End of the boom not the end of the road

The streets of Silicon Valley are littered with survivors of the dotcom boom and bust - but while many retain vivid memories of the crash, few seem permanently scarred by the experience.

Among the most notorious failures was pets.com, an online pet shop that promised to deliver food and supplies across America at competitive prices.

Founded in August 1998 and backed with tens of millions from investors including Amazon, the brand blew up quickly, with a popular ad campaign and a January 2000 Super Bowl spot that cost more than US$1 million.

The company went public with a US$83 million stock offering a month later - weeks before the crash. Nine months on the company had collapsed and the truth about its business became clear: it had spent vast amounts on advertising while selling most of its products at a heavy loss.

Founder Julie Wainwright remains unapologetic for the very public burnout, suggesting that "it was a great company, but the timing wasn't".

She went on to run an online photo service and worked in venture capital, before starting women's health website SmartNow two years ago. Even the fact that her husband filed for divorce just days after pets.com went under seems to have been part of the process. "I had two major life crises in the same week, one public and one private, that sent me on a journey of self-discovery ... I couldn't have anticipated," she told the New York Times in 2008.

Wainwright's story is one repeated by veterans all over the internet industry: their companies may have collapsed during the bust, but that failure is worn as a badge of honour.

In fact, despite the vast amounts lost when the internet bubble collapsed, it is the websites themselves that have fallen by the wayside, rather than the people behind them. A prime example is the web radio service broadcast.com, which was sold to Yahoo for US$5.7 billion in 1999 but no longer exists as a website in its own right. While broadcast.com is dead, former chief executive Mark Cuban has gone on to new heights of fame, as the outspoken billionaire owner of the Dallas Mavericks basketball team and Magnolia Pictures, distributor of films such as Food, Inc.

"I was fortunate enough to be part of a great company that got whisked away in the frenzy. I was also fortunate enough to recognise the difference between a company and a stock," he says. "What was unfortunate was that with the bursting of the bubble came Yahoo basically killing off a company that was doing everything that YouTube does today but years earlier."

Other sites that struggled through the bust have fallen into disrepair, obscurity or simply shut down. GeoCities, an early precursor to social networking sites, was bought by Yahoo for US$3.5 billion in 1999. It was left to languish after the crash and finally put down last year. Co-founder David Bohnett, who now runs his own foundation, says that although much of the enthusiasm died after the bust, many of the ideas developed have gone on to have a massive impact on millions of people.

"GeoCities paved the way for the success of ... sites like Facebook and MySpace," he says.

Not every site from the boom has withered, however. One of the biggest success stories, Amazon, bullied its way through the crash - despite not posting its first profit until 2002. Boss Jeff Bezos bet everything on the idea that heavy, long-term investment would corner the online retail market, even if it meant losses in the short term, and it paid off. He is now ranked 43rd richest man on the planet, with a net worth of US$12.3 billion.

While many entrepreneurs saw their paper fortunes dwindle with the crash, some of the sharpest criticism was aimed at the bankers and investors who had helped fuel the dotcom rollercoaster with soaring valuations.

They too, by and large, recovered quickly from the after-effects of the crash.

Cuban says that despite the tumult caused, few lessons have been learned in the United States. "In 2000 it was the internet stocks. A couple of years ago it was real estate and mortgages. In five years it will be something else," he says. "We live for bubbles in this country."

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