Companies That Fueled the Tech Bubble - Research Paper Example

Farrall, Don. “The Bubble Decade.” CNBC, 4 Dec. 2009. Web. 6 Nov. Companies That Fueled The Tech Bubble From 1998 to 2000, nearly 1,500 technology companies went public, raising $114 billion. That avalanche of capital was laid at the doorstep of countless companies whose busineses would never turn a profit. But that didnt stop them from taking it. At the same time, parade of stock pushers made their name and often a small fortune trumpeting the merits of almost every company whose name ended in dot-com. And investors took the plunge. Perhaps the greatest speculative bubble the stock market has ever seen, the tech bubble finally reached its apex with a handshake on the tenth day of the new millenium with the merger of AOL and Time Warner. But before it was clear that this, the biggest deal in history would ultimately go down as the worst, Internet fever would only grow. Click ahead to see some of the companies most intrinsically linked to growing, and ultimately bursting the tech bubble. Dasgupta, A. “Cultural Dynamics in International Negotiations.” Social Science Research Network, 2005. Web. 6 Nov. 2012. Gleiberman, Owen. Movie review: Startup.com. Entertainment Weekly, 9 May 2001. Web. 4 Nov. 2012. MOVIE REVIEW Startup.com (2001) MPAA RATING: R Reviewed by Owen Gleiberman | May 09, 2001 Vrh obrasca Dno obrasca PARADIGM LOST Herman and Isaza Tuzman toast the future in Startup.com Critical Mass How other reviewers grade this film 88REVIEWS More reviews about this filmPOWERED BY MRQE.com SHARE THIS ARTICLE EWs GRADE A DETAILSRelease Date: May 25, 2001; Limited Release: May 11, 2001; Rated: R; Length: 103 Minutes; Genre: Documentary; With: Tom Hermanand Kaleil Isaza Tuzman; Distributor: Artisan Entertainment Its not every day, or every decade, that you get to see a film as eye opening in its timeliness asStartup.com. The movie, which documents the heady rise and even more spectacular fall of an Internet start-up company, feels as if it had been shot through a crystal ball -- it seems to anatomize the whole debacle of the dotcom universe -- yet its remarkable prescience is more than a matter of happenstance. Startup.com is a revelation not merely because a couple of smart filmmakers got lucky, hitting the news headline jackpot just as the Nasdaq nosedived, but because the film, which for sheer dramatic wallop outpowers virtually every fiction feature Ive seen this year, embodies the story of our time, the way that the collusion of money and technology has taken over our dreams. Produced by D.A. Pennebaker, and codirected by his collaborator Chris Hegedus and by a new member of the team, codirector Jehane Noujaim, the movie follows the path of two naively ambitious entrepreneurs in their late 20s. The hulky, high fiving, charismatically bullheaded Kaleil Isaza Tuzman and his nerdish, compartmentalized tech head partner, Tom Herman, have been friends since high school. As the film opens, in 1999, they pool their desire to get rich into a kind of new millennium vision quest. They bark and strategize into their cell phones, pumping up their troops with group cheers. They visit the offices of venture capitalists, raising heroic sums of cash, and they stand around a Manhattan pizza parlor, debating the name of their new company like teenage rockers trying to title their garage band. Theyre digital geek Horatio Algers, and they brandish a willed attitude of locker room swagger descended from the fast lucre Wall Street cowboys of the 80s. With much noise and fanfare, Kaleil and Tom declare their intention: They will launch govWorks.com, a bold new website designed to link people up to local municipalities. In essence, this comes down to a newfangled way of paying parking tickets. From the outset, though, theres a frantic, often very funny instability to the way that these young mens fantasies of megasuccess appear to be driving their business plan, rather than the other way around. Kaleil is the CEO, and his baby faced bravura sets the tone for what is, essentially, a group of overgrown adolescents posing as businessmen. Their showy and advanced communications systems -- the cell phones and computer flow charts, the magic jargon phrases like first mover advantage -- are really go-go signifiers, a way of imparting an aura of importance to everything that occurs, so that the act of forging a destiny becomes more central than the destiny thats being forged. These guys have all the trappings of success, and the investment cash, too. So what goes wrong? A failed trip to Silicon Valley provides an early omen of doom. Along the way, theres an amusing visit from an Atlanta competitor (he strolls through the govWorks offices as wily in his folksy charm as Bill Clinton), as well as a hilarious glitch in the website itself; an office break-in may even be sabotage. More than any of that, though, govWorks, like so many online ventures, turns out to be a half-baked concept, a traditional, even banal idea with the mystical cachet of dotcom attached. The site launches, but it is hardly the oasis of convenience its meant to be. The whole fake patriotic generosity of the idea -- i.e., that the company exists to help people -- is driven by the same cult of the Internet arrogance that allows the act of sitting at a desk staring at a computer screen to be dubbed a revolution. Does anyone at govWorks even realize that a parking ticket is already quite easy to pay? The central figure, and one of the indelible movie characters of the year, is Kaleil, who has left his job at Goldman Sachs in an act of lone gun rebel moxie. (The joke is that hes behind the curve: By mid 1999, dotcom pioneers were already starting to cash out their options.) Sexy yet soft bodied, a Jewish Colombian who prays before deals, Kaleil, with his you know Im right grin, can be unbearable in his New Age Art of War sharkiness, yet its the depth of his self delusion that makes him such a complex and strangely appealing figure. Amid the market frenzy, he ends up as a guest on Digital Jam, and also at a White House roundtable broadcast on C-SPAN, where hes introduced by President Clinton (to whom he slips a business card). Yet the more we see of Kaleil, the more we catch the boyish glint of self doubt that dances beneath his bluster. Edited down from 400 hours of video footage, so that each scene plays like a rich chapter of its own, Startup.com may be to our time what Wall Street was to the 80s -- a defining myth of capitalist excess. True, this is a documentary, but thats precisely what makes it such a quintessential reflection of the 90s boom, when financial news, fueled by the numbers crunch melodrama of CNBC, became entertainment -- a drug rush for a nation of day traders, inflating the very market that had seduced their inner greedhead. Kaleil and Tom express loyalty, even love, to each other, yet as their business breaks down, so, inevitably, does their trust. The entire relationship is filtered through fickle layers of profit logic, so that what were seeing isnt just a harbinger of the dotcom downturn. Its the fallout of a society in which the prospect of instant riches has become a surrogate for identity, a replacement for self. Startup.com lays bare the moment when America embraced the grand illusion that said, I go public, therefore I am. Horst, Paul R. Cross – Cultural Negotiations. Air War College, 2007. Web. 9 Nov. 2012. Harvard Business School. Harvard Business Essentials: Negotiation: Your Mentor and Guide to Doing Business Effectively. Boston: Harvard Business School Publishing, 2003. Print. Kehoe, Louis. “Shut – down of a start – up.” Financial Times, 26 Jun. 2001. Web. 4 Nov. 2012. Shut-down of a start-up A film about the collapse of one dotcom contains the story of a hundred other failures Published: June  12 2001 17:08GMT | Last Updated: June 26 2001 17:39GMT Persuading hard-working founders of Silicon Valley start-up companies to find time to go to the cinema would usually be a challenge. But half a dozen founders of companies ranging in size from a three-person fledgling to a public company with 250 employees jumped at the chance, last week, to see Startup.com. This fly-on-the-wall documentary chronicles the formation, funding, achievements and disintegration of GovWorks.com. The dotcom company, dating back to 1999, aimed to create a service linking citizens to government services, letting them pay for a parking ticket or apply for a building permit online. Kaleil Isaza Tuzman and Tom Herman, the founders of GovWorks.com, like so many other entrepreneurs who jumped on the internet bandwagon in the late 1990s, were bright, excited twenty-somethings, convinced they were destined for fame and great wealth. Startup.comis their story but it is also the bitter-sweet tale of hundreds of other failed companies. At the height of the internet boom these would-be millionaires would drop by the FTs office in San Mateo - sometimes at the rate of several a day - to share their "visions" and their PowerPoint slides. Often they came by after meetings with venture capitalists who, they typically claimed, were vying to put money behind their "huge" ideas. Most of those start-ups have, like GovWorks, long since been sold or gone out of business. GovWorks lives on only thanks to Chris Hegedus and Jahane Noujaim, whose cameras captured every human and business aspect of the saga: the dreams, the exhaustion, the arguments, the victories and the defeats. The film won the grand prize at the recent Sundance Festival. There was plenty to satisfy those looking for further evidence of the stupidity of internet mania. "It captured well the consensual hallucination of last years dotcom frenzy - the arrogance of the venture capitalists, the narcissism of the entrepreneurs, the naivety of the employees and the tragicomedy of too much money chasing too many bogus ideas," said Larry Bohn, chief executive of NetGenesis, who added some "east coast perspective" and saw the film in Bostons Kendall Square. The group who saw the film in Palo Alto - ground zero of Silicon Valley - were more generous. They saw the film as an "inside the bubble" perspective of an internet company. The logic of driving for growth at all costs, with seeming disregard for profits, may sound crazy today - but that was what bubble-era companies were expected to do. The rules were different. The issue that gripped the Silicon Valley group was why GovWorks had failed. As more than one of them acknowledged, the line between success and failure is uncomfortably narrow. Timing, or luck, plays a bit part in the success of all start-ups, said Alan Huang, chief executive and chief technology officer at Terabit, which is developing networking equipment. GovWorks failed in part because of unlucky timing. "It was relatively easy for GovWorks to get funding a couple of years ago. Now it would be very difficult. A couple of years ago it was difficult to get funding for hardware; now it is considerably easier; but six months ago it was difficult." The founders of GovWorks did a lot of things right, said Daphne Carmeli, chief executive and co-founder of Metreo, an e-business software start-up. "They identified a need, rather than merely introducing a technology. So many start-ups are founded on a build it and they will come mantra." But Kaleil and Tom also made a lot of mistakes, the worst of which was failing to determine who was in charge, the group said. The tensions between the GovWorks founders stood out to Ofer Matan, co-founder and chief technical officer at Blue Pumpkin Software, which has developed software for workforce scheduling. "Doron [Aspitz, Blue Pumpkins chief executive] and I have worked together for four or five years," said Mr Matan. "We each know our roles. Perhaps it is a matter of maturity. "The chief executive should be a visionary and enabler to other parts of the business but delegate those parts to others to own," added Ms Carmeli. Originally, it appears, the film-makers thought they were following a success story that would end with an initial public offering. At one point during the film, Kaleil is pictured sitting next to Bill Clinton, then US president, at a White House press conference. But the story of the film ultimately becomes that of the deteriorating relationship between the two founders and their struggles over which is in charge. Towards the end of the film, Kaleil fires Tom - and GovWorks never recovers. "The founders of a company own the dream. Every time a founder is fired it is a bad decision," said Herb Stephens, chief executive of Outcome, a San Francisco start-up that has developed an online payments aggregation system. Eli Barkat, who is chief executive of Backweb Technologies, developing internet "push" technology, and a former founding partner of BRM Technologies, Israels leading incubator venture firm, put the failure of GovWorks down to the lack of a good business model. "Most successful companies have problems; none of them is perfect. This pair had enough of everything to be successful but they did not have a good business model." Mandeep Khera, who joined the founders of Maaya, a web services pioneer, in January as chief marketing officer, took a different tack. "You need all of the ingredients - good technology, good business model, good venture capital backing - but ultimately it comes down to people. People make companies and people break companies." To close the evening, I asked the Silicon Valley group whether they would have allowed the cameras in on their start-up companies, had the opportunity presented itself. Most felt that the cameras might have been too intrusive. Some believed that the GovWorks founders had been distracted by the filming. Yet had GovWorks been successful, the film would have been a marvellous marketing tool. And who would not want to have a record to look back on that documented the history of an exciting episode in his or her life? I suspect that all of these company founders would want to star in Startup II - providing the ending were different. Contact Louise Kehoe Kersten, Gregory E. “Modeling Distributive and Integrative Negotiations. Review and Revised Characterization.” Group Decision and Negotiation, 2001, 10.6 (2001): 1 - 25. < http://www.springerlink.com/content/l5854658g131x8u2/> Kuemmerle, Walter. “A Test for the Fainthearted.” Harvard Business Review (2002): 4 – 8. Web. 5 Nov. 2012. Lewicki, Roy J., Barry Bruce & Saunders, David M. Negotiation. McGraw – Hill/Irwin, 2006. Print. Read More