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After the bubble burst, the remaining technology companies figure out how to survive.
A look at the history of the internet to provide context for today's technology ecosystem. From the birth of the internet to the evolution of the hellscape that is social media today.
With the world facing another culture shock in the face of the Covid-19 pandemic and the Black Lives Matter movement, it’s good to know a bit of history. Is our economy going to survive?
Should we be investing in bitcoin?
Digital currencies existed long before Bitcoin. Today, the hype is in decentralization. Before that, we had Flooz. Flooz used the idea of gift cards that could be used at specific sites and they backed their transactions with a guarantee. When the FBI informed Flooz that Russian hackers had purchased $300,000 worth of Flooz to launder funds from stolen credit cards, it created a cash flow problem. Flooz money had been spent by consumers and retailers looked to Flooz to reimburse them. The credit card companies wouldn’t pay though because the money had been part of criminal activity. This left Flooz on the hook for the loss.
What about working online? Should we move our jobs to the internet? Before Facebook was raking in billions of dollars in advertising, Jennifer Ringley was making a living by broadcasting her life on a single webcam with a subscription of $15 a year. She reportedly had over 100 million visitors a week to her site JenniCam. She wasn’t just watching TV and making dinner though. She also broadcasted herself masturbating and having sex. It was the first successful lifecasting attempt and ran from 1996 until 2004. JenniCam voluntarily went out of business.
How did the bubble bursting affect businesses? The operating mentality of investors and executives changed after the bubble burst. Investors looked at how fast the company burned through cash. How are companies going to be measured post-pandemic?
Companies that spent millions on advertising but didn’t generate revenue? That didn’t work after the bubble burst. Many companies ran out of capital and went through liquidation. About 48% of dot-com companies survived through 2004.
This brings us to the internet landscape you know today. Amazon is the everything store. They were around before the bubble. They first became profitable in December of 2003 with profits of $35.5 million. Last year they had $2.1 billion in profit.
Apple released the first iPod in October 2001 in the midst of the bubble. It wasn’t until the release of the iPhone in 2007, a little over a decade ago, that Apple began to dominate the technology sector.
Google as a word was first used in pop culture in the fourth episode of the final season of Buffy the Vampire Slayer in October of 2002. That’s when people started saying “just google it.”
Facemash was released on October 28, 2003 and was launched as a Harvard only social network in February 2004. It took us over a decade for us to collectively realize Mark Zuckerberg is morally bankrupt, much like the executives at Enron.
Then there are the survivors. The companies that made it through the bubble, yet very few would question if they’re ruining our lives. Priceline started as a name-your-own-price airline seat bidding service in 1999. It has since pivoted to a full service travel broker that some people use. It surpassed its dot-com high in 2013.
Adobe is a giant and can feel like a monopoly sometimes, but probably only for creative professionals. They surpassed their bubble high in 2007, growing through acquisitions and dominating the creative software market.
Ebay was once just an auction site, but pivoted to a platform for business-to-consumer sales and online payments through its acquisition of PayPal. They surpassed their bubble high by December 2003.
Then there’s Intuit, the maker of TurboTax and Quicken. If you haven’t used their software yet, you probably will when you file your taxes at some point.
Speaking of tax software, isn’t it strange that most people have a fairly straightforward tax return form that could probably be automated through software?In 2019, about 40 percent of U.S. taxpayers filed online. About 40 million people did that with TurboTax, an Intuit product. For about 20 years, Intuit has lobbied the government and used dark design patterns to fend off the threat of making tax filing easy. You don’t need to take my word for it though, ProPublica has an excellent article with all the dirty details.
The post bubble tech sector has adopted a four prong approach to being successful. The first is to serve needs. That’s a good start. Netflix scratches an itch that never goes away. We love watching movies and TV with a low-cost simple solution.
The second pillar is to adapt. If you make a product and people stop using it, you should change your business model. That’s what eBay did. Auctions were a huge fad, but Ebay saw the writing on the wall and moved towards fixed-price sales to get users that had tired of auctions back.
The problem with the second pillar is that often it is enacted by the third pillar, which is acquire. Priceline was pretty innovative with the “name your price” tool. It was popular, but executives knew it wouldn’t last, so they bought booking.com in 2005. Instead of creating an innovative new product, they just bought someone else’s. That’s fine in theory, but what happens when a morally bankrupt CEO buys your company? WhatsApp had a great product only to be bought by Facebook. Instagram had the same fate. Our experiments with virtual reality are now also being implemented by Mark Zuckerberg through Oculus.
The last pillar is the most important and the most troubling: data.
Large tech companies are obsessed with data. They watch you, see what resonates with you, and sell that to you. In the case of social networks, the data is the product. You create data for Facebook, which Facebook then uses to sell targeted advertising. You are their product.
And when the data you’ve collected can no longer make them money, they sell it to someone else without your permission. Those companies would say that you should have known you were signing your rights away by clicking “I AGREE” to their EULA.