Toast the Bursting of the Dot-Com Bubble

I'll admit it: The thought of some fresh-faced twentysomething becoming a dotcom millionaire after only a few months of sweat equity (if you want to call taking meetings at Starbucks Corp. for 18 hours a day sweaty) makes me more than a tad envious. Actually, it really ticks me off. I've been in the same industry for more than a decade, working my way up the ladder to a rung just below middle management. During that time, I've managed to put aside a tiny, yet consistent pretax chunk of every paycheck in the hope that one day I will not become a burden to my kids. Then along comes dotcom fever and the advent of the 90-day millionaire. The world pegs me as a loser because I've spent the bulk of my career with one company and my net worth doesn't surpass the GNP of Guatemala.

Personally, I'm not as interested in strike-it-quick riches as I am concerned--some might say irrationally worried--about having a comfortable nest egg. My 401(k) balance still hasn't caught up with my salary. Frankly, I'm about tapped out when it comes to imaginative ways to stretch the US$1,117 I'll receive each month in Social Security benefits. By 2030 it will translate to about $198.50. But retirement-envy aside, the recent shakeout and layoffs among dotcoms is good for more than just my psyche; it's good for business in the long haul.

When Internet mania took off in earnest, venture capitalists, individual investors, executive talent and rank-and-file employees tumbled all over each other in the hopes of latching on to a startup that would make them a buck or two...million. Among the more popular repositories for money and talent were online pet stores, toy stores, grocery delivery services, high-fashion boutiques and lifestyle magazines. But did anyone seriously think a website proffering Liv-a-Snaps and chew toys--and leaking money like a sieve--was worthy of a stock price in the hundreds of millions? I suppose those executives who quit their steady, six-figure-salary jobs did, or they wouldn't have abandoned the companies that trained and nurtured them in order to helm startups with no plans of turning a profit until maybe 2020.

Many of these retail and information sites are useful but they're not going to rock anyone's world, much less generate a new business paradigm. Why would a horde of people log on to Kozmo.com to order a video and pizza that will be delivered in an hour when they can hop into their trophy SUV and pick up the same stuff in half the time? True, there's probably a solid market for home-delivery services, and an online company that can deliver value may enjoy a comfortable and profitable existence. But no company in this space should have a marketing and advertising budget that rivals those of the Big Three automakers.

But as venture money poured in, plans for IPOs followed. And before anyone knew it, upstart ventures run by children with sketchy business plans enjoyed valuations that rivaled GE's, a company founded in 1878 with a CEO who currently is considered a certified management genius.

Suddenly, any kid with an MBA believed they held the winning lottery ticket in a multistate Powerball game. The ready-to-take-on-the-world confidence they felt was quickly transformed into smugness, thanks in large part to a fawning media that portrayed Internet entrepreneurs as capitalism's saviors. (Remember Time magazine anointing Jeff Bezos as its Man of the Year?) Many new economy pundits scoff at the idea that Internet startups should concern themselves with anything so mundane as making money. It's their long-term potential to change commercial transactions as we know them, they say, that makes these companies so valuable now. No doubt just such an attitude fueled and condoned spending sprees worthy of Imelda Marcos. Internet startups burned through funds like there was no tomorrow. (And for Boo.com, Toysmart and others, there was no tomorrow.) Does anyone remember a single, jillion-dollar-a-second spot for a dotcom from last year's Super Bowl? The concept of building a brand through satisfied customers rather than bizarre commercials apparently is lost on the dotcom crowd.

It seems that many investors and entrepreneurs wholeheartedly bought into the idea that the Internet speeds up everything. And it does speed up business processes such as procurement, purchasing, ordering and shipping. But what it doesn't speed up is due diligence. Companies that hope to succeed long-term need to study the market, attract a loyal clientele, groom seasoned management and make sound alliances. While any one of these tasks can be rushed without adverse effects, rush them all, and you're sowing the seeds of disaster. If you're dead set on becoming a multimillionaire by next Tuesday, you'll probably be on the unemployment line by this coming Monday.

All the mumbo jumbo about brands, business models and value chains obscured a sober but obvious lesson. Money--as in positive cash flow--does matter. Now that layoffs and plummeting--yet more realistic--stock prices are hitting dotcoms where they live, the philosophy of Benjamin Graham, Warren Buffett and their value-focused ilk will hopefully take hold again. I, for one, will be ecstatic if the instant gratification attitude that typifies the Internet crowd gives way to a long-term perspective that's less hectic and less concerned with daily stock prices. A little humility can go a long way.

I've not given up on the dotcom economy. Those companies that can weather some belt-tightening and accept the idea that successful businesses need to be nurtured over time will do quite well for themselves. Of course, today it may not be as easy to recruit hot young things with stock option dreams. But even some dotcom executives recognize that a fall to earth is a good thing in the long run. Greg Bott, chief technology officer of INC2inc, an online marketplace for the food industry, has the right philosophy on HR matters. In a recent conversation, I asked Greg if the shakeout among e-commerce companies was making recruiting more difficult. While he admitted that the going was tough, he liked the idea that the candidates he talked to wanted to work for the company primarily because of the work itself, not because they could cash in and walk away with a handsome bundle in 18 months.

Hopefully that same philosophy will strike a chord among those dotcom high-fliers who now find themselves pounding the pavement. While hitting pay dirt before 30 is nice, the rest of us have learned to find contentment through a job mastered over time. In the end, this is not a bad way to be.

Welcome to the ranks of people like me--ants not grasshoppers--who grow their retirement nest eggs one decade at a time.

Senior Editor Megan Santosus, who is way too young to be thinking about retirement, can be reached at msantosus@cio.com.

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