The Dot-Com Bubble - 5 Minute History Lesson

this video is sponsored by Squarespace go to Squarespace comm saj the plain bagel to save 10% off your first purchase of a website or domain using code the plain bagel in the world of finance we are often quick to forget the tragedies of the past yet valuable lessons are to be had by exploring their causes and effects after all in world of ever-changing rules products and services history is the one constant that can guide us through the ambiguity so let's take a five-minute history lesson on today's plain bagel it's early 1993 and the Internet is kind of poopy I'm sure the ability to transfer data globally in developments like the World Wide Web have been revolutionary but only 2.3 percent of the u.s. population is actually online because unless you're techy it's not that easy to use that is into the release of mosaic I user-friendly home internet browser that shows pictures alongside text the first to do so suddenly view in the Internet's isn't so hard lean web traffic to increased 1000% within a month mosaics release and has a website's bumpin entrepreneurs make a move after all with the internet in its infancy there's a lot of untapped potential and with interest rates at their lowest point since 70s starting to come B's easier than bringing cups to a potluck so before long all kinds of com company starts showing up from online retailers to search engines early social media pages dope doesn't take long but the real gold rush comes late nights 95 all things to a company called Netscape Communications you see Netscape us launched its own internet browser no one has navigator then with its faster or easier to use interface it's made quick work of mosaic mosaic Kirra was it that's good I'll write that down but anyway even though Netscape is losing money to costs the founders decide to cash in on the browser's success through an initial public offering now normally investors are looking for companies with solid profits to invest in but let's cape is different every time their dog is his navigator and with Internet adoption accelerating you'd have to be a dummy to pass upon the opportunity so the stock goes public and on its first day of trading its price doubles with a Messer demand pushing the company's market capitalization to 2.7 billion dollars in a matter of minutes something that took General Dynamics 43 years it's a huge success with Netscape reaching Rockstar levels of Fame inspiring a wave of entrepreneurs and exciting investors and with the proverbial gates of valhalla now open we entered the internet age as people flock to achieve their own on Loree before you know it auction sites web portals internet radio and even if we delivery service are coming online with new companies revolution I seen life as we know it and experiencing food sales growth right out the gate not to mention investors are tossing money at every I feel they can now sure companies are spending out there Yahoo for this growth so after costs their profits are pretty well non-existent but hey this is the internet we're talking about the biggest thing since sliced bread if you want to make it big you've got to be spending to grow your business besides with the banking industry convincing investors that lost it now just being larger profits down the road there's plenty of money keeping the dream alive so it all comes continue to splurge when the investor funds on advertising acquisitions fancy offices fat paychecks and all expenses paid vacations and parties for voice you know the essentials and for the most part times are good by 1999 the tech-heavy Nasdaq has doubled with even telecom and equipment companies getting in on the action building out infrastructure and enabling companies to explore the boundless frontiers of the Internet but before long troubling tides begin to emerge with salesgirls becoming the only thing investors care about companies are employing growth at all cost tactics song units a loss Bunny excessively on marketing and making least the acquisitions to keep up their growth worse yet some companies are simply adding comp to their name to get in on the height with others going public without even having a finished product but investors have been convinced to look past outdated metrics like profitability and valuation so they're buying up anything with a pulse in a domain something that only intensifies when rumor surface of an impending computer calamity y2k a calendar bug that threatens to end technology as we know it the scare leads to a wave of computer equipment upgrades boosting business activity and pushing markets into an outright mania sock start seen four hundred five hundred million seven hundred percent returns on their first day of trading with other takers rising above one thousand percent in 1999 alone people are leaving their day jobs trade stocks full-time and as more companies battle for online real estate they start to feel like a fever tree Whoopi Goldberg is advertising and crypto wannabe people are scanning barcodes with cats and an online retailer has spent millions to make a sock puppet a nationally recognized mascot after mere months of existence and on March 10th 2000 the Nasdaq opposite Index hits five thousand and forty eight points a bubble two hundred times the size of underlying earnings but while it would take the index only five years to rise over five hundred percent it would take only half that to undo it all you see what the Federal Reserve planning on aggressively tightening Terry policy in insiders Kashi note Salim pressure has been on the rise not to mention that after crazy spending people just don't need as much computer equipment or online retailers so in March 13th when it's announced that Japan has entered a recession the nasdaq slips suffered its fourth largest loss up to that point is enough to spook investors and get them questioning whether their companies can survive without their tech capital we answer no not really as it happened off da coms find themselves burning through cash and with promised profits failing to materialize things go from Mamma Mia to red wedding the real quick within months companies add reached 100 million dollar valuations become worthless in markets tumble as management mishaps --n even fraud come to light the March of 2001 the US is in a recession and on October 9th 2002 the Nasdaq bottoms out a 1114 points a seventy seven point nine percent decline from its peak over four hundred and fifteen thousand IT jobs would be lost as a result of the tech crash who take the nasdaq fifteen years to recover while some homes would survive and actually go on to prosper half would fail by 2004 with many others becoming but shadows other former selves oh and as for Netscape the company that arguably kicked this all off it would lose its market share to a program release just a week after its IPO Internet Explorer and while AOL would acquire the company its name in that of thousands more would eventually fade into obscurity it goes to show that not all that glitters is gold and while a great idea can send stock prices to unfathomable levels it takes but a reality check to pop a bubble thanks for watching despite the dot-com crash the internet and by extension the web did of course go on to revolutionize the world just not the way many of us had hoped for in fact while the number of websites online grew during the bubble they continued rising after the crash and currently sits around 1.7 two billion or should I say 1.7 two billion in one because doesn't right now the plain bagel calm is live that's right thanks to Squarespace who sponsored this video I now have my own com but don't worry this one's just for fun and no one can deny having a website is an important part of building a brand especially when you've named yourself after a popular bread but yeah if you want to learn more about the channel or check out some of the resources i've linked to in past videos you should check it out and 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Channel: The Plain Bagel

Views: 338,929

Rating: 4.888474 out of 5

Keywords: The Plain Bagel, Dot-Com, dotcom, bubble

Id: 25_WjiZnvQk

Length: 6min 57sec (417 seconds)

Published: Fri Feb 07 2020