What is the .com bubble? And why did it burst?
In: Economics
Back in the 90’s people realized that some bastards had made beaucoup bucks off of some tech stock. You’d read stories about some how if you had only bought a few shares of the right IPO you would have been a millionaire.
So naturally everyone decided that they wanted some of those sweet tech dollars.
But what to invest in? As far as anyone knew, Microsoft and Oracle had topped out, IBM seemed to be going nowhere and Apple just sold overpriced toys to graphic designers. That left startups.
The allure of becoming an IPO millionaire was too much for many people. The problem was that your average person didn’t know fuck-all about technology so they had no way know what these companies were doing. This was on top of the general ignorance of how stocks, IPOs and financial markets work that persists to this day.
At first a few smart investors actually did snatch up a few good startups. But once they were bought the rest of the public were still hungry. This led to any tech IPO instantly getting sold out.
Since the internet was just becoming popular these new tech companies did something that almost no other company did, they had web pages. They also followed the original naming convention where .com was supposed to be reserved for commercial entities. Thus these new tech companies were collectively referred to as “dot coms”.
As we know now, most of these tech companies were crap. The general concept was that they attempted fill needs that nobody had by putting them on a shitty website. The employees got a lot of really fancy office furniture and beer and nothing useful was produced.
Eventually people figured out that they had bought into a bunch of steaming turds and tried to dump them on to other people. But that was around the same time everyone else realized that these companies were steaming turds so nobody wanted to buy them.
Hence, the “dot com bust” or as many people called it, the “dot bomb”.
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