WEBVTT - The Dot Com Crash 0:00:00.280 --> 0:00:02.960 Brought to you by the reinvented two thousand twelve Camray. 0:00:03.160 --> 0:00:08.920 It's ready. Are you get in touch with technology? With 0:00:09.039 --> 0:00:17.760 tech Stuff from how stuff works dot com. Hello again, everyone, 0:00:17.800 --> 0:00:20.000 and welcome to tech stuff. My name is Chris Poulette 0:00:20.000 --> 0:00:22.280 and I am an editor at how stuff works dot com. 0:00:22.280 --> 0:00:24.919 Sitting across from me as senior writer Jonathan Strickland. The 0:00:24.960 --> 0:00:28.040 point is, ladies and gentlemen, that greed, for lack of 0:00:28.080 --> 0:00:31.960 a better word, is good. Oh I think I know 0:00:32.000 --> 0:00:34.720 where that one came from. Yeah, we are going to 0:00:34.800 --> 0:00:37.440 tackle a subject that a lot of listeners have asked 0:00:37.520 --> 0:00:41.120 us to talk about, both on Facebook and an email, 0:00:41.320 --> 0:00:45.000 possibly on Twitter as well. But we've received many requests 0:00:45.040 --> 0:00:49.680 to talk about the dot com bubble and crash of 0:00:49.720 --> 0:00:53.200 two thousand, two thousand one. And it's an interesting story 0:00:53.200 --> 0:00:57.040 and it's certainly has some lessons that we can learn, uh, 0:00:57.160 --> 0:01:01.920 particularly with certain companies that are operating right now. That's 0:01:01.960 --> 0:01:06.559 that's absolutely true. Um. I have the occasion to work 0:01:06.680 --> 0:01:12.240 in technology during the dot com bubble years um, and 0:01:12.319 --> 0:01:16.880 it was a crazy ride. Yeah, it was very exciting 0:01:16.959 --> 0:01:19.759 time for a while, and then it was a very 0:01:19.880 --> 0:01:23.320 terrifying time. But uh, but to build into this, we 0:01:23.360 --> 0:01:26.760 should really kind of give you a a bird's eye 0:01:26.800 --> 0:01:28.960 view of what was going on at the time. So 0:01:29.840 --> 0:01:34.640 the World Wide Web really started to make penetration into 0:01:34.640 --> 0:01:38.279 the public in ninety three or so. Yeah, it's funny 0:01:38.319 --> 0:01:41.039 because a lot of people, I think still really have 0:01:41.160 --> 0:01:46.680 no idea that the Internet, uh was born decades really 0:01:46.760 --> 0:01:49.400 before before you know, we were all using the web 0:01:49.480 --> 0:01:52.920 for you know, keeping up with everyone and and you know, 0:01:52.960 --> 0:01:57.200 communications of different kinds. Um. But yeah, I mean that 0:01:57.440 --> 0:02:01.080 once the Web arrived on the scene, that enabled a 0:02:01.120 --> 0:02:04.200 lot of people to do things that with computers that 0:02:04.240 --> 0:02:06.920 they wouldn't necessarily have done. So I remember it's funny 0:02:06.920 --> 0:02:09.080 because I was thinking about this on my way into 0:02:09.080 --> 0:02:11.600 the studio this morning. There was a game show I 0:02:11.639 --> 0:02:15.640 was watching, um and uh, I think it was Alan 0:02:15.720 --> 0:02:17.560 Ludden who was hosting it is one of the older 0:02:17.560 --> 0:02:20.080 shows on Game Show Network, and one of the prizes 0:02:20.200 --> 0:02:22.399 was a home computer. This was in the probably late 0:02:22.480 --> 0:02:24.760 nineteen eighties when this was the show is from. And 0:02:24.800 --> 0:02:27.680 he's he's like, okay, well, if you want to I'm 0:02:27.680 --> 0:02:30.360 paraphrasing because it's been so along, but you've won a 0:02:30.440 --> 0:02:33.160 personal home computer. Although I don't know what you would 0:02:33.200 --> 0:02:37.120 do with something like which cracks me up now because 0:02:37.800 --> 0:02:40.600 the Internet and especially the Web, has made it possible 0:02:40.639 --> 0:02:42.760 to do so many different kinds of things like online 0:02:42.800 --> 0:02:47.600 banking and watching uh shows and and keeping up with 0:02:47.720 --> 0:02:51.520 calendars and reading the news and kinds of friends. Yeah, 0:02:51.560 --> 0:02:54.960 but we we didn't do that before. And once the 0:02:54.960 --> 0:02:58.000 web came around, people started going, wait, I know you 0:02:58.040 --> 0:03:00.399 could make up you know, fill in the blank here, 0:03:00.800 --> 0:03:03.120 and there wasn't one already. You didn't say, you know, 0:03:03.320 --> 0:03:06.400 I could make an online banking site. Oh no, you know, 0:03:07.240 --> 0:03:09.760 the giant World Bank has already done that. Well, I 0:03:09.880 --> 0:03:12.200 maybe I could come up with a way to network 0:03:12.240 --> 0:03:15.799 with my friends. Now there's already a Facebook. These these 0:03:15.840 --> 0:03:18.440 people were creating these things from scratch and it was 0:03:18.480 --> 0:03:20.680 a really heady time because everybody wanted to be the 0:03:20.720 --> 0:03:23.600 first in and make loads of money from doing this, 0:03:23.639 --> 0:03:28.440 although they didn't really necessarily know how, right, I I 0:03:28.560 --> 0:03:32.720 equate the early days of the web, and really, even 0:03:32.720 --> 0:03:35.000 though ninety three was when the public started getting hold 0:03:35.040 --> 0:03:38.280 of the web, is when businesses started to really look 0:03:38.320 --> 0:03:40.960 at how can we use this as a way to 0:03:41.040 --> 0:03:44.120 make money? Or not just business is looking into it, 0:03:44.160 --> 0:03:46.520 but people looking into it thinking how can I form 0:03:46.560 --> 0:03:49.720 a business that uses the web as a platform. Uh, 0:03:50.320 --> 0:03:53.680 But I equate it to a land grab Like like, 0:03:53.760 --> 0:03:57.800 imagine that you have come to a new country and 0:03:57.840 --> 0:04:02.280 there's a huge territory that is open and it has 0:04:02.400 --> 0:04:06.080 a set amount of of land that's available for a 0:04:06.160 --> 0:04:10.280 set price, right, and there are and it's divided up 0:04:10.280 --> 0:04:13.080 into certain sections, and then essentially on a certain day 0:04:13.360 --> 0:04:16.120 you are allowed to go and stake your claim. You 0:04:16.120 --> 0:04:18.480 would actually go and you would stake your claim, put it, 0:04:18.960 --> 0:04:21.960 you know, say this land is what I'm purchasing and 0:04:22.080 --> 0:04:24.960 that would become yours. And you know there's risk involved 0:04:25.000 --> 0:04:27.080 in that because you might you might go and grab 0:04:27.200 --> 0:04:29.920 land and then find out that you thought that maybe 0:04:29.960 --> 0:04:31.680 there'd be a good place to dig a well and 0:04:31.720 --> 0:04:33.600 it turns out there is no good place to dig 0:04:33.640 --> 0:04:36.160 a well on that land. Or you know, you thought 0:04:36.200 --> 0:04:39.760 that the land that the section you grabbed was gonna 0:04:39.800 --> 0:04:42.440 be great for farming, and then you realize, oh wait, 0:04:43.600 --> 0:04:46.039 this is really rocky ground that's not going to be 0:04:46.160 --> 0:04:48.760 easy to farm at all. Same sort of thing with 0:04:48.800 --> 0:04:51.440 the web, really is this idea of this this this 0:04:51.760 --> 0:04:58.120 frontier that have been mostly unoccupied, especially from a business perspective, 0:04:58.720 --> 0:05:02.000 and it gave people the idea that anything is possible, 0:05:02.040 --> 0:05:04.560 and as long as I have a good idea, I 0:05:04.600 --> 0:05:07.720 can build up a customer base. And once I build 0:05:07.760 --> 0:05:10.719 up my customer base, I can find a way to 0:05:10.760 --> 0:05:13.320 make money from them. That was kind of the problem 0:05:13.360 --> 0:05:15.119 was that they first thought, I need to get people, 0:05:15.720 --> 0:05:16.960 and then I need to figure out how to make 0:05:17.000 --> 0:05:20.159 money from them. Yep, yep, and I think uh, I 0:05:20.200 --> 0:05:26.039 think it bears UM bears going into Also the it 0:05:26.160 --> 0:05:29.679 wasn't just the tech sector. People within the tech sector 0:05:29.680 --> 0:05:33.160 who were excited about this UM In the mid nineties, 0:05:33.200 --> 0:05:36.720 that's when people started getting really excited about UH internet 0:05:36.760 --> 0:05:39.480 access and getting home computers so that they could use 0:05:40.000 --> 0:05:44.840 the Internet at their homes. And once people realize this, 0:05:44.920 --> 0:05:49.680 they started thinking, you know what, I bet these companies, UH, 0:05:49.880 --> 0:05:53.760 you know, they might be worth something someday, especially because UM, 0:05:53.800 --> 0:05:56.279 I think people were saying, hey, you've really got something here. 0:05:56.800 --> 0:06:00.400 So a lot of these companies would issue UH stock 0:06:01.040 --> 0:06:03.800 to join the stock market, and UH I was I 0:06:03.800 --> 0:06:05.719 was looking into this last night as I was doing 0:06:05.720 --> 0:06:09.320 my research. UH. Andrew Batty wrote an article about bubbles 0:06:09.360 --> 0:06:13.200 for Investipedia, and UM, I wanted to just give you 0:06:13.240 --> 0:06:18.880 the definition of a bubble based on on his article. Um, 0:06:19.040 --> 0:06:20.680 you know, he actually wrote about it. A lot of 0:06:20.720 --> 0:06:23.240 different famous bubbles that have happened, a lot of them 0:06:23.240 --> 0:06:25.680 in real estate. You know, there are many bubbles, not 0:06:25.839 --> 0:06:29.240 just this one. But the idea is that people are 0:06:29.240 --> 0:06:34.800 really excited about a product that is on the stock market, 0:06:35.640 --> 0:06:39.040 and they're so excited that they keep buying it. They 0:06:39.080 --> 0:06:41.320 want more stock, as much stock as they can get, 0:06:41.680 --> 0:06:45.880 and that drives the price at the stock up. And eventually, 0:06:45.880 --> 0:06:50.480 though the company, the the actual worth of the company 0:06:50.760 --> 0:06:55.080 can't match what the perceived value is in the stock market, 0:06:55.320 --> 0:06:57.960 and it keeps inflating and inflating, inflating, And so there's 0:06:58.240 --> 0:07:01.479 a company might be worth say twenty million dollars, but 0:07:01.520 --> 0:07:03.720 it has you know, in the stock market, it's far 0:07:03.880 --> 0:07:07.400 more than that. So eventually hundred million dollars and shares 0:07:07.400 --> 0:07:11.680 out exactly. And at some point when the company falters, 0:07:12.800 --> 0:07:16.320 the the bubble can burst. People suddenly realize, oh my gosh, 0:07:16.360 --> 0:07:19.600 this company is not worth but that much. It's sell 0:07:19.640 --> 0:07:22.840 their stock exactly. And then you you end up with 0:07:22.880 --> 0:07:28.000 a company where it's it's yeah, it starts to fall apart. Uh, Yeah, 0:07:28.040 --> 0:07:32.840 the we call this this this whole idea speculation, right. 0:07:33.240 --> 0:07:38.400 Stock market speculation and speculation is essentially when you bet 0:07:39.000 --> 0:07:44.200 it's it's usually it's it's um related to short term gains. Yes, 0:07:44.280 --> 0:07:47.360 you know, you're looking at the stock market momentum, and 0:07:47.400 --> 0:07:49.840 you're not necessarily a lot of people who were investing 0:07:49.880 --> 0:07:53.600 weren't necessarily looking into companies they were particularly interested in. 0:07:53.960 --> 0:07:56.520 They were betting that the company they were investing in 0:07:56.640 --> 0:08:00.120 was going to explode and that it would either are 0:08:00.400 --> 0:08:03.240 become wildly successful, in which case you become rich, or 0:08:03.320 --> 0:08:05.560 we get acquired by a bigger company, in which case 0:08:05.600 --> 0:08:07.880 you get rich. So it seemed like a no brainer. 0:08:07.920 --> 0:08:10.000 You know, you just you do. You throw in money 0:08:10.680 --> 0:08:13.640 and these small companies as soon as they become available, 0:08:13.960 --> 0:08:17.600 and then you just watch your your cash increase. Uh. 0:08:17.640 --> 0:08:19.840 But the problem is that when more and more people 0:08:19.840 --> 0:08:22.800 get involved in this speculation, it does drive the price up, 0:08:22.840 --> 0:08:25.440 and it drives it up well beyond the company's worth, 0:08:25.520 --> 0:08:28.120 like you were saying, And so it's very high risk, 0:08:28.360 --> 0:08:31.760 it's fast paced. Uh you can you I mean, if 0:08:31.800 --> 0:08:34.560 you want to indulge in in being a speculator on 0:08:34.600 --> 0:08:36.920 the stock market, you have the potential to make a 0:08:36.960 --> 0:08:39.320 lot of money, but you have to you have to 0:08:39.360 --> 0:08:42.839 be really nimble, and people are not gonna like you 0:08:43.040 --> 0:08:45.960 because you're you're not investing in a company in order 0:08:46.040 --> 0:08:49.080 to have that company succeed. You're investing in a company 0:08:49.200 --> 0:08:52.160 kind of like if you were in Las Vegas and 0:08:52.200 --> 0:08:56.080 you were making a bet on a poker game right now. 0:08:56.360 --> 0:08:58.560 Of course, it's not as simple as as coming up 0:08:58.600 --> 0:09:02.640 with an idea in your bedroom one night, writing it down, 0:09:02.960 --> 0:09:05.199 sketching it up on a napkin for five five friends, 0:09:05.200 --> 0:09:06.679 and then starting the company the next day and then 0:09:06.679 --> 0:09:11.160 becoming rich. There there's many many steps in between. Um. 0:09:11.320 --> 0:09:14.320 What the piece that we may that you may be 0:09:14.400 --> 0:09:16.520 missing if you're unfamiliar with a lot of this is 0:09:16.679 --> 0:09:19.640 the venture capitalists and these are these are people who 0:09:19.720 --> 0:09:24.079 are our business people looking to make initial investments. Um, 0:09:24.120 --> 0:09:27.240 you know you have your your five friends with you, 0:09:27.240 --> 0:09:30.720 you've started your company, but you know you've maxed all 0:09:30.760 --> 0:09:32.600 of you have maxed out your credit cards trying to 0:09:32.600 --> 0:09:34.920 get this thing off the ground. And you say, well, 0:09:34.960 --> 0:09:36.680 you know where am I going to come up with 0:09:36.679 --> 0:09:39.480 some money? I'm scratching my head but you can't see it. Uh, 0:09:39.480 --> 0:09:43.360 and a nice visual. Um, So, yeah, what am I 0:09:43.360 --> 0:09:46.680 gonna do? Well, these venture capitalists might want to talk 0:09:46.679 --> 0:09:49.880 to you. You might go into the boardroom, meet with 0:09:49.920 --> 0:09:52.160 the with the people at the firm and say, look, 0:09:52.200 --> 0:09:54.439 here's our idea. These are the five things you want 0:09:54.480 --> 0:09:56.960 to accomplish to do it. We figure we're gonna need, 0:09:57.280 --> 0:10:00.400 you know, fifteen million dollars to really tool up and 0:10:00.440 --> 0:10:04.479 make this thing a possibility. If you can convince those investors, 0:10:04.480 --> 0:10:08.600 those initial investors, uh, that you really have a case, 0:10:09.000 --> 0:10:11.120 they might be willing to give you some money and 0:10:11.200 --> 0:10:13.240 to to get the company started. So then you could 0:10:13.240 --> 0:10:16.200 go ahead and rent some office space, get your you know, 0:10:16.320 --> 0:10:19.000 copier and your computers, and you know, hire a couple 0:10:19.000 --> 0:10:23.040 of people to help you along. Yeah. Yeah, you've got 0:10:23.040 --> 0:10:24.760 a lot of overhead costs that you've got to take 0:10:24.800 --> 0:10:29.600 care of. These these uh initial investments come from these 0:10:29.679 --> 0:10:33.200 venture capitalists. And I was reading on an article in 0:10:33.280 --> 0:10:37.240 San Francisco Chronicle by Tom Abate, who um, who did 0:10:37.240 --> 0:10:41.440 a piece on the dot com bubble, and was saying that, uh, 0:10:41.679 --> 0:10:45.640 venture capital firms would, uh we're just going nuts funding this. 0:10:45.720 --> 0:10:48.079 In fact, that one of my supervisors want to work 0:10:48.080 --> 0:10:50.600 for a tech company left to join an adventure capital firm. 0:10:50.640 --> 0:10:52.800 We all thought that was really cool, um, which it 0:10:52.920 --> 0:10:56.360 which it was, But yeah, I mean, but again, this 0:10:56.400 --> 0:10:58.199 was a no brainer. They were coming up with the 0:10:58.640 --> 0:11:03.760 greatest ideas fresh off the right out of the UH factory, 0:11:03.920 --> 0:11:07.240 if you know, um, and they were. He said that. 0:11:07.559 --> 0:11:11.520 Abate said that venture capitalists in the in two thousand 0:11:12.080 --> 0:11:15.160 made about eight thousand investments valued at about a hundred 0:11:15.160 --> 0:11:20.360 point five million dollars um, which doesn't sound like a lot, 0:11:20.400 --> 0:11:23.360 it's like a hundred million dollars, but you know, that's 0:11:23.400 --> 0:11:25.280 the money that gets the company off the ground to 0:11:25.320 --> 0:11:29.160 the point where they can go ahead and raise enough 0:11:29.200 --> 0:11:31.960 interest from an investment firm to get you a an 0:11:32.000 --> 0:11:34.839 I p O an initial public offering of stock. That's 0:11:34.840 --> 0:11:38.079 where the public launch just stuck within that company. So yeah, 0:11:38.080 --> 0:11:40.000 you start your company, you get some people to to 0:11:40.080 --> 0:11:41.600 give you some funding to get off the ground, you 0:11:41.640 --> 0:11:45.280 get moving. Then you go to the big banks and say, hey, 0:11:45.440 --> 0:11:47.920 if we can launch some stock, I know we're all 0:11:47.920 --> 0:11:51.720 gonna get rich. And once they do that, and the people, 0:11:51.760 --> 0:11:54.240 and believe me, there were lots of stock watch pages. 0:11:54.320 --> 0:11:56.280 People speculated all the time about who was going to 0:11:56.400 --> 0:11:58.960 have an I p O and and which which new 0:11:59.000 --> 0:12:01.320 tech company was you know, these guys were any good 0:12:01.360 --> 0:12:04.439 who where they come from? You know, and people people 0:12:04.440 --> 0:12:07.199 were following which I p o s were coming in 0:12:07.040 --> 0:12:08.920 in the weeks and months ahead, so that you could 0:12:08.960 --> 0:12:11.240 go ahead and buy in on the first day and 0:12:11.280 --> 0:12:13.520 in a lot of cases the stock which you right 0:12:13.640 --> 0:12:16.320 up immediately out of the gate. Yeah. Yeah, to the 0:12:16.360 --> 0:12:19.440 point where if you were not in on it at 0:12:19.480 --> 0:12:22.880 the very beginning, then yeah, I mean there were still 0:12:22.880 --> 0:12:25.679 people who were purchasing stock prices even at high points 0:12:25.760 --> 0:12:27.960 because they were there were you know, the sky was 0:12:28.000 --> 0:12:31.080 the limit. There was no ceiling as far as anyone 0:12:31.080 --> 0:12:34.120 can tell for these companies and UM. And one of 0:12:34.120 --> 0:12:37.120 the risks of venture capital, and I find this interesting, 0:12:37.640 --> 0:12:41.120 is that there are times where um, a startup company 0:12:41.160 --> 0:12:44.839 will get more venture capital than it needs to get 0:12:44.880 --> 0:12:47.760 off the ground. And that's actually a problem. It's not 0:12:48.040 --> 0:12:49.600 you know, because the company has to figure out what 0:12:49.640 --> 0:12:51.920 to do with that money. And it may be like, 0:12:52.000 --> 0:12:54.040 let's say that there's a company that starts up that 0:12:54.120 --> 0:12:58.680 needs approximately twenty million dollars in venture capital to really start, 0:12:59.080 --> 0:13:02.120 but they get a hundred million dollars in venture capital. 0:13:03.000 --> 0:13:07.640 This is what leads to this can lead to bad habits, 0:13:07.720 --> 0:13:10.920 bad practices, for example, and a lot of these dot 0:13:10.920 --> 0:13:14.280 com companies fell into this trap where they started spending 0:13:14.800 --> 0:13:21.000 their venture capital on let's call them luxuries or lavish, 0:13:21.200 --> 0:13:25.840 lavish settings. Oh yes, because the dot com companies a 0:13:25.880 --> 0:13:28.840 lot of them in places like Mountain View, California, and 0:13:28.840 --> 0:13:32.000 San Francisco, San Francisco area, a lot of them. There 0:13:32.000 --> 0:13:33.920 will look quite a few of them here in Atlanta. Yeah, 0:13:33.920 --> 0:13:37.480 actually Atlanta had a lot of the dot com crash 0:13:37.760 --> 0:13:41.000 hurt Atlanta a lot. If you if you want to 0:13:41.040 --> 0:13:43.760 get an idea what it was like at the heyday, 0:13:44.080 --> 0:13:47.679 go to how Stuff Works dot com and read Jonathan's 0:13:47.760 --> 0:13:50.520 article on the Google Plex. Google still has offices very 0:13:50.559 --> 0:13:53.600 reminiscent of the kinds with the kinds of amenities that 0:13:53.679 --> 0:13:55.880 you would see in these places. But one of the 0:13:56.120 --> 0:13:58.360 cool things about the dot commerce was they wanted to 0:13:58.400 --> 0:14:00.880 attract the best in the brightest, so they would they 0:14:00.880 --> 0:14:03.840 would load up on these on things like foodsball tables, 0:14:03.920 --> 0:14:08.720 and arcades. They're trying to hire like like graduate students 0:14:08.760 --> 0:14:11.719 right out of school, so so schools like m I T. 0:14:11.960 --> 0:14:15.760 Georgia Tech. I mean, these these te yeah, cal Tech. Yeah, 0:14:15.840 --> 0:14:19.320 these these schools we were like the seed farms for 0:14:19.320 --> 0:14:21.920 for these companies. I mean they were going after these 0:14:21.960 --> 0:14:24.920 these students, sometimes hiring them right off, like out of college. 0:14:24.960 --> 0:14:28.880 They haven't even graduated. Yes, I I know. People as 0:14:28.880 --> 0:14:30.280 a matter of fact, you think of that as being 0:14:30.280 --> 0:14:32.240 a sports phenomenon. Oh well he's not coming back for 0:14:32.280 --> 0:14:34.960 a senior year because he signed with you know, joined 0:14:34.960 --> 0:14:37.520 the draft or something. Yeah. They some of these uh 0:14:37.800 --> 0:14:40.680 tech wizards. You know, we're talking like you know, eighteen 0:14:40.760 --> 0:14:44.240 nineteen twenty years old, they would get pulled out of college. UM. 0:14:44.320 --> 0:14:46.840 You know, there there's an incubator, which is what you 0:14:46.920 --> 0:14:51.080 call a UM an office space where little companies go 0:14:51.560 --> 0:14:54.320 UM at the Georgia Tech campus that I've been to 0:14:54.880 --> 0:14:57.480 UM and you see like office after offices. You know 0:14:57.920 --> 0:15:01.040 there in each office is a little company that's just 0:15:01.160 --> 0:15:03.800 getting started. UM. They get a little office space and 0:15:03.920 --> 0:15:06.600 a chance to to to get started on their business. 0:15:06.800 --> 0:15:09.160 But yeah, I mean if you have this stuff happening 0:15:09.240 --> 0:15:12.040 right next to the campus, it's easy for them to 0:15:12.040 --> 0:15:15.880 to do some recruiting and uh and and also the 0:15:15.880 --> 0:15:18.040 companies that were slightly larger that had had an I 0:15:18.160 --> 0:15:22.640 p O UM they would lure people in with stock options. Yeah, 0:15:22.680 --> 0:15:26.280 you would get paid in stock options, and since the 0:15:26.360 --> 0:15:30.200 companies were doing so well, that made you instantly a millionaire. 0:15:30.280 --> 0:15:32.520 That's not a joke. There were people who were joining 0:15:32.600 --> 0:15:38.360 companies and essentially overnight being a millionaire. If you were 0:15:38.440 --> 0:15:42.480 able to consider the stock options as being equivalent to, 0:15:43.040 --> 0:15:46.520 you know, the their perceived market value at the time. Yes, 0:15:46.600 --> 0:15:49.120 that's that's correct. And you have to, uh, you have 0:15:49.160 --> 0:15:51.440 to think about like, well, okay, so what if I 0:15:51.520 --> 0:15:56.280 join Giant Internet Co. And I, you know, I just 0:15:56.360 --> 0:15:58.520 come there and they pay me all these millions in 0:15:58.600 --> 0:16:02.120 stock options and I, you know, buy the stock and leave. 0:16:02.200 --> 0:16:04.720 I could just be a millionaire. Well know, a lot 0:16:04.760 --> 0:16:07.600 of these had a vesting period, so you'd have this 0:16:07.960 --> 0:16:09.880 these options on paper, and you had the right to 0:16:09.880 --> 0:16:12.600 buy them at a at a low price um or 0:16:12.640 --> 0:16:14.520 at the price of the data issues. So if you 0:16:14.600 --> 0:16:16.960 joined the company when the stock was three dollars a 0:16:17.040 --> 0:16:20.560 share um that you had the right to that that's 0:16:20.600 --> 0:16:24.000 locked in. But in order to actually get that stock 0:16:24.240 --> 0:16:26.840 or the right to actually buy the stock, you have 0:16:26.960 --> 0:16:29.880 to work there for so and so many years. So 0:16:29.960 --> 0:16:33.560 in two that was four years. You could get your 0:16:33.960 --> 0:16:36.840 you know you can. You can get your eight thousand 0:16:36.960 --> 0:16:39.360 shares a stock at three dollars this year. Meanwhile, the 0:16:39.360 --> 0:16:43.600 stock price had risen to ninety nine dollars a year. Wham, 0:16:43.640 --> 0:16:47.000 you've got lots and lots of money. But unfortunately did 0:16:47.040 --> 0:16:49.480 not work out that way, not well for a lot 0:16:49.520 --> 0:16:52.880 of people, but for some people that did. But that 0:16:52.960 --> 0:16:56.240 was during the bubble, as the stock prices continued to inflate. 0:16:56.800 --> 0:17:00.120 And um, you know, because the bubble started forming, like 0:17:00.160 --> 0:17:02.720 we said in the mid nineties. Uh, and it really 0:17:02.760 --> 0:17:06.399 reached it's its height in two thousand. Yes, and again 0:17:06.440 --> 0:17:10.200 from the article in the Chronicle March tenth, two thousand 0:17:10.600 --> 0:17:14.119 the peak five. This is the NASTAC, one of the 0:17:14.119 --> 0:17:17.119 stock exchanges here in the United States, a lot of 0:17:17.400 --> 0:17:20.639 it's not exclusively a tech stock exchange, but there are 0:17:20.640 --> 0:17:23.120 a lot a lot of tech stocks on there. Um. 0:17:24.240 --> 0:17:28.920 The NASTAC hit its peak of UM five thousand onety 0:17:28.920 --> 0:17:37.200 two fifty two UM, and then it virtually overnight crashed. 0:17:37.400 --> 0:17:41.280 Now um, the low point of the NASDAC was a 0:17:41.320 --> 0:17:44.120 couple of years later October nine, two thousand two, where 0:17:44.119 --> 0:17:49.320 it reached one thousand eleven. That's a seventy eight percent 0:17:50.000 --> 0:17:54.040 drop over two and a half years, two and a 0:17:54.080 --> 0:17:57.000 half years, seventy eight percent of the value of that 0:17:57.680 --> 0:18:02.359 of that stock exchange gone. Well, that's because it's because 0:18:02.359 --> 0:18:04.159 of a lot of things. So a lot of the 0:18:04.200 --> 0:18:08.200 tech companies delivered on their promises, but all of them did. 0:18:08.320 --> 0:18:10.280 There let's let's talk about some of the companies that 0:18:10.440 --> 0:18:14.760 started during this this uh this bubble. There are a 0:18:14.760 --> 0:18:18.680 few that are still around. There's eBay, which did quite well. 0:18:19.040 --> 0:18:23.639 There's Amazon, which Amazon followed a pattern that a lot 0:18:23.680 --> 0:18:26.080 of companies followed. Amazon made it work and most of 0:18:26.119 --> 0:18:28.119 the other companies did not. And that was the pattern 0:18:28.160 --> 0:18:30.960 that was kind of talking about earlier, where you try 0:18:31.000 --> 0:18:33.840 to get as many customers as possible and then you 0:18:33.880 --> 0:18:36.440 figure out a way to make money from them. Amazon 0:18:36.600 --> 0:18:40.480 did followed this, get big, get fast, and then make money. 0:18:40.760 --> 0:18:42.520 So the idea was that, all right, well, we need 0:18:42.560 --> 0:18:44.520 to hit as many people as possible, because that was 0:18:44.560 --> 0:18:47.120 the promise of the web. Correct. I mean you think 0:18:47.160 --> 0:18:50.240 of your average store, all right, your average physical store, 0:18:50.280 --> 0:18:54.280 physical brick and mortar store. There's a limit to the 0:18:54.320 --> 0:18:55.879 number of people who can go in and out of 0:18:55.920 --> 0:18:58.160 that store in a single day. Yes, if you want 0:18:58.160 --> 0:19:00.400 to know. If you really want to get into uh 0:19:00.560 --> 0:19:03.199 depth on this, you can read Chris Anderson's article in 0:19:03.320 --> 0:19:05.840 Wired magazine, The long Tail. He actually did a book 0:19:05.840 --> 0:19:08.240 on that too that might be available to your local library. 0:19:08.280 --> 0:19:12.240 But um, but yeah, I mean, Jonathan's right, there's you've 0:19:12.280 --> 0:19:15.680 got your local store, but you know it's it's also 0:19:15.720 --> 0:19:18.320 got so much it can carry, so you're limited to 0:19:18.760 --> 0:19:21.520 the stuff they think they can move. And if you 0:19:21.560 --> 0:19:23.840 want something that was published fifteen years ago, it may 0:19:23.840 --> 0:19:26.040 not be on your local store shelves anymore. So you've 0:19:26.040 --> 0:19:28.120 got a physical limit to how much you can have. 0:19:28.280 --> 0:19:30.119 You have a physical limit to how many people can 0:19:30.240 --> 0:19:34.639 visit your regionally based right, So I mean there's gonna 0:19:34.640 --> 0:19:36.639 be a limit to how far people are willing to 0:19:36.760 --> 0:19:39.880 travel to get to your store. But on the web, 0:19:40.320 --> 0:19:43.760 all of those disappear yep, right, because you you can 0:19:43.800 --> 0:19:46.520 have an unlimited number of people well, assuming your bandwidth 0:19:46.560 --> 0:19:49.000 can handle it, you can you can have a virtually 0:19:49.080 --> 0:19:51.920 unlimited number of people visit your store. You can have 0:19:52.119 --> 0:19:56.879 a virtually limitless inventory because you can always order whatever, Like, 0:19:56.880 --> 0:19:59.200 if you start selling out something, you can always order 0:19:59.280 --> 0:20:03.720 from the manufacturer more items of that until that dries 0:20:03.800 --> 0:20:08.600 up and and there's no regional limit essentially, and then 0:20:08.600 --> 0:20:11.520 you might be somewhat limited by whatever country you're in. 0:20:11.840 --> 0:20:14.080 But that's a lot different than being like, if I 0:20:14.080 --> 0:20:16.600 have a store in Atlanta, Georgia, and that's my only store, 0:20:16.960 --> 0:20:19.679 then essentially I'm catering to Atlanta. But if I have 0:20:19.720 --> 0:20:22.199 a website and my my my website is based out 0:20:22.119 --> 0:20:25.280 of Atlanta, but it goes everywhere, then my customers are 0:20:25.320 --> 0:20:29.520 the world. That is a phenomenal thing. Yes, Now, I 0:20:29.520 --> 0:20:32.920 mean you have something else too at your disposal, which 0:20:32.960 --> 0:20:38.199 is a method of communicating with potential customers. Now you 0:20:38.520 --> 0:20:41.720 Jonathan Store here in Atlanta, Georgia, Um, well, you've got 0:20:41.720 --> 0:20:44.800 people where it has spread throughout the state, maybe to 0:20:45.080 --> 0:20:50.040 uh neighboring states like South Carolina, Tennessee, Alabama, and Florida. 0:20:50.160 --> 0:20:52.600 And you know, people buy something here and go home. 0:20:52.680 --> 0:20:54.600 So you know, five or six people in New York, 0:20:54.600 --> 0:20:58.040 a couple of people in California know about Jonathan Store. 0:20:58.119 --> 0:21:00.280 They think it's cool. Maybe he comes out with a 0:21:00.320 --> 0:21:02.679 mail order catalog and get some more at business or 0:21:02.840 --> 0:21:05.960 do I maybe I franchise or maybe he franchises. But 0:21:06.000 --> 0:21:08.440 the thing is the word word of mouth is spreading 0:21:08.520 --> 0:21:10.680 and there's only so much advertising you're gonna I mean, 0:21:10.720 --> 0:21:14.400 he's not gonna put TV ads on in Wisconsin because 0:21:14.520 --> 0:21:17.240 they can't come into the store. They could get a catalog. 0:21:17.280 --> 0:21:19.600 And you know, of course there are many many success stories, 0:21:19.600 --> 0:21:23.800 people like seers who managed to make that work. Um, 0:21:23.840 --> 0:21:27.919 but that that's a painstaking into the Internet makes that 0:21:28.200 --> 0:21:30.920 so much easier because using search engines you can find 0:21:31.040 --> 0:21:32.919 It's like, you know, new and used books, where am 0:21:32.920 --> 0:21:34.880 I going to find? Oh, there's a store called Amazon 0:21:34.960 --> 0:21:38.240 dot com? What's here? And then you know, Amazon for 0:21:38.320 --> 0:21:41.600 it's part two, only has to maintain a handful of warehouses. 0:21:41.640 --> 0:21:43.359 They can put one in the Northeast, they can put 0:21:43.400 --> 0:21:45.760 one in the Southeast, they could put one in the Midwest. 0:21:46.320 --> 0:21:48.639