TweetFollow Us on Twitter

Aug 00 Viewpoint

Volume Number: 16 (2000)
Issue Number: 8
Column Tag: Viewpoint

Viewpoint

by Jordan Dea-Mattson

Of Tulips and Dot.COMs

A Mania for Tulips

In his book Extraordinary Popular Delusions & the Madness of Crowds, Charles MacKay recounts the history of the Danish Tulip Mania of the 17th Century. It is a fascinating story that has definite lessons for us today.

Tulips were originally introduced to Europe from Turkey in the mid-1500s. Their beauty made them popular among the well to do and having various varieties in your garden soon became a status symbol, if not a requirement for being considered a cultured individual. Soon, connoisseurs, desiring to one-up one another, would focus on getting the right variety of bulbs, so that their gardens would be "just right".

As you might suspect, as the popularity of tulips grew, the demand for tulip bulbs drove their prices higher and higher. Ordinary people seeing the price for individual bulbs double and then double again soon started buying them - not to have them in their gardens - but as investments.

Holland was hit particularly hard by the mania for tulips. An entire industry of tulip exchanges and brokers sprung up, and soon ordinary folks were emptying their bank accounts and mortgaging their homes to get in on this sure-fire way to riches.

A "crash" - or to use the new and improved, politically correct phrase, a "correction" - finally came, and when it did it was bloody. People lost their homes. Families were bankrupt. People's "sure thing" investments in tulip bulbs returned to being what they were originally: the source of beautiful flowers.

Today's Tulips

For the last several years - up through March of this year - anything that smelled of "dot.com", "Internet", "digital convergence", or "new economy" was the "sure thing" that would bring you untold riches. For a while - as in the Danish Tulip Mania - it seemed to hold true. You could invest in almost any "half-baked" idea - and lets be honest here, they were ideas not companies - and you would double your money in a couple of months.

But when you dug into these ideas you found that many of them weren't and wouldn't ever be ready for baking. People were launching magazines on the Internet - a very tough business, just ask our publisher - like Salon.com, and commanding valuations that you would never find placed on an established magazine with a stable subscriber base and lots of faithful advertisers. It was absurd.

Even that darling of the Internet's new economy, Amazon.com - which when you dig into it is only a very slick and efficient retailer - was and still is, even at around $30 a share, absurdly overvalued.

And like in the Danish Tulip Mania, a whole industry has grown up around the trading of our latest mania. There are web sites - many of which, in the greatest of ironies, have gone public as part of our Internet Mania - chat rooms, magazines, and mutual funds, all of which are focused on driving the Mania forward.

And, like the Danish Tulip Mania, our Internet Mania seems to be unwinding itself to an extent. As I write this column, the NASDAQ has finished a week long decline. A decline that has former Internet darlings like Amazon.com and e-toys further in the red than ever before. The mania part of the Internet seems to be - unlike the Danish Tulip Mania - imploding softly.

It Isn't All Mania

If you are reading this column, you in all probability agree with me that the Internet is going to change the way that we live across the board. You probably agree that we haven't seen but a glimmering of the beginning of the changes it will bring. This is true, but it is going to be a long-hard road to the "Promised Land". Unfortunately, it is going to be a long road with a lot of potholes along the way.

The mania isn't over. It has just subsided for a while. In the years ahead, there will be Internet related gold rushes from time to time. Gold rushes that will happen, because in large part "there is gold in them hills..." This is the fundamental difference between the Danish Tulip Mania and our present dot.com mania: if you dig hard enough, you can find value.

Making Money in a Gold rush

In the California Gold rush of 1849 - and any of the others I have studied - for every person that struck it rich prospecting for gold, there were hundreds that lost everything. It wasn't the miners or the prospectors that made fortunes.

The folks that struck it rich in each and every gold rush were those that provided goods and services to the miners and the prospectors. It was people selling denim jeans - does the name Levi-Strauss ring a bell, food, laundry service, tools, banking, and recreation.

This is a lesson that we should keep in mind as we survey the business prospects in the "new economy". Over the last few years I have watched friends and acquaintances stream into the businesses of the "new economy" one by one. I have seen them go to one "sure thing" after another. They have gone to web-tailers, and business to business exchanges. They have joined network infrastructure companies and system integrators. By and large they are all doing well, but the ones that are most secure are the ones that are selling something to the "miners" and "prospectors" of the Internet gold rush.

If you want to make your fortune on the frontiers of the New Economy, I recommend that you focus on providing services to the prospectors with stars in their eyes and cash in their pockets. But make sure that you get cash up-front, and try and get a piece of each claim that they file. Who knows, one of them might strike a mother-load.
 

Community Search:
MacTech Search:

Software Updates via MacUpdate

Latest Forum Discussions

See All

Six fantastic ways to spend National Vid...
As if anyone needed an excuse to play games today, I am about to give you one: it is National Video Games Day. A day for us to play games, like we no doubt do every day. Let’s not look a gift horse in the mouth. Instead, feast your eyes on this... | Read more »
Old School RuneScape players turn out in...
The sheer leap in technological advancements in our lifetime has been mind-blowing. We went from Commodore 64s to VR glasses in what feels like a heartbeat, but more importantly, the internet. It can be a dark mess, but it also brought hundreds of... | Read more »
Today's Best Mobile Game Discounts...
Every day, we pick out a curated list of the best mobile discounts on the App Store and post them here. This list won't be comprehensive, but it every game on it is recommended. Feel free to check out the coverage we did on them in the links below... | Read more »
Nintendo and The Pokémon Company's...
Unless you have been living under a rock, you know that Nintendo has been locked in an epic battle with Pocketpair, creator of the obvious Pokémon rip-off Palworld. Nintendo often resorts to legal retaliation at the drop of a hat, but it seems this... | Read more »
Apple exclusive mobile games don’t make...
If you are a gamer on phones, no doubt you have been as distressed as I am on one huge sticking point: exclusivity. For years, Xbox and PlayStation have done battle, and before this was the Sega Genesis and the Nintendo NES. On console, it makes... | Read more »
Regionally exclusive events make no sens...
Last week, over on our sister site AppSpy, I babbled excitedly about the Pokémon GO Safari Days event. You can get nine Eevees with an explorer hat per day. Or, can you? Specifically, you, reader. Do you have the time or funds to possibly fly for... | Read more »
As Jon Bellamy defends his choice to can...
Back in March, Jagex announced the appointment of a new CEO, Jon Bellamy. Mr Bellamy then decided to almost immediately paint a huge target on his back by cancelling the Runescapes Pride event. This led to widespread condemnation about his perceived... | Read more »
Marvel Contest of Champions adds two mor...
When I saw the latest two Marvel Contest of Champions characters, I scoffed. Mr Knight and Silver Samurai, thought I, they are running out of good choices. Then I realised no, I was being far too cynical. This is one of the things that games do best... | Read more »
Grass is green, and water is wet: Pokémo...
It must be a day that ends in Y, because Pokémon Trading Card Game Pocket has kicked off its Zoroark Drop Event. Here you can get a promo version of another card, and look forward to the next Wonder Pick Event and the next Mass Outbreak that will be... | Read more »
Enter the Gungeon review
It took me a minute to get around to reviewing this game for a couple of very good reasons. The first is that Enter the Gungeon's style of roguelike bullet-hell action is teetering on the edge of being straight-up malicious, which made getting... | Read more »

Price Scanner via MacPrices.net

Take $150 off every Apple 11-inch M3 iPad Air
Amazon is offering a $150 discount on 11-inch M3 WiFi iPad Airs right now. Shipping is free: – 11″ 128GB M3 WiFi iPad Air: $449, $150 off – 11″ 256GB M3 WiFi iPad Air: $549, $150 off – 11″ 512GB M3... Read more
Apple iPad minis back on sale for $100 off MS...
Amazon is offering $100 discounts (up to 20% off) on Apple’s newest 2024 WiFi iPad minis, each with free shipping. These are the lowest prices available for new minis among the Apple retailers we... Read more
Apple’s 16-inch M4 Max MacBook Pros are on sa...
Amazon has 16-inch M4 Max MacBook Pros (Silver and Black colors) on sale for up to $410 off Apple’s MSRP right now. Shipping is free. Be sure to select Amazon as the seller, rather than a third-party... Read more
Red Pocket Mobile is offering a $150 rebate o...
Red Pocket Mobile has new Apple iPhone 17’s on sale for $150 off MSRP when you switch and open up a new line of service. Red Pocket Mobile is a nationwide MVNO using all the major wireless carrier... Read more
Switch to Verizon, and get any iPhone 16 for...
With yesterday’s introduction of the new iPhone 17 models, Verizon responded by running “on us” promos across much of the iPhone 16 lineup: iPhone 16 and 16 Plus show as $0/mo for 36 months with bill... Read more
Here is a summary of the new features in Appl...
Apple’s September 2025 event introduced major updates across its most popular product lines, focusing on health, performance, and design breakthroughs. The AirPods Pro 3 now feature best-in-class... Read more
Apple’s Smartphone Lineup Could Use A Touch o...
COMMENTARY – Whatever happened to the old adage, “less is more”? Apple’s smartphone lineup. — which is due for its annual refresh either this month or next (possibly at an Apple Event on September 9... Read more
Take $50 off every 11th-generation A16 WiFi i...
Amazon has Apple’s 11th-generation A16 WiFi iPads in stock on sale for $50 off MSRP right now. Shipping is free: – 11″ 11th-generation 128GB WiFi iPads: $299 $50 off MSRP – 11″ 11th-generation 256GB... Read more
Sunday Sale: 14-inch M4 MacBook Pros for up t...
Don’t pay full price! Amazon has Apple’s 14-inch M4 MacBook Pros (Silver and Black colors) on sale for up to $220 off MSRP right now. Shipping is free. Be sure to select Amazon as the seller, rather... Read more
Mac mini with M4 Pro CPU back on sale for $12...
B&H Photo has Apple’s Mac mini with the M4 Pro CPU back on sale for $1259, $140 off MSRP. B&H offers free 1-2 day shipping to most US addresses: – Mac mini M4 Pro CPU (24GB/512GB): $1259, $... Read more

Jobs Board

All contents are Copyright 1984-2011 by Xplain Corporation. All rights reserved. Theme designed by Icreon.