Chapter 2: History Lessons
Of course, this hasn’t happened yet, and to a large extent it is because the dot-
bomb brought the easy-money days of online entrepreneurship to an abrupt end.
As the Dot-com Era came to an end, questions naturally arose as to what had
caused the dot-bomb and, more importantly, what had been wrong with the dot-
com bubble in the ﬁrst place. At the highest level of reﬂection, the dot-com model
for business was fundamentally ﬂawed—a result of bad business planning and
poor execution combined with undiscriminating investment.
The dot-bomb sharply illuminated several erroneous dynamics of the existing
• Business leaders assumed that extraordinary improvements in productivity
and revenue growth were essentially activities of the past.
• Information technology was a necessary evil of doing business.
• Information technology produced nominal value by itself.
• Information technology was a means of managing overhead.
The dot-com revolution served as a wake-up call to the business world. Here,
for the ﬁrst time, was a new vision for technology. It was the notion of the business
as technology. Put another way, it was information technology in place of the
bricks-and-mortar business. The implication was that, instead of people,
buildings, and inventory, all you needed was an Internet presence via a web page
parked on a server somewhere. Best of all, companies sprang up that would
cheerfully provide the server and the web page. The gleam in executives’ eyes
came from thoughts of zero-overhead proﬁt-generating shells. The market’s motto
should have been “Money for nothing!” The reason anyone could take this notion
seriously was partly because of bad business skills but also because of bad
technology skills: Executives were essentially ignorant when it came to leveraging
the power of technology for their business.
The dot-com dynamic illustrated the extent to which the status quo was deeply
entrenched in the business world. Executives could make sense of the new
technology only in the context of that with which they were familiar. This generally
was a model of business as a ﬁxed infrastructure operation. Even though dot-com
promised to change the dynamics of business, the only way most companies
conceived of this change was as a wholesale replacement for existing operations, not
as a complement to them. This explains the phenomenon in which bricks-and-
mortar businesses that engaged in e-commerce activities launched dot-coms as
operations that were completely separate from the existing conventional business.