Dot-Com Mania Peaked a Decade Ago This Week
Eight months after the bubble burst - at a time when the scope of the failure had become clear to most all - USA TODAY published an analysis headlined: What detonated dot-bombs? It delved into a handful of "mistaken assumptions," which, in retrospect, seem difficult to imagine as conventional wisdom:
It's okay to sell products for less than what they cost you, because that will bring you lots of customers.
Internet-based companies are immune to economic cycles.
Internet companies can't spend too much on advertising.
Internet companies that carry no inventory are infinitely profitable.
Yet even then there were holdouts hiding deep in dot-com caves, witness this extraordinary claim from a principal in Pets.com:
"(Spokesman John) Cummings doesn't blame the failure of Pets.com on the business model. Impatient investors did the company in, he says, because they weren't willing to invest the additional money needed to break even. 'Not all companies are profitable in 14 months,' he says."
Not everyone had guzzled the Kool-Aid, of course, with Warren Buffet having been a most prominent dot-com doubter. A year after that stock-market high, Buffet told BBC News:
"After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities ... will eventually bring on pumpkins and mice."
In other words, March 10, 2000 was the day the NASDAQ struck midnight.