• by Michael Schrage , June 7, 2002

The Internet Bubble? A media conspiracy hoax. Don’t blame the entrepreneurs, the venture capitalists, the bankers, the analysts, or the dot-com investors; it’s The Media’s fault. Why? Simple. We got bored. We tired of the latest Windows “upgrade” and Macintosh mess. The idea that we’d have to start covering SAP, PeopleSoft, Baan, and whatever fool notion Larry Ellison got into his well-coiffed head was turning out to be too much for us. So when the Internet came along, we grabbed onto it like a starving vegan grabs on to celery stalk in the middle of the stockyards. It was the Clinton era, so we knew that people would be suckers for any story we peddled so long as it had a smidgen of sex appeal and a dash of charisma. We weren’t trying to create a trillion dollar bubble; it’s just that things, you know, kinda got out of hand.

Of course, VCs throw money at any digital technology that can scale, so it was easy to turn their seed Net investments into a slew of “Microsofts of Tomorrow” stories. Editors loved them. Readers liked the plucky start-up leitmotif. They were also really easy stories to write. But we never thought the SEC would let “companies” with no positive cash flow, no discernible revenues, no justifiable business model, and CEOs who were younger than we were actually go public. BONUS! We knew we were going to party hearty when Yahoo went public big time and Wired could not. That’s when we knew that promoting potential was a better narrative investment than analyzing performance. As you know, The Media don’t like analyzing performance; too much work. We’d rather quote pithy analysts.

Sure, you can’t have 20 companies each claiming they were going to get 20 percent of the market before the incumbents had even made their first response without expecting a few casualties. But that’s too preemptive. Why get ahead of ourselves? Besides, it’s a better story if you keep the horses running as long as possible. Why declare winners and losers when there were still billions more to be invested? We were just beginning to have fun. Come on! AOL buying Time Warner? We thought we had died and gone to heaven. Jeff Bezos as Time’s “Man of the Year”? Come on, folks, if you didn’t get that punchline you have no sense of humor. A dot-com that not only rehabilitates William Shatner but builds their brand around him, makes him rich, and scores a market cap greater than America’s top three airlines combined? Nirvana! That was us, folks. We were playing you for the suckers we all know our readers and viewers to be; people who are even more superficial and celebrity-struck than we are. God, those were good times. Alan Greenspan can bark about “irrational exuberance” and fiddle with the money supply all he wants. But whose stories put the “con” in consumer confidence? Ours did!

And when we got tired of a bunch of GenXers making more money than we thought reasonable; when the dotcommers got a little too uppity for our taste; when NASDAQ hit peaks so ridiculously high that our faces hurt from all the smirking, then we found a Lehman analyst to start cracking down on the credit side of Amazon—wasn’t that a nice touch?—and pricked ever so gently. Sure, the Internet Bubble took its time hissing down. But, let me tell you, nothing gives The Media more satisfaction than building up a pimply 24-year-old with death’s-head tattoos into a celebrity dot-com millionaire, and then gutting its value by 90 percent in 90 days.

What we build up, we tear down. Don’t think for a moment that the marketplace or the venture capitalists or the SEC or investors or the technologists have anything to do with speculative bubbles and valuation volatility. The Media are in control. We control the horizontal; we control the vertical; do not adjust your set. We’ll get back to you when we finish deciding how long this recession is going to last.

©2001 ASM Communications, Inc. Used with permission from Marketing Computers. A codirector of the MIT Media Lab’s EMarkets Initiative, Michael Schrage is the author of ‘Serious Play,’ published by the Harvard Business School Press.