Billionaire Bubble: Ten players in the local tech scene look back, a decade later, at the frenzied days of the Internet boom and its fateful bust

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By Christina Breda Antoniades
Sunday, March 7, 2010

There was a time, as 1999 rolled into 2000, when it seemed as if everyone was rich. Or, at least, as if they could be rich. They had equity. Or a big idea. Or a lock on friends-and-family shares in an IPO. With tech stocks soaring and venture capital money flowing, cashing in on the cyber revolution seemed a worthy bet.

That was then, of course. It's been a decade since the tech-fueled NASDAQ reached its all-time high, on March 10, 2000, having nearly doubled itself in just a year. It was a dizzying peak reached thanks in part to a spectacular rise in the valuations of companies that had hitched their wagons to the Internet.

Later, it would be called a bubble, and much of the paper wealth it had created would evaporate. But in the spring of 2000, anything seemed possible. And the Washington area, with Northern Virginia's tech corridor leading the way, had established itself as one of a handful of national tech hubs.

The excitement played out in some iconic moments, such as when PSINet paid an estimated $100 million to put its name on Ravens Stadium or when MicroStrategy would spring for an all-company Caribbean cruise. And early success stories such as AOL or UUNet--with their tales of millionaire secretaries and 20-something moguls--enhanced the mystique.

Though many predicted the boom would end, no one knew exactly when. As it turned out, the March 10 peak would be followed by a jolting downward slide. Small companies would feel the pinch quickly--as the venture capital disappeared and the window for IPOs slammed shut. Larger companies would ride it out longer. But by early 2001, it was clear the highflying boom days were over. By 2003, the tech bust had wiped out an estimated $5 trillion in tech company market value.

So, what was it like inside one of the biggest business booms in history--and the bust that followed? We talk with 10 local tech players and observers who experienced the boom from a variety of vantage points about the excitement of the time and the shock of seeing it fall apart.

The Players: Elie Ashery, co-founder of Newsletters.com; Susan Defife Askew, digital media consultant; Sanju Bansal, co-founder of MicroStrategy; Steve Case, co-founder of AOL; Michael Chasen, co-founder of Blackboard; Raul Fernandez, founder of Proxicom; Shannon Henry, co-founder of online site Cooking with Friends; Paula Jagemann, founder of eCommerce Industries; Mario Morino, founder of Venture Philanthropy Partners; and Mark Walsh, former AOL executive.

A NEW REALITY

By late 1999, tech's rise was in high gear. Venture capitalists poured $1.8 billion into local tech companies. That would leap to $4.8 billion in 2000 and by 2008 would fall to $625 million.

Walsh: I'd labored in relative obscurity for 13 years. The joke was, "It's the business of the future and always [will] be." It was always "someday." Well, that day started to arrive. What was energizing was that you really felt like you were writing the book.

Chasen: In 1999, probably north of 30 competitors all come out of nowhere offering similar versions of our software for free. Some of them had incredible investors behind them and a lot of hype. We had investors calling us up saying, "Have you thought about converting yourselves to an eyeball model or a page view model?" I'd like to say we were so smart, but we ... literally couldn't figure out how to make it work.


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© 2010 The Washington Post Company

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