―Joan Didion

A TEST OF CHARACTER

In the early days of the Internet, when professional business people jazzed with the possibilities of cheap online access would complain to me about the dearth of great web sites, my stock line was, "The Internet is the world, and there is just as much small-mindedness and venality on the Net as in the real world, and just as few moments of wit and grace." I think now that easy money may have magnified the venality.

With too much stupid investors' cash chasing too few good business ideas, during the 1990s tech boom-and-bust it was easy to confuse luck with talent. For many people, especially many younger people just out of college, the Internet era created employment expectations that were bound to be shattered: BASIC programmers making $120,000 per year; English majors pushed into $80,000 customer service jobs; office coolers stocked with free Snapple, big holiday bonuses, foosball tournaments every Friday, and nobody wore a tie.

For the GenX Internet cohort, I'll bet the formative experience won’t be the good times at the peak but rather the big bust that came with the millenium. A decade from now the young people from that era will remember the broken dreams and the hard times afterwards more than the 20 or 30 months of wealth and promise. It's almost like a new Depression Era generation who'll be more skeptical and circumspect. Some of the lessons we learned are good ones, I think, and should make us more prepared and more pleasant the next time business gets good.

• Don't count other people's money.

• Don't count your own money until it's in the bank.

In 2000 I lost $7 million on the stock of a start-up I helped launch that went public. I never had the $7 million to begin with, it was all only paper profit. I knew it wasn't real, I told myself not to count on it, and I never talked about it to anyone. But when it disappeared with everybody else's inflated Internet earnings, it took with it dozens of daydreams that I had fallen in love with. I wonder about the psychological recession that was sparked by all of those stock option millionaires who's similar daydreams were shattered, and I often think that that's a more important loss than the merely theoretical money.

• Lush lives generally end badly.

In the Boom years you could smell the money burning at some start-ups. The Aeron chairs, the fancy PR campaigns and SuperBowl ads, the armies of vice presidents of this-and-that could never be paid for from the profits of honest business. Adolescent VCs who can net 1,000% on a successful deal don't seem to understand that most companies have to get by with 20% or 30% profit on sales; they think every office needs a $50,000 conference table.

• Vision is not enough.

When an Internet executive started talking about paradigm shifts, first-to-market advantage or monetizing clicks, it often meant that he had too much vision and not enough profit potential. All the snide comments about bricks-and-mortar people who "just didn't get it" obscured the fantasies of many business plans that would lose money on every customer but make it up in volume. If it sounds crazy, maybe it is crazy.

• What goes around comes around.

Some people wear their success well, others are conniving, self-indulgent, duplicitous and intolerant all the way up the ladder. When the going gets tough, it gets even harder to do the right thing, to tell the truth, to live clean, but good people endure and the dregs get flushed out of the system in time. \\

Go back to Part I.