overspending

Growing Pains For The New Economy

 

painsneweconomy 300x188 - Growing Pains For The New Economy

 

If the internet revolution was slow off the blocks, by the end of the 20th century it had reached a headlong sprint. At the beginning of 2000, there were over 1 billion pages on the World Wide Web. Internet millionaires were being made by the minute, and any would-be entrepreneur with half an idea was welcome to join the party.

The e-commerce boom had begun, and venture capitalists were falling over themselves to provide the finance. The airwaves crackled with advertising for dotcoms, and advertisements on billboards, buses and in the broadsheets were reinforcing the messages. Technology stocks soared on Wall Street, and adland rubbed its hands together as the money rolled in. Amazon’s value peaked at $39.4 billion and Yahoo!, the world’s biggest portal, reached a dizzying $125 billion. Elsewhere, a rash of new entrains replaced some of the traditional bricks-and-mortar bluechip occupants of the UK’s FTSE 100 index.

In the UK, with its narrow choice of mass communication channels, media owners found that competition for limited airtime and outdoor space meant they could sell to the highest bidder. There was even talk of secret higher rates being offered to the more gullible dotcoms. The cost proved unsustainable, and investors either wised up or lost their nerve.

The skeptics were slow to find their voices, but tales of bad management, naive business plans, overstaffing and massive overspending gradually began to filter through.  Suddenly, those previously hailed as heroes of the new economy were being viewed with suspicion by the markets. Continue reading →

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