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15 Years Later: The Rise and Fall of the Dot Com Business Boom

There was a period, not long ago, when the idea of advertising and making money with the internet were new and uncharted ideas. Then, in the mid 90s, everything changed and businesses everywhere found a new platform and potential revenue stream

Author: Elad Domb
Date: Mar 7, 2011 - 11:33:15 PM

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Advertising is in part what makes the internet in 2011 possible. There are ads tailored to individuals based on their surfing habits, search tendencies and past purchases. Ads appear on just about every site in one form or another. Advertising and the notion of internet commerce are common place today, but there was a period, not long ago, when the idea of advertising and making money with the internet were new and uncharted ideas. Then, in the mid 90s, everything changed and businesses everywhere found a new platform and potential revenue stream - the internet was going to make every entrepreneur rich and every existing business seem original again. And for a while, it all happened as planned. Until the great dot-com collapse.

1995

The internet was fledgling, slowly beginning it's inevitable transformation into the ubiquitous utility it is today. Broadband connections were the exception, not the rule, and monetization via advertising was in it's infancy. Indeed, the digital age was not quite upon us. Iphones hadn't been invented, there was no such thing as social networking and music and movies were still available on tapes(!). But big things were in the offing, change was coming, and an entire new sector of business and revenue was about to become a reality for many people. The "dot com" revolution and business boom were about to happen.

With internet usage becoming more prevalent amongst the mainstream public, it was only a matter of time until opportunity and commerce would enter the picture.

At the time, domains purchased on the web all used ".com", and because of this, most businesses started up during this period are broadly referred to as "dot coms". The idea of using the internet as a platform for your business is simply another avenue to increase revenue nowadays, but in the mid 90s this was still a very new concept, and as such, there were not many experts on the subject and no one had any real prior experience or frame of reference. Enthusiasm for the idea of business on the internet was replacing traditional business acumen.

Many businesses were created seemingly overnight. Companies were being founded faster and faster, as it seemed, on the surface, that one only needed to buy a domain name and spend on high-speed network equipment to make it all work. New businesses worked feverishly to build clientele, eschewing any of the practicality that is usually practiced and observed when starting out. Existing companies were getting in on the act just as quickly, with their reputations already established, many simply added an ".com" or "e-" to their established name and doing so would see immediate gains in their stock profiles. Dot-com's were sprouting up everywhere and successful commercial growth seemed all but assured. But for many, spectacular failure and financial loss were also just around the corner.

As there were no guidlines, no established protocol and no real proven examples to emulate or observe, many of the dot-com's crashed and burned just as quickly as they appeared. Many businesses were swept away simply because the owners didn't have any idea what to do, how to grow their new business, once they had established them. Without the capial necessary to sustain a new business while a customer base and awareness is established, there was simply no way for many of these companies to stay solvent.

By the year 2000, the dot-com "bubble" had finally burst. An overwhelming number of dot-com's had folded up shop and disappeared, having used all of their available resources. No longer useful domain names were being bought up by the competition, bankruptcies were being filed and layoffs and consolidations were common place. With the floor finally having dropped out, the meteoric rise of the internet business boom had come inevitably crashing back to reality.

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