The first time fortunes were made – and lost

In the autumn of 1999, a new internet start-up called Boo.com was launched with the intention of creating a global fashion retailer, selling brand name clothes. The British-based company – founded by Swedes Ernst Malmsten, Kajsa Leander and Patrik Hedelin – spent £83.5m of venture capital in 18 months. Less than a year later, on 18 May, 2000, it was placed into receivership and liquidated.

While Boo.com represented one of the more spectacular busts in the dotcom crash of 2000, it was not alone. The first dotcom bubble lasted almost six years, from 1995-2000.

It is now viewed as a period of mass hysteria. Investors had little idea how the companies they were investing in would make money, resulting in the inevitable bursting of the bubble.

In the mid to late Nineties shares in internet start-ups soared when they listed on the Nasdaq stock market, despite the fact few of them made a profit. The unwavering belief shown by investors that companies would eventually turn a profit if their market share kept growing fuelled soaring share prices and drastically overvalued companies. A powerful myth was circulating – the dotcom age was rewriting economic laws

This confidence was exemplified by the amount of money being spent on advertising for the early start-ups. During its first fiscal year in 1999, Pets.com had revenues of £381,000, but spent £7.3m to market itself, including an advertisement during the 2000 Super Bowl TV broadcast. The company folded in November 2000.

This story was repeated throughout the tech industry. In 18 months, American online grocery delivery firm Webvan raised £108m to expand into eight cities. At its peak, the company was valued at £740m, but with small profit margins, it was never going to last. The company closed in 2001, with 2,000 jobs lost.

In Britain, a similarly extravagant amount of money was being invested in companies yet to show a profit. A small online travel agency started by Brent Hoberman and Martha Lane Fox was valued at £735m at its flotation on 15 March, 2000. A year later, the company, lastminute.com, was worth £70m. Lastminute.com, however, eventually turned a profit in 2002.

The dotcom boom peaked when the internet service provider America Online bought the media company Time Warner for nearly $200bn (£122.9bn) in January 2000. But in March the same year, the bubble burst, and the Nasdaq index fell by 78 per cent by October 2002. Speaking in 2010, Jeff Bewkes, chairman and CEO of Time Warner, acknowledged the merger was "the biggest mistake in corporate history".



Suggested Topics
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
Life and Style
The new Windows 10 Start Menu
tech
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
PROMOTED VIDEO
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Travel
Bruce Chatwin's novel 'On the Black Hill' was set at The Vision Farm
travelOne of the finest one-day walks you could hope for - in Britain
Sport
footballManchester City 1 Roma 1: Result leaves Premier League champions in danger of not progressing
Arts and Entertainment
Gay and OK: a scene from 'Pride'
filmsUS film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
News
i100
Life and Style
Magic roundabouts: the gyratory system that has excited enthusiasts in Swindon
motoringJust who are the Roundabout Appreciation Society?
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
booksWell it was good enough for Ancient Egyptians and Picasso...
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Gadgets & Tech

    1st Line Service Desk Analyst

    £27000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our client who are...

    Trainee Recruitment Consultant - Birmingham - Huxley Associates

    £18000 - £23000 per annum + Commission: SThree: Huxley Associates are currentl...

    Trainee Recruitment Consultant - Birmingham - Computer Futures

    £18000 - £23000 per annum + Commission: SThree: Computer Futures are currently...

    Recruitment Consultant - Bristol - Computer Futures - £18-25k

    £18000 - £25000 per annum + Commission: SThree: Computer Futures are currently...

    Day In a Page

    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
    The magic of roundabouts

    Lords of the rings

    Just who are the Roundabout Appreciation Society?
    Why do we like making lists?

    Notes to self: Why do we like making lists?

    Well it was good enough for Ancient Egyptians and Picasso...
    Hong Kong protests: A good time to open a new restaurant?

    A good time to open a new restaurant in Hong Kong?

    As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
    Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

    Paris Fashion Week

    Lagerfeld leads a feminist riot on 'Boulevard Chanel'
    Bruce Chatwin's Wales: One of the finest one-day walks in Britain

    Simon Calder discovers Bruce Chatwin's Wales

    One of the finest one-day walks you could hope for - in Britain
    10 best children's nightwear

    10 best children's nightwear

    Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
    Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

    Manchester City vs Roma

    Five things we learnt from City’s Champions League draw at the Etihad
    Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

    Trouble on the Tyne

    Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?