by Erick Convery
My tech topic is regarding the rise and fall of the Dot Com era of the Internet. This era took place throughout the mid 1990s until the year 2001. During this time the investments in Internet-based companies rose dramatically causing a similar rise in equity markets. This was mostly due to fad-based investing where all investors poured their money in to Internet startups so they would not miss out on the tremendous opportunities that were projected for these companies.
Building of the Bubble
The Internet and World Wide Web were created in the late 1980s with very few functions or ways to manipulate the material. After many years of improvement and the introduction of Mosaic, a web browser, the Internet began to prove more useful and profitable than expected. In 1995, the number of people using the Internet spiked tremendously. Investors saw all these Internet-users as potential consumers, and this lead to the birth of many Internet startups. These Internet startups were also known as “dot-coms”. Seeing the numerous investment opportunities in these “dot-coms” investors flocked to not only invest in the Internet, but all technology in general.
Components of the Bubble
While many companies played major factors in the DotCom bubble, the 4 main players during the time were considered “the Four Horsemen of NASDAQ” and they were Cisco Systems, Dell, Intel and Microsoft.
All these companies were vying for market domination during the times of the DotCom bubble. As you can see all these companies still exist today, and managed to survive the bursting of the DotCom bubble, but many other companies did not.
Bursting of the Bubble
Due to this unexpected and overwhelming rise in technological investment, the market rose far too quickly and the NASDAQ could not handle it. This eventually led to the burst of the DotCom bubble. Many, if not all, the investors lost substantial amounts of money that they had invested in many of the small Internet startups. On the other hand, most of these Internet startups ended up failing as a result of the burst. Even many of the larger Internet companies suffered tremendous hits and barely survived the burst themselves. This includes “the four Horsemen of the NASDAQ”. All of this had a tremendous effect on the economy as well, as the country suffered a minor recession throughout the year 2000 and some of 2001.
There were a lot of lessons learned from the bursting of the DotCom bubble. Although it only lasted less than a decade it played a tremendous part in the economy as well as shaping the Internet. The event scared most investors away from technology and the Internet until recently, when web 2.0 was released. Only since then has the entire market truly began to recover.