AZnomicsThe Dot-Com Bubble
$5 trillion evaporated when the market realised stories aren't businesses
"Pets.com raised $82 million, spent $11 million on a Super Bowl ad, and was bankrupt nine months later."
Between 1995 and 2000, the internet convinced investors that the old rules of business no longer applied. Profitability was irrelevant. Revenue was optional. All that mattered was growth and eyeballs. The Nasdaq rose 400% in five years. Then it fell 78% — and took 15 years to recover. $5 trillion in market value disappeared.
The internet was genuinely revolutionary — investors weren't wrong about that. What they got wrong was valuation. Companies with no revenue were worth billions because investors assumed they would eventually dominate vast markets. The mantra was "get big fast" — acquire users at any cost, worry about making money later. Venture capitalists funded anything with ".com" in the name. Investment banks rushed IPOs to market before anyone could do proper analysis.
Webvan raised $375 million to deliver groceries and went bankrupt. Boo.com burned through $135 million in 18 months building a fashion website that barely worked. Kozmo.com promised one-hour delivery of anything and lost money on every order. These weren't minor failures — they were celebrated, funded, and IPO'd. The collective delusion was industrial scale.
The companies that survived — Amazon, Google, eBay, Salesforce — did so because they had real business models or adapted fast. Amazon's stock fell 94% during the crash. Bezos kept building. By 2024 Amazon was worth $2 trillion. The dot-com crash didn't kill the internet. It killed the fantasy that all internet companies were equal, and left the field to the ones that actually understood unit economics.
Narrative can inflate valuations to absurd levels when investors believe they're witnessing a once-in-a-generation shift. The shift was real. The valuations were not. Price always reconnects with value eventually — the only question is how violently.