The founders of South African cryptocurrency investment platform Africrypt have disappeared along with $3.6 billion (R51.4 billion) worth of Bitcoin, according to a report….
As Google embraces the stock exchange, many dot.com kids are rubbing their hands with glee at what could signal a return of the good times. Matthew Buckland has been through dot.boom and dot.bomb and spent lots on expensive therapy to forget it all, but here he reminisces.
It was the 1990s for godsake. The geeks were to rule the world. Takkies, jeans and T-shirts were to replace ties and sensible shoes in the corridors of power. Boardrooms were to be replaced by lounges with bean bags and foosball tables. The dot.com kids were ushering in a new economy built around the internet and showing the old world how it was done.
Those were exciting, unrealistic times and the salaries were disgusting. Every day you read something about a new crazy dot.com start-up, backed by millions. Those days the employees were doing the job interviewing, not the employers. You were considered over the hill at 35 and the twentysomethings and thirtysomethings ruled the show.
As the young MD of South African dot.com startup Netflorist, Ryan Bacher describes it: “The Net gave a lot of young people a lot of confidence. We would waltz into big companies and tell them how the internet works and they would listen. You could tell them anything those days and they would buy it. Many older guys in the business were scared they would miss the boat, so they bought into anything you said. People would make rash decisions based on fear…”
I was in London during the height of the dot.com madness. I was at a BBC startup called beeb.com and there was a real sense we were here to take over the world. A whole new revolutionary ethos and culture was emerging around the business of ‘net. We were at the crest of the dot.com wave. We were hip and arrogant, but worked furiously and late.
We impatiently looked at old businessmen like they were already dead and washed up. What did they know about computers and the internet? We all had our dot.com startup shares and were happy to work overtime because we felt we were making history. It was an intoxicating feeling and the pace was unrelenting.
“We could do anything we wanted, try it all, put up sites, change them, write rules and discard them. It was inventive, jovial, chicky and clever,” recalls Rudy Nadler-Nir, one of the founders of Cape Town-based portal iafrica.com.
Living in the 90s, writes the UK’s Guardian newspaper, and having no involvement in a dot.com startup was like living in the 60s and not smoking. The dot.com generation was a cultural phenomenon: “The uniform of combat pants and foosball and inflatable aliens were de rigueur”.
God, we must have been irritating. It’s no wonder the old economy and established businessmen were laughing when it all started to fall apart. They were the ones being sidelined in this new internet economy and they didn’t like it one bit. No-one listened to them (or anyone else) during those heady days. Legitimate criticism was quickly dismissed. Critics were told they just “didn’t get it” and didn’t understand this new way of doing things. We are in the throws of a “paradigm shift”, what did they know?
For Jason Stevens, a programmer who got his fingers burnt “making a stock market play” for WorldCom, the dot.com era “symbolised the shift in power from the older generation to the younger generation. It brought in a new culture of lightening quick decisions based on information. But it represented an idea more than reality…”
For the dot.com movement the business proposition went like this: e-commerce does it cheaper than real-world shops do it on the street. The cost of a website transaction is cheaper than a transaction in a shop – you don’t need to pay for space and all the problems that come with it such as high rents, security or insurance. That was the theory and everyone bought into it, buying up tech stocks and sending the stock exchanges through the roof.
During the rush, the entreprenerds were getting listed one after the other, getting big business to burn money on their wild ideas. Some of the ideas were just plain stupid. But this was boom time, the stock market was soaring on emotion and everyone was irrational. One techie dreamed up Pets.com. Hell, selling Petfood online is going to be the next big thing!
“The forecasts were hysterical. We would go into a board meeting and would just change variables on an excel spreadsheet to show we were going to make more profit. People were just spewing out numbers then,” recalls one dot.comer.
The dot.com generation was lapping up generation X author Douglas Coupland’s new book Microserfs which set the scene for dot.com fever — a peek inside the high-tech geek culture in Silicon Valley. Wired magazine was our bible and we self consciously pored over every word.
In London, an English friend I worked with at the BBC startup went on to create famous UK startup Lastminute.com with a South African. Lastminute.com was caught in the hysteria that ensued and its share price rocketed and then crashed — but it is still one of the few exceptions among dot.com startups: the company is still around today.
The dot.com scene in South Africa, although not as big as the US or UK, was tight. We would scuttle off to regular First Tuesday meetings in London, Cape Town or Johannesburg – edgy networking sessions around the world designed to bring venture capitalists and young, savvy geeks together to fund their crazy startups.
It was an idea modelled on the UK’s First Tuesday meetings, originally founded in a Soho bar by a group of friends in 1999. The Guardian reports that at the height of the boom an Israeli technology firm paid £33-million for the group. Only six months later when the crash came the Israelis sold First Tuesday back for a mere £1m.
Before the crash came, AOL, an internet company, was taking over an old media company, Time Warner. The deal, which created the biggest media company in the world, was final confirmation for geeks all across the world of the power of the new dot.com generation. Media across the world trumpeted the deal as the “new economy” triumphing over “the old”.
In South Africa we had startups like Metropolis, iafrica.com, ShoppingMatrix.com, Streetcar.com and Woza. Iafrica.com still remains today, but is a fraction of its former size in the glory days. Its holding company Metropolis burned Primedia’s money. Cash was being flushed down the drain and it didn’t seem to matter much then.
Employees recall how Metropolis had a completely new chair designed especially for the company’s staff to sit on. The Bryanston head office carpets were specially woven with the company logo and a fancy custom-made front door that never quite fitted was made… all this, for a company that didn’t make a single cent of profit.
Metropolis of course is not alone. Ostentatious offices and overspending was the trademark of many dot.com companies. A South African colleague visiting the offices of Lastminute.com said it looked like “two ten year olds had been given 20 million pounds and told to do an office up”. There was a bizarre assortment of chairs so large or small that you couldn’t sit on them: they were just there for the décor — the bean bags scattered around the office were for sitting on.
If you had a meeting at Yahoo! you could get your car “Yahooed!” — repainted in the colours of the company. A restaurant in Palo Alto, the city at the heart of Silicon Valley, became infamous for the “hundred dollar burger” – a burger served at the height of the boom with an expensive bottle of champagne. For many it epitomised the way people were throwing away money.
Things were frenetic and everyone wanted in to make a quick buck. While I was at iafrica.com, my uncle phoned me in a sweat wanting to know which tech stocks he should buy so that he could too make the millions he had been reading about. Buy Metropolis I urged him… you’ll make a fortune. Well he didn’t and neither did I. Metropolis collapsed and the CEO resigned and went on to follow a movie career. Now that I look back at it, it seems like it was all one big fat movie. There was a surreal feeling about it all.
And then the crash came and the bubble burst. I’ve lost my Metropolis share certificate – it was never quite worth the toilet paper it was written on. My girlfriend’s brother who worked at another well known Cape Town-based tech company was a paper multi-millionaire for a short while. When the crash came the share price went south and suddenly the multi-millionaire was worth R20 000. It was that bad. It was that dramatic. My English friend’s one percent share of Lastminute.com isn’t quite worth what it was before either.
Even the AOL Time Warner deal was beginning to collapse. The old media gurus began to edge out the new media philosophers in the boardrooms. They began to see through all the hype. And they were angry. As an obvious act of vengeance, the internet part of the company’s name, AOL, was dropped. You can’t replace the solid business principles that have been tried and tested for years, they bellowed.
New website, Fuckedcompany.com, began to chronicle the list of dot.coms that came crashing down on a daily basis. Predicting the next dot.com failure became a worldwide sport. At the Mail & Guardian Online – one of SA’s oldest internet brands – the staff was squeezed to its barebones, to about 20% of what it was during its heyday as online advertising dried up. If it wasn’t for the Mail & Guardian newspaper and its longtime sugar daddy M-Web, it would have probably closed down.
Heather Ford, a South African who studied at Stanford – the university from where Google and Yahoo! emerged – recalls how “for sale” signs began to spring up everywhere on the famous Sand Hill Road in Palo Alto, where many venture capital companies had their HQs. She says the “one hundred dollar” burger isn’t quite the hit it used to be.
For geeks, suddenly the cool factor disappeared. Mentioning you worked “in the internet” no longer turned heads at parties. You were no longer that young, bright thing with zillions of shares and his or her own startup. As the industry came crashing down, so everyone’s credibility came crashing down with it. As a dot.com worker, you felt you had been part of “the lie”. Whether a conscious or sub conscious act, Iafrica.com considered dropping the “.com” from their brand name to be known just as “iafrica”.
“Before — I would phone up any company and say I am from an internet company and I want a meeting… and it would happen, but then after the bomb everyone put you on hold,” says Bacher, recalling the mood after the crash.
The South African dot.com exiles that are still going to First Tuesday meetings say that there is now more of a sombre feel at the once-buzzing, high flying get-togethers. There is also a lot less of the “next big thing” mumbo jumbo.
I stuck with online. My dot.com shares are worthless and I have seen many brilliant people pack it in and flee to other industries. But there are many that are sticking with it and believe in it. The recent listing of Google and the Googlerific success of the company is an indication to many that the dot.com era is approaching again. For many Google represents the ethos and culture of the dot.com era: young, savvy and relaxed – but now with added profit and business sense.
Many of South Africa’s dot.coms became dot.compost, but there are some that survived. Some have been propped up, forgiven for their sins and nurtured through the hard times by their old economy parent companies. Many are about a tenth of their size. Others, such as Netflorist, iafrica.com and search engine Ananzi are doing well — they continued through the hard times and stuck to solid business principles. Mail & Guardian Online is starting to claw back some of its former glory and has hired new staff. There is light at the end of the tunnel, but there is still some way to go.
The geeks are also dressing a lot smarter these days. Not because they are getting older, but because they are desperate to prove their credibility again. Most are a lot more self-effacing and speak fondly, with a mild embarrassment, of the gold rush era. Some still wear their striped takkies. But many now wear their smart white shirts and sensible shoes to show the old guys that they are serious about business now. That dot.com silliness is all in the past.
Matthew Buckland is the editor of the Mail & Guardian Online @ www.mg.co.za. He is also a columnist and contributor to The Media magazine and US journalism site Poynter Online. You can e-mail comments to him @ matthewbuckland [*at*] gmail.com