberman said.
Toby Rowland was another 20-something caught in the rush. With partner Richard Norton, he raised ?3 million (US$5.76 million) in his first funding round for alternative health Web site Clickmango -- which launched in 2000 with ads fronted by Joanna Lumley -- but had to close in the wake of the crash.
Even the name of the company -- because "older women love mangos," says Rowland, with a grin -- was a measure of the exuberance of the times.
"When 1999 came along it was a wonderful time when everything seemed possible -- and you couldn't not do something," he says.
"The intoxicating smell in the air was that of dotcom money being made left and right," agrees Tristan Louis, a developer who worked at Boo.com's London office.
"Those of us that had been in the business for a while were worried about it being a bubble. But we worried for so long -- in internet time -- that by 1999, the worry turned to concern that maybe we were among the ones who didn't `get it,' who didn't really understand the power of the net," Louis says. "It felt a little like our wildest expectations about the transformational power of the net were being exceeded at a faster rate than we thought."
As spring 2000 came, many had a sense of impending trouble. Sportal's Hersov said he knew by then that the boom was too good to be true -- but he had already become involved in a costly race to make a profit before the market fell away.
His site owned potentially valuable wireless and broadband rights, in perpetuity, to a list of major European football clubs -- Real Madrid, AC Milan, Juventus, Bayern Munich and Paris St Germain -- and he believes that if he had sat on them and done nothing, Sportal would now be a billion-dollar company. In the end, he ended up selling the Web sites for ?1 in November 2001.
"Everyone felt like they could get in and out in time," he says. "And I reckon most rational people knew the market would come off. People were saying: `It's going to come off 10 percent, 15 percent' -- that was the rational thing to think, not 50 percent. No one expected the complete meltdown; they expected the market to start dropping, but not to melt," Hersov says.
Julie Meyer, co-founder of First Tuesday, puts it this way: "It's not that I didn't think it was coming. It was that you never see the shape of things until it happens."
The first crack was the collapse of Boo.com. The e-clothing company, founded by Swedes Kajsa Leander and Ernst Malmsten, had launched in the summer of 1999 with more than ?70 million of startup capital, the most ever raised by a dotcom. Employing more than 400 people in London, New York and four European cities, it tried to sell designer clothes in 18 countries across the world -- with the help of Ms Boo, an irritating avatar who needed the Macromedia Flash plug-in to work.
As a measure of just how hubristic that was, Freeserve -- then the UK's top ISP, now owned by Wanadoo -- had only just started offering unmetered dial-up access, which meant that few customers who looked at the site could get as far as buying clothes. And it didn't work on an Apple Mac. Throw in the tales of Concorde flights and high living in five-star hotels, and you had the archetypal dotbomb. By the time it went bust in May 2000, Boo.com had run up more than ?10 million in debt.
The trouble was that Boo led to comparisons that were harmful to other businesses -- particularly Lastminute.com.
"It was a bad thing for us," says Hoberman. "The parallels were very frustrating, and they were all the more easy to make because it was a man and a woman who were young, and both women were very attractive. What I said to everyone at the time was that that was about the only parallel."
But Boo's demise did focus attention on real problems that affected dotcoms: the high cost of technology, the high cost of marketing, and the fact that customers were not yet online in big enough numbers to drive e-commerce.
"The correction had to happen," says Hersov. "There was too much money chasing too many ideas, no viable revenue stream in most cases, technology that just wasn't ready for what everyone wanted it to do -- the whole thing got ahead of itself."
Mike Antliff of Digital Animation Group -- in those days makers of virtual newsreader Ananova, now purveyors of animated characters known as WeeMes to mobile phones -- agrees. "The market wasn't mature enough. We were technology-driven. We're much more market-driven now."
Those who got their timing right, of course, made cash. Hersov may have lost out with Sportal, but the internet incubator Antfactory, which he co-founded, was sold in 2002 for ?77 million.
Peter Wilkinson, who reputedly sketched out the idea for Freeserve on a napkin, sold his Sports Internet business to BSkyB for more than ?300 million. Lastminute.com turned its first quarterly profit in 2002, although it went back into the red after making a series of acquisitions in a bid to increase its scale.
And in what now seems an extraordinary piece of deal-making, the centerpiece of the boom -- First Tuesday -- was sold in late 2000 to an Israeli Internet company, Yazam, for ?26 million.
Meyer, who now works as a venture capitalist for Ariadne Capital in London, says: "The art is to find a buyer that really wants what you have."
According to Hersov, though, Europeans were at a disadvantage.
"You needed to be at the epicenter to make money," he says. "You needed to be based in Seattle or Silicon Valley, and you needed to have launched something in 1997. For anyone else, and that applies to most Europeans, who launched two years after that, it was very difficult to get a technical platform, team in place, revenue stream, path to profitability, go public, cash out -- the time just got shorter and shorter the further you got from the epicenter."
Some, of course, are still looking forward. Lastminute.com, like many companies, has bold plans to exploit mobile devices by using location based maps, offering theater and restaurant deals.
Rowland is philosophical about the failure of Clickmango, but now runs Midasplayer.com, a skill gaming Web site he describes as "to gambling as Country Life girls in pearls are to pornography." Last month, he says, the company turned its first profit.
He misses the sense of community of the early dotcom days -- now, he says, there are "a lot of lone wolves out there, doing their thing."
"We need a First Tuesday," he adds. "Someone's going to have a First Tuesday and there's going to be like 500 people there. It can happen -- I believe it. I wish Julie [Meyer] would do it. Just for fun."?
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