Net Loss

John Cassidy probably set out to write the first really readable, definitive history of the Internet: from the wild levers of early punch-card machines to the glorious late ’90s, when you could log onto, order a pint of ice cream or an old comic book, and get it delivered in minutes for free.

Cassidy earns his keep writing for The New Yorker; and, as with many of the narrative pieces in that magazine, Dot.con starts out with a time, a place, and an important person you don’t know much about. In this instance, it’s Vannevar Bush, father of the National Science Foundation (NSF), and his World War II dream of using computers to organize massive amounts of information with links mimicking the way our minds associate. As Cassidy explains, Bush didn’t accomplish his ultimate goal, but he did kick-start the research that would lead to the Internet and then the World Wide Web.

Cassidy then does a good job of describing the extraordinary moment, right before the Internet boom, when hordes of people foresaw amazing things happening with information technology but few actually had any clue how it would really work. Time Warner, for instance, spent about $150 million trying to build a network of television sets in Florida in the early ’90s, and Bill Gates barely mentioned the Internet in the first edition of his 1995 book The Road Ahead.

Soon, however, Netscape Navigator emerged and the Internet and the Web began to grow exponentially, along with the number of users, the wild prognostications about its importance, the number of pimpled millionaires it created, and so on. At about this point in the tale, though, Cassidy leaves the narrative track and begins to push the theory that comprises his title: Dot.con, The Greatest Story Ever Sold.

Cassidy’s theory is that the Internet stock boom wasn’t just a Ponzi scheme inadvertently created out of exuberance for a remarkable new technology. It was a Ponzi scheme maliciously created by a selfishly-motivated cabal of journalists, analysts, investors, politicians, entrepreneurs, and others. This “unscrupulous alliance helped turn an exciting technological development into a dangerous speculative bubble.”

Perhaps the best example of the lunacy came in 1999 when 3Com spun Palm Computing off as a subsidiary. Palm’s stock spiked upwards, and its market value soon dwarfed 3Com’s, even though 3Com controlled 95 percent of Palm’s stock.

Cassidy is also right to argue that many of the rowdiest boosters were utterly compromised. His principal villain is Mary Meeker, a 35-year-old Morgan Stanley analyst who constantly unleashed wildly optimistic predictions for financial success for companies that she must have recognized as dogs. Meeker did this partly because she also needed to recruit new companies to use Morgan Stanley for their IPOs.

Cassidy also sticks it to Alan Greenspan for not deflating the market earlier, and pillories journalists for their relentless Internet jabber. He writes: “Trapped in the logic of herd behavior, Wall Street will inevitably keep inflating the bubble until it bursts. It is up to journalists and government officials to try to maintain sanity, but in this case neither proved up to the task.”

Ultimately, though, Cassidy’s thesis seems stale, and it’s hard to find the new “con.” Everybody knew at the time that Meeker and company were conflicted, and that venture capitalists and entrepreneurs would want strato-spheric stock prices forever. Many investors also knew that they weren’t buying pieces of solid companies; they knew a collapse could come and wanted only to try to sell to the next yet bigger fool.

Cassidy could have made an interesting case if he had dug up new facts or shown that people like Meeker were intentionally duping the masses, not just predicting that prices would go up—because, well, they did just keep going up. But Cassidy seems to have done little new reporting. If you didn’t believe that the Internet bubble was really “the greatest story ever sold” on page one, you probably won’t believe it on page 325.

As for Greenspan and journalists, Cassidy is partly right. But he vastly understates the Internet’s importance, and thus Greenspan’s rationality in taking it slow, as well as journalists’ rationality in writing optimistic forward-looking stories. To Cassidy, the Internet boom was pretty much all a ruse. After negatively comparing the Internet to indoor plumbing, he scoffs that the “Internet hasn’t made people live longer, changed where they live, or made it any easier for them to get from New York to Paris.”

But the Internet has done much more important things than that, from transforming business management to creating a whole new form of communication to fostering democracy abroad. Plus, it has done two of the three things Cassidy mentions, too: facilitating medical communication and scientific discovery and allowing a new generation of people to work at home. And, even if the Internet hasn’t made it easier for Cassidy to get to Paris, it certainly makes it much easier for Wal-Mart and other companies to keep track of shipments everywhere else.

If I had to, I’d wager that Cassidy’s publishers pushed the title and the “dot-con” thesis on him, thinking that a general narrative wouldn’t sell. I’d also wager that they pushed him to finish the book much more quickly than he wanted. The last few chapters read like a ticker tape as he pumps out stock prices, and the rest of the book is scattered with odd repetitions, awkward prose, and errors—the funniest pair of which seems to represent an odd, perhaps astrological, fetish. Early on, he writes that the inventor of a 1975 computer “called his invention the Altair, after a character from Star Wars.” I can’t think of any such character from that film—which premiered two years after that computer was invented. Later, Cassidy refers to “Paul Allaire, the co-founder of Microsoft,” when he means Paul Allen. He once cites as fact a fictional story about a made-up company called (“We’re going to put the fun back in funerals.”).

Despite its flaws, the virtue of Dot.con is that it manages to record the whole story in one place. It also helps answer a question that had baffled me since I showed up as a newly hired editor at the Monthly and was almost immediately handed a scattershot submission from “a New Yorker writer.” How does The New Yorker put out such a consistently clean, well-written, and clearly argued magazine? Do they just have a stable of astonishingly good writers or are there a couple of great editors in the back office with bullwhips? This book makes a strong case for thesis number two.

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