Dotcom Bubble: The Resurrection of the Tech Industry

Table of Contents

Dotcom bubble

What was the Dotcom Bubble?

The dotcom bubble, or Internet bubble, refers to the bull market period during the mid-to-late 1990s in which U.S. technology stocks experienced a significant and rapid increase in valuation. This exponential rise in value is especially reflected in the tech-dominated Nasdaq, one of the big three U.S. indices along with the Dow Jones and S&P 500. The index rose from under 1,000 points in 1995 to a peak of 5,058.62 in just five years.

Nasdaq Composite

source: 25IQ via The Wall Street Journal

At the turn of the millennium, technology stocks plummeted just about as fast as they rose. Investment had dried up, and many of these young companies had little to show for the billions of people had invested in them. Nasdaq crashed from the 5000+ points to 1,139.90 (a 76.81% decline) between 2001 and 2002.

We at the Zero Theft Movement strive to eradicate the rigged parts of the U.S. economy so that the ethical and healthy parts can thrive. For you, the public as a whole, and the economy. While not necessarily an event involving economic foul play, the Dotcom crash did lead to some companies deceiving investors by concealing their losses. 

Blowing the Dotcom Bubble

The dotcom bubble really started in 1989, when word got out of a new technology: the World Wide Web. If you ever wondered why urls begin with ‘www.’ that’s your answer.

The world had completely transformed seemingly overnight. Suddenly, we were in the Information Age. Information technology, more than ever before, underpinned the economy. 

The possibilities for business, global communication and networks, information sharing, etc. actually proved endless. Purchasing items from the comfort of your own home or communicating to your friends through online messaging was science fiction come true. Internet and tech-based companies, led by young entrepreneurs, started cropping up left and right. Computer ownership rose by 20% (from 15% to 35%) between 1990 and 1997.

But the technology seemed to come at a time to create a perfect storm of excessive excitement, government backing, and low-interest rates. For one, the Taxpayer Relief Act of 1997 decreased the top marginal capital gains tax, encouraging people to take greater risks and invest speculatively. This legislation, in conjunction with the Telecommunications Act of 1996, truly opened up the field to any and all comers and made the potential fruits seem all the more juicy.

The Savings and Loan Crisis triggered a bailout of around $500 billion (in 1990 money). See if the Zero Theft community thinks one of the biggest industry bailouts was necessary… 

The Dotcom Crash, or When the Bubble Burst

The fervor, the excitement, the potential! Investors and venture capitalists had gotten wrapped up in what could be, rather than calmly analyzing the actual reality. In essence, they did not want to miss out on what appeared like a guarantee.

According to CNN, venture capitalist firms invested $35.4 billion in U.S. companies in 1999. 90% of all these investments went to technology companies. The biggest IPO of the year was…VA Linux Systems. When the company went public, it broke IPO records, rising in value by 737% in the first day of trading.

But in reality, the extremely high market value of these technology stocks was simply propped up by speculation, by eager investors willing to shell out money to companies that had proven little.

Startup Strategy 

It bears noting that many of these technology startups did not exactly approach business with their primary focus on developing the best products possible. Like the bubble they helped create, there was a lot of size but little solidity behind it all. 

Reportedly, companies without proprietary technology abandoned fiscal responsibility, spending fortunes on marketing and advertising in order to separate themselves from the pack. Some businesses designated as much as 90% of their budget on marketing.

TED, creators of the well-known TED talks, published an article exploring how online travel agency Priceline navigated the dotcom crash. The article states:

“So many of the companies that would embody what we think of when we remember the dot-com bubble —, eToys,, UrbanFetch — shared some or all of Priceline’s traits: a business plan that promised to “change the world”; a Get Big Fast strategy to reach ubiquity and corner a particular market; a tendency to sell products at a loss in order to gain that market share; a willingness to spend lavishly on branding and advertising to raise awareness; and a sky-high stock market valuation that was divorced from any sort of profitability or rationality.”

The Bubble Bursts

It boils down to a question with a pretty simple answer: how can a company without a product survive/thrive when the investments dry up? 

Short answer, it can’t. High hopes and billions in investment do not necessarily result in a good product—or a product at all, for that matter.

Information Technology Market

Information Technology Market as % of Total Profits vs % of Total Market Cap 

source: Capital Group

So the many companies that didn’t have anything to show for all the investments started to fail one by one, starkly showing that they had not actually brought anything of value to the table after all.

That being said, many forward-thinking, product-driven businesses failed as well., for example, was the first social media website ever created. Or take the biggest failure of all the dotcom companies, Webvan, a grocery delivery service that sounds all too familiar to what many retailers offer now. Perhaps these businesses came around just a bit too early for people to wrap their heads around their concepts, or they grew too fast due to unprecedented volume of investments. 

Cisco, Intel, Oracle, Amazon, eBay, even these powerhouses experienced significant dips in value because of the sudden shift in public sentiment towards technology companies. Just to give you a sense of how quickly values rose and fell for now-thriving tech companies, take a look at how Amazon’s market value increased by ~7,000%.

Amzn high and low

From @bespokeinvest on Twitter

Overzealous investors collectively suffered trillions in losses. Companies who had invested fortunes in building out the technology side of their business were left with products and services very few wanted. While some took the failure on the chin, others committed white-collar crimes in an attempt to conceal their considerable losses (e.g. the Worldcom scandal and the Enron scandal).

Multinational companies and kleptocrats might be using tax havens and/or shell companies to avoid paying taxes and launder money. See what the ZT community has uncovered about tax evasion… 

Solid business or not, the tech industry had been decimated as quickly as it developed. We of course know now that some of the most successful companies today are those that survived and rebounded from the Dotcom crash. 

Fears of Another Dotcom Bubble

As they say, time heals all wounds. Nasdaq reached the record set in the dotcom bubble on April 24, 2015, and has continued on its upwards trajectory.

dotcom bubble then vs now

From Google

However, the continued growth of Nasdaq has caused some concern that we are in another tech bubble. Doing a quick Google search shows that many have deemed it worthy of discussion (or to at least, address potential fears the public might have).

are we in another dotcom bubble.

But you’ll find that most of these articles argue that the current tech bubble and the dotcom bubble are fundamentally different in (at least) one major way. A lot of the technology companies thriving today have proven themselves, proven that they offer actual value to consumers. 

As you can see from the Capital Group graph in the previous section, the % market cap and % profit have levelled out. Not only does the tech industry make up ~25% of the market cap, it produces ~25% of profits across industries.

Furthermore, the race to going public has died out considerably after the dotcom bubble. Citing data gathered by economics professor Jay Ritter, Bloomberg article claims: “The kind of fledgling tech companies that imploded in the dot-com era now tend to stay private for longer, and the ones that do go public are usually more mature.”

dotcom crash not a bubble now

source: Bloomberg article linked above

While the market value of many technology stocks might be overinflated, internet and technology businesses have been around much longer now. Many have proven that they provide actual value to consumers. That means, this bubble has much more solidity to it than when the Internet emerged.

Fight the Rigged Economy with the Zero Theft Movement

The dotcom bubble is one of many examples where we have gotten caught up in the hype. Take it as a lesson, so that you can reduce the chances of making an uninformed or ill-advised investment in the future.

But when it comes to instances involving financial foul play, you might feel that you don’t have any control. That you’re too small to do anything. That might have been true previously, but it isn’t anymore.

On the Zero Theft voting app, citizens author theft proposals, and the community decides whether that investigation has convincingly proven (1) theft is or isn’t occurring in a specific area of the economy, and (2) how much is being stolen or possibly saved. Through direct democracy, we can collectively decide where the problem areas are and start working on addressing them systematically. 

The ZTM community knows that many businesses, including some corporations, act ethically. We are trying to hold the bad actors accountable. The corrupt corporations, lobbyists, and government officials. That way, good people and businesses can properly thrive and enjoy the piece of the pie we’re all due.

Standard Disclaimer

The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.   

Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.  

The public has voted! See where citizens believe the economy has been rigged

Explore the Problem Hierarchy

We have primers on potential problem areas of the economy. Before you start voting, it’s important you get a basic understanding of the issues at hand, so you can be as helpful as possible to other community members. Take a few minutes and come prepared.

Serve your fellow citizens as a citizen investigator

The success of our movement rests in your hands, the leaders willing to dedicate time to conduct investigations into potentially rigged areas of the economy. Lead the movement and help create an ethical economy.

Commitment to nonpartisanship

The rigged layer causes all of us to suffer, regardless of our political allegiances. If we wish to eliminate rigged economy theft, we have to set aside our differences and band together against crony capitalists and corrupt officials. 


ZTM operates solely on donations. Sure, we might eventually have high-profile donors, but they do not get to control or decide what the community investigates and how they vote on reports. Everyone is welcome to participate as long as you act in good faith.

Beyond the dotcom bubble…

An educated public is an empowered public. 

We regularly publish educational articles on, just like this one on the dotcom bubble. They teach you all about the rigged layer of the economy in short, digestible pieces.