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Dr. Koop and The Bubble

dcurt.is

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Re: Dr. Koop and The Bubble

#31

Post by jroseattle »

Ah, the good old days.

It was 1999, we had just moved to Seattle, and all these people I had just met who were in their early 30's were retiring from Microsoft. Not just from MS -- they were retiring. Near the millenium, with the stock sitting at about $120/share, a good friend who had started at MS as a receptionist and moved all the way up to program manager (a rather common title, in those days) decided to call it quits. She cashed out, worth some $7.5MM, bought property on the Baja in Mexico and left town. Never saw her again.

Then, after the bubble popped in March 2000, I can recall people losing their million-dollar homes in Queen Anne because they had secured the purchase with options on IPO stock. All the sudden, their paper was worthless -- and a lot of people were left scrambling.

I remember stories of people who leveraged all this paper wealth, only to be left upside-down in the blink of an eye.

Such foolish times for people with resources.

Re: Dr. Koop and The Bubble

#32

Post by muzz »

jt2190 wrote: post #26
muzz wrote: post #23

Earlier quoted context omitted.

I'm always amazed at the immediate discounting that is given to WebVan. They had a long-term vision that will eventually be realized by some other company or companies-- to have a van come regularly to your home, not only to deliver things (like groceries, but also consumer goods, electronics, etc) but also to pick things up while they are there-- your drycleaning, movie rental returns, film rolls to be processed (it…

I remember coming up with an idea for home grocery delivery using the internet to place orders. (This was in 1995 or 1996 I think... before I'd heard of WebVan) Ten minutes of scribbling on an envelope convinced me that the idea could not be profitable, except perhaps for a niche market that was already well served. When WebVan arrived, I was curious to see how they'd overcome the obstacles. They didn't. No doubt som…

WebVan was profitable in the SF Bay Area from early on, and profitable in Southern California as well. So yes they had a lot more than "vision". They expanded too rapidly and the losses in those other geographic markets is what did them in.

Re: Dr. Koop and The Bubble

#33

Post by adventureful »

JVIDEL wrote: post #21
adventureful wrote: post #16

Earlier quoted context omitted.

I disagree. There's a difference between valuing NeXT as a business and valuing Steve Jobs as a visionary or creative genius. Investors didn't believe in the business prospects of NeXT, but Jobs was still very highly regarded by the valley.

NeXT wasn't a terrible business and it had many of the same ideas that AAPL uses today, like top-of-the-line industrial design. Do you even realize there were 5 years between Jobs arrival at AAPL and the iPod right? 3+ years if we count the time it took the iPod to become a true sensation. Add to that 11 years since he had been kicked out from AAPL. You seem to believe that Jobs was always in the limelight, when the…

NeXT was a terrible business, it never turned a profit, and bled money endlessly. The products were often good, but they were extremely expensive and were never quite matched properly to a market. NeXT was such a terrible business, Jobs was nearly at a point of having to shut it down when Apple purchased it because it couldn't stand on its own as a hardware company any longer.

The reason VC never touched NeXT was the hyper valuation Jobs placed on it from day one. Before it had any products or any sales, he slapped a $100+ million valuation on it, which was a lot of money back in 1986, and a huge valuation for any VC to touch without any sales or product.

It would have been trivially easy for Jobs to get VC money at a sane valuation.

And yes, I realize there were five years between the iPod and Jobs arrival. So what? The point was the iPod is what revived Apple and set it on a huge upswing (which is also why the stock didn't move until 2003 as the iPod sales rolled in). The work that was done on the iMac got Apple back to stable ground as a business, the iPod sent it on a skyrocketing trajectory.

The valley absolutely believed in Jobs. He was a big reason the NeXT products were often good, and the valley saw that. The fact that the valley believed in him is why he was able to sell NeXT to Apple for so much money in the first place, and why he was able to take the helm at Apple again in the second place.

Re: Dr. Koop and The Bubble

#34

Post by leak »

georgieporgie wrote: post #30

Near the peak of the bubble, I was at the gym in Phoenix, AZ. Two guys on the stationary bikes in front of me were talking. "I just bought AOL at $ X today." There was a look of resigned exasperation between them over how high the buy-in was. "But hey, you know, it can only go up from here, right?" That was about the time I started moving my 401k into bonds for awhile. :-) Incidentally, for the younger folks, one of…

Almost the same story a friend of mine told me about how he knew when it was time to cash out. "I was at 7-Eleven and the clerk was talking to the customer in front of me about what stocks they were buying. The next day I sold all my stocks."

Re: Dr. Koop and The Bubble

#35

Post by The_Sponge »

JVIDEL wrote: post #21
adventureful wrote: post #16

Earlier quoted context omitted.

I disagree. There's a difference between valuing NeXT as a business and valuing Steve Jobs as a visionary or creative genius. Investors didn't believe in the business prospects of NeXT, but Jobs was still very highly regarded by the valley.

NeXT wasn't a terrible business and it had many of the same ideas that AAPL uses today, like top-of-the-line industrial design. Do you even realize there were 5 years between Jobs arrival at AAPL and the iPod right? 3+ years if we count the time it took the iPod to become a true sensation. Add to that 11 years since he had been kicked out from AAPL. You seem to believe that Jobs was always in the limelight, when the…

He was booed possibly more out of fanboy-ism than anything else. Remember, at the time, the "Mac Community" was tiny, tightly knit, and viewed Microsoft and Bill Gates as Satan personified. Hell, there was even a mailing list called the Evangelist.

Re: Dr. Koop and The Bubble

#37

Post by BradleyStC »

If like me you were too young to witness the madness that existed back in the .com bubble, an interesting documentary to watch is Startup.com. It's a fly on the wall flick that documents the rise and fall of Govworks.com. (1998 - 2001) from almost day 1. Although their fall seemed more attributable to poor management than being bitten by the bubble, it's a good watch. (There's some lessons to learn there about time spent wooing VC's vs. time spent growing the business). I saw it for the first time yesterday...

http://www.imdb.com/title/tt0256408/ http://en.wikipedia.org/wiki/Startup.com

Re: Dr. Koop and The Bubble

#38

Post by lifeisstillgood »

SoftwareMaven wrote: post #10

One big thing people don't ever talk about is how much more expensive it was to get a site running back then. I was hitched to one of Utah's brightest dot-coms in 1998, and building a basic web portal was a LOT of work. Consider our building blocks: Oracle or MySQL and Java with servlets. Everything else was written in house, because the open source alternatives were all currently being written in-house elsewhere (or…

That is a great summation.

Re: Dr. Koop and The Bubble

#39

Post by dugmartin »

taude wrote: post #36
earino wrote: post #5

WebVan was great too. Some pretty impressive hubris.

Kozmo.Com was another good one ( http://en.wikipedia.org/wiki/Kozmo.com ).

Yes, I remember ordering a single candy bar from Kozmo when I worked in Chicago in 1999 just to see if they would deliver it. They did.

Re: Dr. Koop and The Bubble

#40

Post by 1234the1234 »

jt2190 wrote: post #26
muzz wrote: post #23

Earlier quoted context omitted.

I'm always amazed at the immediate discounting that is given to WebVan. They had a long-term vision that will eventually be realized by some other company or companies-- to have a van come regularly to your home, not only to deliver things (like groceries, but also consumer goods, electronics, etc) but also to pick things up while they are there-- your drycleaning, movie rental returns, film rolls to be processed (it…

I remember coming up with an idea for home grocery delivery using the internet to place orders. (This was in 1995 or 1996 I think... before I'd heard of WebVan) Ten minutes of scribbling on an envelope convinced me that the idea could not be profitable, except perhaps for a niche market that was already well served. When WebVan arrived, I was curious to see how they'd overcome the obstacles. They didn't. No doubt som…

You were right about WebVan not being able to make enough money. Because it deals in everyday items(groceries, dry cleaning etc). These things have notoriously low margins.

Pizza is the classic delivery model because a pizza is really cheap to make(beyond the upfront equipment), but the margins are enormous, because the buying public has it in their head that it's worth more. And they still have to squeeze drivers down to $4/hr and make them use their own cars.

We have to be careful in having too much faith in magic capitalism thinking. Money doesn't always line up with the most useful, beneficial or really anything else. Often there are correlations between the two, but you must be very careful to automatically tie them together.

Profitable things are profitable. Nothing more, nothing less. I know that sounds silly to read, but it's very important to keep that in mind if you are concerned about profit.

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