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The Great Internet Scam

By rusty in News
Mon Apr 10, 2000 at 09:34:23 AM EST
Tags: Internet (all tags)

The Washington Post has an article today called Wall Street's Best Head West, about the mass migration of bankers and stock brokers fleeing Wall Street for the Valley, drawn by the lure of startup stock options. It features this now canonical piece of "internet gold rush" news copy:

"Everybody's got at least two or three friends who are now deca-millionaires two years out of college, so you must be a loser if you're not one of them," said Jim Carroll, 45, who left his job in May as a managing director of Bear Sterns Co. to help launch ArtistDirect Inc., a Los Angeles firm linking musicians and fans online.
Do you have two or three deca-millionaire friends? Can you swing a dead cat in the Valley without hitting an investment banker? Or is it all a great big scam? More of my thoughts on the New Gold Rush below...

We've all heard the story so often it's practically a cliche. Everyone's a millionaire in the new economy. If you're online and you're not rich yet, you must be an idiot. But is any of this actually true?

Ok, sure, there are more millionaires being created faster today than ever before. If you worked for AOL more than three years ago, your options probably make you Daddy Warbucks on paper. But AOL is, and has always been, a "special case." What about the rest of us?

My experience has been that a lot of people in this industry talk a great game. Everyone's got VC lined up at their door. Everyone's got twenty million with one phone call. But has anyone yet made any actual money on the internet? I don't mean "start company, go public, rake in the investor cash." I mean, has anyone actually made millions *from* their online venture?

As far as I can see, investment bankers keep getting rich, just like they always have. They're doing it in technology now, instead of the Hong Kong derivatives market, but as far as I can tell, it's still basically just money men shuffling money around to each other. It makes for exciting news, and the media loves to repeat the mantra about the internet millionaires, but the newspapers also loved to print stories about the dirt poor prospector who struck it rich in San Francisco, during the last gold rush. It wasn't true then, either, and the fact that you *can* become rich overnight has never guaranteed that any of us actually would.

So is the "new economy" just a scam? If not, how come all my friends aren't millionaries yet? And if so, when will the newspapers stop telling us otherwise?


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The Great Internet Scam


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