Michael Lewis on the Late 1990s Tech Boom--and Bust | Big Think

TL;DR

The internet boom and bust was not a con, but a result of a misunderstanding of the transformative power of the internet.

Transcript

yes I have I take a more sanguin view of the internet boom and bust than I think than of the other panics in in this Anthology but also than most people at the time I didn't think it was a giant con I think it was just a giant misunderstanding of what was going on it's true people said things that weren't true and I'm there were lots of cynical peo... Read More

Key Insights

• 😕 The internet boom and bust was the result of a misunderstanding rather than a deliberate con.
• 🤑 Underinvestment in innovation led to the market compensating by throwing excessive money at internet companies.
• ❓ Despite the mistakes made, the Venture Capital industry survived and recognized the value of funding great companies.
• 🖤 The internet boom and bust shares similarities with other financial crises in terms of a lack of understanding and the creation of persuasive language.
• 😷 Real understanding and asking simple questions before investing are vital to avoid excessive financial investments.
• 🥺 The transformative power of the internet and its long-term effects could not be ignored, leading to speculation about future commercial outcomes.
• 👋 The public good aspect of innovation and research and development should be considered when evaluating investment opportunities.

Questions & Answers

Q: What was the author's view on the internet boom and bust?

The author believes that it was a giant misunderstanding rather than a deliberate con, acknowledging some dishonesty but emphasizing the public good aspect of innovation.

Q: Why did the market invest heavily in internet companies during the internet boom?

The transformative potential of the internet made people speculate on various commercial outcomes, leading to excessive investment to capture potential future success.

Q: Did the Venture Capital industry survive the internet bust?

Yes, the Venture Capital industry did not dry up because the funding of great companies outweighed the mistakes made during the boom period.

Q: What connection does the internet boom and bust have with other panics in history?

Similar to other financial crises, the internet boom and bust was characterized by a lack of understanding and the creation of a language (such as prioritizing "eyeballs" over revenues) to convince investors to put money into internet companies.

Summary & Key Takeaways

• The internet boom and bust was not a deliberate con but rather a misunderstanding of the potential commercial outcomes of the internet.

• The market compensated for the underinvestment in innovation by throwing a lot of money at internet companies.

• The Venture Capital industry survived the bust, suggesting that funding great companies outweighed the mistakes made.