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

By Christina Breda Antoniades
Sunday, March 7, 2010; W18

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; 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.


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.

Askew: There were very few women entrepreneurs who raised venture capital--less than 2 percent of VC money went to women. I would present at venture conferences ... and there would be 60 presenters, and two would be women.

Morino: When people think about entrepreneurs, they always think about them being young, and the reality is that they cover the age range. We did an informal survey in 1998 or 1999 of anybody dealing with the Internet, and the average age was 48.


The work ethic for this new class of entrepreneurs was full immersion--long hours and nonstop networking.

Walsh: It was absolutely all-consuming. ... When your personal net worth is growing in ways that are really shocking to you, it's really hard to turn it off.

Jagemann: My husband bought me a horse for Christmas. He used this as a ploy to get me some downtime. He would crawl in my office with this picture of this horse and go, "I'm lonely."

Ashery: You had the drag factor--that was: Are you married, do you have kids, do you have an overindulgent and protective girlfriend? These were drag factors, and you couldn't have a drag factor.

Henry: People just couldn't get enough of each other. I remember people getting kicked out of these [hotel ballrooms] at the end of the night. They couldn't stop talking to each other.

Ashery: It was, "Who can we jump into bed with, and how many partnerships can we have just for bragging rights?" A lot of it was ego-driven.


Many companies believed that success meant grabbing market share at almost any cost--and dealing with a fickle, sometimes irrational, stock market.

Jagemann: The focus was on getting big, fast, even at the cost of negative profitability. There was very little scrutiny of the company because we had so much momentum and such horsepower. Our employee meetings were all just rallies.

Walsh: Back then, as one of my colleagues of AOL once said to me, "Days are weeks, weeks are months, months are years." There was very little time to stop and think. And speed is not a great structure to make important decisions.

Morino: In retrospect, the comment of "irrational exuberance" probably applies to everybody. I think people who'd been around for a while knew that something would give way at some point. [But] they got caught up in the momentum and forgot about the basics. It's not a matter of how they allowed it; they thrived on it.

Fernandez: In 1999, [Proxicom's] stock went up, I think, 30 percent in the five days between Christmas and New Year's Eve. It wasn't anything we did or said in the marketplace -- it just happened. "Party like it's 1999" could never have been so fitting. The company was worth $6 [billion] or $7 billion. I was worth over a billion. It was just surreal.


For a lucky few, hard work or just the right timing, would bring life-changing good fortune.

Walsh: I brought my executive assistant to AOL with me, and I got her a nice option grant--a few thousand shares. She became wealthy beyond her expectations. That's at the secretarial level.

Case, on how many millionaires AOL created: At one point, I was told it was a couple thousand.

Morino: Some of it was really merit-ocracy-based, and some of it was market timing. I think one thing people don't give enough credit for is serendipity. When I left Legent, we sold 1 million shares at $48 a share. It went up a little after that, and there were some down periods. The next time it reached $47.85, I sell a million shares. Just picture a U. I sell a million at the top of the U on the left and then sell another million on the right.


The public became fascinated by the new economy, and suddenly all eyes were on tech, which had a new cachet-- and the means to spend lavishly.

Henry: The political people used to be the rock stars, and now you have the tech people ... [who] are philanthropists and sports owners, really becoming these money and intellectual rock stars, which in Washington is power.

Walsh: I was invited to have lunch with then-Treasury Secretary Lawrence Summers. It was Steve Case and Jerry Levin at Time Warner and Eric Schmidt [now chief executive of Google]. ... Summers was asking what should Treasury be doing to make the Internet grow faster and stronger and better. I was like, How cool is this? We've all sort of arrived.

Fernandez: Michael Jordan became my partner. You can't even dream that stuff.

Jagemann: We had this great vibrant purple carpeting; the wood was blond; lots of glass. I'm a huge U2 fan ... so all the artwork was signed U2 memorabilia, all the conference rooms were named after albums. I remember thinking, We're doubling our expenses.

Ashery: There were crazy parties. I remember going to Internet World in New York, and each company had their own party, and they would rent out huge hotel banquet rooms or entire posh restaurants and blow a half-million dollars for the night.

Case: As the CEO of the company, I was going to be a kind of visible evangelist ... for the industry.


By January 2001, the big fold was on. With the industry awash in layoffs and shutdowns, for many the party was over.

Askew: Everybody got scared. Investors wanted the ships to turn overnight, and those ships couldn't turn overnight.

Fernandez: [I would] go around to our offices and focus them on things they could control--good customers, good product, good work--and really move them away from looking at the stock price. Because it was just going to depress you.

Walsh: [The] enthusiasm and just kind of fantasy that drove the bubble up turned into wrath and ire and vengeance when the bubble popped. The stuff people used to post on these stock bulletin boards--threats of violence, false accusations of executive behavior.

Jagemann: I literally bought the Paula Jagemann [domain name]. I was like, Our customers are going to buy and create this Web site of me with horns.


Some tech entrepreneurs took the money they made and headed into the sunset -- to focus on charity, or family, or their golf swings. But for others, the end of the boom wouldn't mean a retreat from tech.

Askew: There was an initial overreaction that the Internet was not as important as people thought it was going to be. Those of us in the business knew that the Internet was not dead, that yes, people will shop online. And, lo and behold, that's where we are now.

Walsh: In the '90s, it took a lot of time and a lot of money and a lot of technology to make something cool happen on the Internet. Now, it takes very little money, very little time and very little technology.

Jagemann: I'm happy that we sold and the investors didn't lose and those employees that stayed are okay, but the employees who have not continued with the company did not get a payoff. ... That keeps me awake at night. ... I still have the same amount of energy and innovative ideas, but I think I've mellowed. I was cocky. Now, I'm confident.

Bansal: People didn't think of D.C. as a technology hub until the mid-'90s, and then it certainly became recognized as one of the top three in the country. My gut-level observation is that many of the people that came never left.

Case: I did enjoy the AOL journey. The first 10 years really were about the pioneering building phase, and even though the second 10 years was where the fame and fortune came, I kind of enjoyed the first 10 years more.

Askew: There's a Garth Brooks song called "The Dance," and there's a line that says, "I could have missed the pain, but I'd have had to miss the dance." And I wouldn't have missed that dance.


The Players


Then: Co-founder of, a clearinghouse for market research reports that raised $11 million in funding and later was sold for an undisclosed amount. The company's technology is still in use today.

Now: Chief executive of Gold Lasso, a marketing software company that he co-founded in 2006 by buying $5 in used computer parts at auction and flipping them on eBay for $8,000.


Then: Chief executive of, an online business community for women, which she founded out of her McLean home in 1994. In late 1999, the company was valued at $25 million by a potential buyer but would go unsold and be shuttered in August 2000.

Now: Digital media consultant, mostly for early stage technology companies.


Then: Co-founder, with Michael Saylor and Thomas Spahr, of MicroStrategy, a business intelligence technology provider whose stock rose to $333 per share but during the bust (and amid an accounting scandal) fell to just over $1. MicroStrategy eventually stabilized and even grew. It recently reported quarterly earnings of $100 million for the first time in its history.

Now: Vice chairman of the board, executive vice president and chief operating officer of MicroStrategy.


Then: Co-founder of AOL, which had grown to $163 billion in value by the time it announced its merger with Time Warner on Jan. 10, 2000. Case resigned as chairman in 2003. In late 2009, Time Warner spun off AOL, which announced plans to restructure and laid off 1,000 employees.

Now: Chairman and chief executive of Revolution, a family of emerging companies that Case founded in 2005.


Then: Co-founder of Blackboard, a software provider for educational institutions. Blackboard followed a traditional business model of charging customers to use its software and waited until 2004 to go public. When the bubble burst, Blackboard "ended up doing around $40 million in revenue and just about breaking even," Chasen says.

Now: President and chief executive, Blackboard, which has offices in 10 cities worldwide.


Then: Founded Proxicom, which developed e-commerce solutions, in 1991 with $40,000 he'd saved for a down payment on a house. The company went public in 1999 and saw its value top $6 billion. Proxicom was bought by Dimension Data in 2001 for $427 million.

Now: Co-owns the Washington Capitals, Washington Wizards and Washington Mystics, and is chairman of ObjectVideo, which develops security camera software.


Then: Washington Post columnist covering the local tech industry and author of "The Dinner Club," a book about the Washington area tech boom.

Now: Co-founded the online site Cooking with Friends.


Then: Started as an administrative assistant at UUNet and at age 28 made $18 million in the company's 1995 IPO. In 1998, she founded and later eCommerce Industries, for which she raised $92 million in funding. In 2007, the company sold for $95 million.

Now: Is founding the start-up Someone With, an Internet and print catalogue for cancer patients and survivors.


Then: Co-founded software company Legent and later the nonprofit Morino Institute. In the late '90s, he mentored entrepreneurs through Netpreneur, a tech networking organization. In 2000, Morino founded investment group Venture Philanthropy Partners.

Now: Chairman, Venture Philanthropy Partners.


Then: The former AOL executive became chief executive of VerticalNet, a flagship B2B company. It was valued at $12.5 billion at its peak but sold for $15 million in 2007. Walsh, along with other executives, was named in investor lawsuits that were later dismissed.

Now: Venture capitalist, political commentator and chief executive of start-up GeniusRocket, an online marketplace for advertising and marketing services.

Christina Breda Antoniades writes regularly for the Magazine. She can be reached at

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