I reviewed Dot Con for Enterprise and Society, the journal of the Business History Conference. This is a slightly longer version of the review than the one that appeared in the journal in June, 2004, vol. 5, no.2: 347-349.
John Cassidy. Dot Con: The Greatest Story Ever Sold. New York: Harper Collins, 2002. 372 pp. ISBN 0-06-000880-6, $25.95 (cloth); 0-06-000881-4, $13.95 (paper).
The Dot Com Era occupies an interesting place in recent cultural memory. On the one hand, many recall following the comings and goings of the “New Economy” of the 1990s with great interest. We discovered and exchanged information in new ways; we watched as new companies sprung to life like mushrooms in the rain. Nouns like “web” and “net” took on new meanings (“The Web” and “The Net”); and the verb “to IPO” entered common parlance. In many practical ways, our lives in 2004 reflect the continuing social and technological changes that began with Netscape and the widespread diffusion of the World Wide Web. Yet, the Dot Com Era also feels oddly distant, as if it happened to someone else. The events of September 11, 2001 added an exclamation point to the rapid unraveling of the Dot Com economy that began in mid-March 2000 when the NASDAQ index of high-tech stocks began to spiral downward: “It’s over!”
John Cassidy’s Dot Con: The Greatest Story Ever Sold is a solid and well-documented account of this period. Although not as jazzy and engaging as some of the more personal Dot Com memoirs, Cassidy offers the first legitimate attempt to place the events of the 1990s within a broader context. More considered than a typical journalistic account, Cassidy connects the Dot Com Era to larger historical themes like technological utopianism and cultural exceptionalism. His topic is America: “the internet boom and bust was about America – how it works and what it thought of itself in that short interregnum between the end of the Cold War and September 2001.”
The narrative structure of Dot Con develops two parallel stories. The first follows the growth of the internet from its roots as a secure military communication network to the emergence and subsequent mass commercialization of the World Wide Web. Cassidy summarizes secondary materials that will already be familiar to many, adding details about early internet ventures like Netscape, Yahoo!, eBay, and amazon.com. For Dot Com refugees and industry scholars, these passages may seem too familiar, but for outsiders, Cassidy effectively knits together the disparate strands that connected the participants and events to each other.
The second narrative focuses on the speculative frenzy that arose from the determined efforts of entrepreneurs, venture capitalists, bankers, and even journalists to market the shares of these fledgling companies. Here, Cassidy draws upon more extensive primary materials – including personal interviews with leading Wall Street analysts and visits to Day Trading training seminars – as well as academic literature on information cascades (fads) and macroeconomics to advance a more probing account of this particular enactment of the “Greater Fool” theory. Cassidy’s assessment is clear: we endured publicly sanctioned greed on a level never before seen in the history of American business while government regulators snoozed comfortably in the crow’s nest high above the New Economy. Few people and social institutions escape blame, least of all Federal Reserve Chairman Alan Greenspan whom Cassidy repeatedly accuses of letting the securities bubble expand for too long, thereby increasing the depth of the inevitable bust that followed.
Dot Con has several limitations. First, in pursuit of his own theory of perfidy, Cassidy focuses too much on the financial aspects of the boom and bust, in the process neglecting other interesting pieces of the Dot Com experience. The reader meets few people who were not regular fixtures on the cover of The Industry Standard and Business 2.0, yet much of the genuine energy in the thousands of Dot Com Era ventures resulted from the efforts of tens of thousands of ordinary employees with extraordinary dreams. We learn nothing of them.
Second, Cassidy himself falls victim to the dramatic ebb and flow of the New Economy. Take Priceline.com, a company that Cassidy uses as an exemplar of the excesses of the Dot Com Era. Cassidy finished his book when Priceline stock was trading below $2.00 per share and presumably on its last legs. Several years later, however, the stock and, more importantly, the company have recovered. Although worth nowhere near the $10 billion enterprise value the company commanded at the close of its first day of trading in March 1999, Priceline.com is worth $800 million in early 2004, and investors who bought shares near the bottom in early 2003 would have earned 300% in the ensuing 12 months. Hindsight is always perfect, but the rise and fall and subsequent rise of Priceline.com stock highlights the limitations of Cassidy’s fixation upon the boom and bust as a public financial market phenomenon. Gyrations of the stock market produce no end of interesting and entertaining stories, but when all is said and done, the legacy of the Dot Com Era will depend upon the success or failure of the businesses that it spawned and their ability to deliver upon their promises, not the price of their stock. By tacitly equating the story of the Dot Com Era with the story of the Dot Com Era’s financial market excesses, Cassidy overreaches and weakens his own case.
The book also contains several editorial mistakes involving dates, names and events. Shares of Prodigy, VerticalNet, and Healtheon initially debuted in February 1999, not 1998 ; Paul Allen, not Paul Allaire, was co-founder of Microsoft and an investor in Value America ; and the Mayfield Fund has always been based in California, rather than the “East” .
These minor criticisms aside, for instructors teaching any aspect of contemporary economic and business history, Cassidy’s book is far and away the best account of the Dot Com Era to date. Because the book lacks the direct impact of other Dot Com memoirs, an instructor would probably do well to pair it with a personal account such as that found in Michael Lewis’, The New New Thing, Stephan Paternot’s, A Very Public Offering, Po Bronson’s, The Nudist on the Late Shift, or David Kuo’s, Dot.Bomb, to name several.
David A. Kirsch
University of Maryland