The New World Order

October 3, 2000
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Web exclusive. One side of the Internet issue.

In the first part of the 1990s, the Internet opened up to private enterprise. The result was an explosion of activity that has changed the world forever. The Internet is hot, it's sexy; it's The Big Thing. Unfortunately, the glare coming off all this glitz seems to have blinded many otherwise intelligent people, and the net effect of the ‘Net has not been all positive. The Internet was once a place where the best of intentions prospered, where there was a sense of community and everyone helped each other. This sentiment still exists in some of the hidden jewels of the Web, but several factors have caused the Internet to be a big disappointment.

When the World Wide Web came into being, it raised the specter of the Global Information Society, a nebulous concept that many quickly grasped as the Holy Grail of commerce. Would-be entrepreneurs rushed into cyberspace, creating the new economy. The web page model lends itself well to online sales, and software advances have made it relatively easy to create a functional website with little prior experience. If you have more advanced requirements, or if the task appears too daunting, there are now thousands of web consultants to assist you. The ease with which a website can be set up is obvious from their sheer numbers. In June of 1995, there were 23,500 web servers on the Internet, and by June of 2000, there were 17,119,262*. Each of these web servers is capable of hosting multiple sites.

Along about the same time as the web was being developed, baby boomers were entering their most productive years. The largest demographic group in U.S. history had enough money to save, and retirement began to enter their minds. This created a constant inflow of new money into the capital markets of the world. The traditional investment model was turned on its ear by the web, which allowed many to bypass traditional stockbrokers and speculate on stocks directly. The Internet and its associated technology created an entirely new sector of the economy, which quickly became the darling of Wall Street. These and other factors created a confluence of enormous magnitude, fueling itself and spiraling with ever more vigor.

The law of supply and demand being what it is, some investors were able to achieve enormous returns as stocks in these new business start-ups, which sought after by so many others. A dot-com idea was a sure fire way to success. In the old economy, it took years for a start-up firm to reach the point where an initial public offering could be launched. In the new economy, it became a repetitive drill. First, you borrow money from angel investors who like your idea and believe in you. Next, you go through several rounds of venture capital financing. Investment bankers are the next stop, as you issue equity and debt offerings to investors. Money, often huge sums, trades hands each step of the way. This is a rather simplistic rendering of the process, but you get the idea. Greed replaced intelligence as people sought out the enormous potential windfalls.

The web allows entrepreneurs to potentially reach millions of people. This does not necessarily translate into easy sales, however. For Internet-based retailing to work, you must believe that people would rather sit in front of their computers to do their shopping while waiting days to receive their purchases. This seems to be accepted as completely plausible, even though our society has been described as focused on instant gratification.

Consider the story of boo.com, an online British sportswear outfitter. They closed down in May of this year, after 18 months and $135 million in venture capital. Their story is not unique; online merchants such as amazon.com have consistently spent millions of dollars without turning a profit. It’s not only the online merchants who have been losing out. Many of the web consultants who have sprung up are also in trouble. So-called e-consultants, some have watched their share price fall as much as 92 percent this year. Worldwide, billions of dollars have been lost on Internet start-ups; of course much of this money has not been truly “lost,” as much as it has simply been redistributed.

What does all of this mean to the land surveyor? The narrative is intended to show one of the dark sides of the Internet, a side that isn’t often talked about. So much attention is focused on the Internet, that many feel compelled to have their own website. An Internet presence is not a magical key to increased profits. Billions of dollars have been spent by some very smart people trying to cash in on the ‘Net. All of the hype surrounding the Internet has blinded many people to the truth. The truth is that the Internet is an excellent medium for communication. Through E-mail, you can easily communicate with clients, transfer files, and even launch a website to tell your clients more about your firm. The ease with which communications are facilitated does not mean that a website will automatically increase your client base or your profit margin. Next time (November POBOnline) we'll discuss some of the really useful ways that you can employ Internet technology to improve your business.

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