The Dot-Com Collapse

The bubble began to form due to an increase in computer and internet usage. Previously, computers were only available to the military, universities, corporations, and the wealthy. During the 1980's personal computers hit the market at a low enough price point to put them in the hands of the middle class. The invention of the World Wide Web in 1990, followed by the Mosaic browser in 1933 brought about a whole new world of possibilities for what could be done on the internet. Investment started pouring into different tech companies as investors saw the opportunity the web provided and wanted a piece of the pie. These tech companies were constantly getting increasing valuations without the company making any profits yet or even if they operated at a loss. A prevailing practice in the industry was to "get big or get lost" leading people to expand and hire more than they could afford, meaning that they relied directly on investment money to stay afloat.  The situation became completely chaotic as people were making so much money that they were blind to traditional investment strategies. Pretty much every tech company was being invested in regardless of the risks because people were so confident in the potential of the technology, overlooking the potential (or lack thereof) of the company itself. Mr. Fry spoke of his experience during his time in the tech industry as absolute insanity, saying that at one point he had a million dollars set aside for him to make a movie just for fun. We saw a firsthand account of this in the documentary Startup.com when Kaleil went from just starting their business to being on the cover of Forbes magazine and meeting the president in a matter of months. Just like in the documentary, the collapse of the bubble burst just as quick as it had formed.

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