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Dot.Con: The Greatest Story Ever Sold
Cassidy, John. (2002). New York, NY: HarperCollins Publishers.
Price $25.95
13 1/2 hour cassettes
Review by Terry Burgess
Coordinator of Resident Services
Murray State University
Terry.Burgess@murraystate.edu
George Bernard Shaw once said, “If history repeats itself, and the unexpected always happens, how incapable must man be of learning from experience.” This quote would be an excellent lead-in to telling the story that John Cassidy sets forth in Dot.Con: The Greatest Story Ever Sold. John Cassidy, a leading financial analyst and writer for New Yorker magazine, tells the story of how Wall Street created an environment during the late 1990’s that resulted in drastic overvaluing of initial public stock offers of - often for the most part unproven - Internet businesses. This drastic overvaluing of stock offers created a speculative bubble that eventually resulted in a bust where millions of stock investors lost a great deal of money when many of these internet companies failed to produce the anticipated success they were predicted to make as they went public. Previous speculative bubbles, such as the California Gold Rush and the stock market growth created from the industrial revolution just prior to the great depression, should have given individuals clues of how to deal with stocks of this nature. However, many individual investors were cheated and this speculative bubble’s bursting led to another case in American history where a rush of excitement by investors and those who want to make a quick profit led many individuals who were not as financially wise to invest time and or money, only to see that effort result in major losses.
John Cassidy traces the development of the Internet back to the early works of Vannevar Bush and his thought of the “memex” machine/computer during World War II. He leads the reader to believe that the Internet was developed by several young men with greased-backed hair who had horn rimmed glasses and liked science fiction. He continues this history by chronicling the early successes of Netscape, Yahoo, and Amazon.com, just to name a few of the businesses that are addressed in Dot.Con. Cassidy takes the internet story and makes it more personable for the reader by highlighting the success stories of several college students who became millionaires. These individuals include Netscape’s Marc Andreessen, Yahoo’s Jerry Yang, and Amazon’s Jeff Bezos. Their stories help to show the reader the magnitude of power that the Internet speculative bubble played in the overall success and financial well-being for these individuals because of the attention the Internet received by the media and political figures. Cassidy posits that it should not have been difficult to see why few people were going to make money on Internet stocks. He places a lot of blame on Alan Greenspan, Chairman of the Federal Reserve, for the lack of control that was placed on the stock market. However, he also spreads the blame to include people such as John Doerr, an investment capitalist, as well as members of the media and Wall Street experts. Cassidy shows how Internet companies, such a Priceline.com, were set up to lose money from the beginning because the expenditures to produce the actual product and personnel costs far out-priced the income that was generated by the sales of these products. Priceline.com, for instance, initially lost over $114 million its first year despite an income of only $35 million. This loss of $3 to every $1 earned was ignored by many investors and saw Priceline.com’s initial IPO opening price of $16.00 per share swell to a whopping $60 dollars per share at the close of business on that opening day.
It is my opinion that, Dot.Con: The Greatest Story Ever Sold, is an excellently written chronicle about the history of the Internet. John Cassidy takes stories that are widely known and published in leading financial journals and business magazines and spins them together in way that helps to make the average reader who would not be that financial savvy understand and appreciate the content that is in the book. Cassidy also does an outstanding job educating readers about different influences and factors that lead to the success or failure of stocks on Wall Street. I found the book to be a good resource in helping teach me more about the financial markets than my basic economics class in high school and college ever thought about doing. I found Cassidy’s arguments and evidence to be very compelling and thought provoking. They left me wondering, “How could investors not see the crashing of these stocks coming before it actually occurred?” This book, I believe, would be an excellent resource for any individual who is looking to see how different political and media factors as well as investor’s feelings and opinions play on the stock market. This book also would be an excellent resource for any individual who would like to begin a study on the history and development of the Internet. However, this book has some limited applications to individuals practicing in the student affairs profession. The book can be used by the student affairs professional if they are considering investing in the technology stocks on the stock market as part of their retirement funds. The content in this book could be better used by Higher Education professionals such as professors in the areas of business, computer science, computer information systems, telecommunications, and electronics studies as a historical study of the development of technological and internet stocks and how the government and/or business affects them on the stock market.
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