There is a natural defect of the Com model. Loads of
companies in the same field have the same business plan, which is mainly to
seize the market by utilizing the network effect. It is obvious that usually
there are few winners in the same field. And most of them will not succeed.
During that period, many companies used all sort of
means to expand their customer base at great cost. Some companies just named
themselves with a meaningless onomatopoeia (like Yahoo!), which aims to
distinguish itself from the others. The 34th super bowl was held in
2000, which was sponsored by 17 internet corporations. Each spent more than $2M
put their ads only in 30 seconds. At the other extreme, in 2001, it was only
sponsored by 3 internet corporations.
It is no surprise that because of the market mania at
the time, many companies began to spend money like water. They bought luxurious
facilities, provide their stuff with gorgeous holidays and give their stuff
options rather than cash. Many of them became very wealthy when having launched
their IPOs. And they invest on the other internet corporations with their new
wealth.
Almost
all the cities in the US are building themselves with more networked workspace.
They want to become the next Silicon Valley. Communication providers believe
there will be a great demand for their product in the future and they tend to maintain
a high leverage. As a result, companies that produce these facilities gained a
lot, like Cisco. These all together formed a cycle. So on and so forth.
This is
quite similar with what is happening in China now. In the spirit of ShanZhai
(cheap copy?). Many internet companies are trying to become the next Facebook,
Twitter or YouTube. They think there is a large potential market and they have
accumulated much experience during the last decade. They think they have learnt
enough from the lesson of dot com bubble. They think “this time, this situation,
it is different”. They think …… All of this created a similar flavour of the
past. We’ll look into details about it later. In my next blog, we will see the
third stage: How the dot com bubbles burst.
No comments:
Post a Comment