At the first signs of the dot-com decline, I felt relieved. In fact, when "fuckyou.com" graffiti appeared in March, painted in large orange letters on a storefront facing a brightly painted coffehouse called the Dot-Com Cafi on San Francisco's Market Street, I chuckled at the artist's blunt attack. And when hot pink stickers appeared all over town a few days later advertising mock Web sites like "IJustHadARectalExamOnline.com" and "ButIDon'tNeedMyToothpasteDelivered.com," I rejoiced. Finally, I thought, the dissonant rebellion had arrived -- cymbal clashes to break the sugary sweet dot-com melody of "we'll all succeed" regardless of our business plan, regardless of how ridiculous our name may be.
And in the days since then, I've happily witnessed the fizzling of the public's infatuation with dot-coms. When the stock market tanked in April, you could almost smell the hype machine burning out. Companies like Boo.com and Toysmart went out of business; others, like InfoSpace, dropped the dot-com from its name, while dozens more (Salon included) reset their expectations and laid off staff accordingly. Even the long bullish Merrill Lynch analyst Henry Blodget turned sour, downgrading 11 bellwether Internet companies last week including Buy.com, eToys and Pets.com.
But now that the whole Net business frenzy is dying down, I'm learning that my initial relief at the dot-com demise may have been misplaced. It's not enough to cheer for the rebels, to kick the losers when they're down, to laugh at bad business plans. To focus just on the antics of dot-com excess is to obscure the real problem -- the underlying sense of entitlement, the belief that the new economy deserves special treatment because it's so unlike anything that's come before.
For several years now, we've heard and seen endless reports about the new economy that try to convince us that dot-coms are unique, that they are important, sexy and glamorous. Drugstore.com is not a standard Q-tip dispenser, it is a $291 million pioneer in the revolutionary field of e-commerce. Evite is not just the creator of a clumsy alternative to phone calls or e-mail invitations, it is a "fun, free, online activity center that helps people connect and get together with family, friends and colleagues;" Webvan is not a warehouse and a fleet of delivery trucks, but "the world's market at your doorstep." (Have these motto writers never fondled heirloom tomatoes at the local farmers market or sampled a half-dozen Camemberts at their neighborhood cheese shop?)
Sure, we all know that the Net has "revolutionized" business, but does that mean each and every e-company deserves special credit just for using this new medium? Did the first coal miners to ship their fuel on trains rise to celebrity status? Did the mine owners who found new far-flung markets for their coal demand government subsidies to compensate their brave use of trains and expect to be knighted as heroes as they proclaimed their superiority over their horse-and-carriage peers?
You'd think that dot-com "pioneers" would simply be grateful that the Net was invented -- and would quietly build their empires while the programmers who created the new medium reaped the glory. But instead, they've been demanding special treatment and exceptions to standard laws and business practices, while jockeying for our undivided attention.
Take the sales tax issue. Do e-commerce companies really deserve protection from the fees levied on their brick-and-mortar competitors? Is Amazon, for example, with its market cap of $12 billion, really in need of more financial aid than independent shops like San Francisco's City Lights, owned by Beat poet Lawrence Ferlinghetti, or Cody's in Berkeley, Calif., which have hosted readings, fought censorship and fostered a neighborly sense of literary community since the 1950s?
What could our representatives have been thinking, passing a House bill that would keep the Net tax-free until 2006? (It won't be law unless the Senate makes it so, but if it does even state governments won't be able to levy taxes on any Internet-related revenues.)
It makes no sense -- not just to me, but to people who really understand this stuff. "There's no reason in public policy to create a special advantage for one industry over another," says Yale University economics professor Robert J. Shiller, who first questioned the dot-com boom in his book, "Irrational Exuberance." "It's inefficient economically: If you subsidize one industry, too much money will flow into it, making others suffer. We need to let the market define what's most important. [These new companies] should be treated equally."
Or take real estate. In the San Francisco Bay Area space-hungry, money-drenched dot-coms consider it their mission to get bigger faster, even if they annihilate entire neighborhoods in the process. If San Francisco laws prohibit rampant office growth, should dot-coms -- but not, say, the investment firms that finance them -- be able to exploit loopholes and keep building offices? The legislators who wrote these laws in 1986 must be infuriated to see these companies call their sprawling cubicle farms "light manufacturing plants" and "research and development centers" rather than the offices they are. What part of "office" do dot-coms not understand?
Or "patents." Priceline.com CEO Jay Walker has built a business around the 300 patents that he's been awarded or is expecting, demanding that we ignore the fact that most of his "inventions" are nothing more than traditional money-making schemes with a dot-com twist. "Expert-based commerce" is novel and unobvious? Tell that to my local hardware store owner, who's a licensed contractor.
Think back to the days of the old economy and imagine Borders Books having the audacity to apply for a patent on cash register placement, in an attempt to stifle the growth of Barnes & Noble. People would laugh. Yet, when Amazon.com CEO Jeff Bezos defends his company's right to the one-click patent, he's rewarded, not only with the right to make it easier to purchase books on his site than his competitors -- but with the honor of being named Time's person of the year. In keeping with the mood of the moment, he is not lauded for his accomplishments per se -- but his faith in the dot-com future. Time praised his "fervent belief in the Internet," and his assurance "that it would rock retailing, that it would change the way we live."
And that's just one example of how public opinion shapers bought into the glorification of dot-coms. While analysts were singing the praises of the new economy and exciting every mutual fund investing joe about the lucre that was Net stocks, the media obsessed on the stories of ambitious young men (yes, mostly men) who turned a few years hard work into insta-wealth and semi-celebrity. The New York Times put Silicon Valley's dating habits on Page 1, while GQ turned venture capitalists into pin-up boys and Vanity Fair gave the dot-com elite a movie star spread, minting them not as business people, but rather as divine monarchs. The attention only encouraged these dot-commers to think like they'd been the first to the moon, not to B2B portals.
At first I was hoping that the great dot-com shakeout would sift out some of that arrogance. But as e-commerce sites like Value America and Violet.com crash and burn, the fear of failure seems to have only intensified the desire to boast of success, to present a puffed up version of oneself so as to escape the "doomed" label. It's stunning to think that Furniture.com employees actually talked on the phone to imaginary customers when venture capitalists come traipsing through the office to see if the company was worth saving.
Even as the dot-com train has derailed, leaving its cherished Amazon.com stock at a quarter of its previous value, the dot-com sense of entitlement and bravado remains strong.
"These people are now running the world, in a functional sense, if not politically," says Mark Pesce, an interactive media professor at the University of Southern California and co-creator of VRML, which introduced 3-D displays to the Web. "They are the all stars, the quarterbacks, the homecoming queens of the dot-com economy. Damn straight they're feeling entitled -- it's what they've been taught is their rightful due."
Sure, the tech-heavy NASDAQ dropped 38 percent last quarter, but that's no reason for dot-commers to step down from their haughty perch. Hell, venture capital firms tossed more money at start-ups in April, May and June than they did before the market crashed, according to a San Jose Mercury News report. In all, $19.58 billion was handed out last quarter, making it the sixth straight quarter of record-level investing.
"We're in a manic high that we don't want to disturb," explains Schiller.
Perhaps that explains why the language of technology boosterism has survived these rocky moments. Value America and Living.com may be out of business, but when the wireless company Phone.com merged last week with Software.com, a messaging company, Gartner analyst Bernard Elliot declared the deal was made in "dot-com heaven" -- a place that investors still believe in, since they added $2.6 billion to the company's combined market value the day after the deal was made.
Which leads me back to the pranksters. It's clear that what others call heaven, they would call hell. But I wonder how they'll continue their fight. Painting storefronts is easy. So is making funny stickers. Overcoming a culturally entrenched sense of entitlement? Well, that's quite another battle.
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