Magazine article The Spectator

Reasons to Be Cheerful

Magazine article The Spectator

Reasons to Be Cheerful

Article excerpt

THE irrational exuberance was great fun: When London finally discovered the Internet economy towards the end of last year, style soon began outscoring substance. From October the future looked rosy, not to say golden: there were huge - very well, obscene - fortunes to be made out there by anyone with a laptop and a plausible manner. Little-known technology companies began ejecting boring old businesses from the FTSE-100 premier league. A tiny two-year-old loss-making Internet travel company, lastminute.com, was for a few hours worth about as much as the venerable W.H. Smith. And two glamorous twentysomething Swedes who had seduced $120 million out of seasoned European businessmen were, after five months of delay, finally selling fashionwear on their boo.com website.

On 6 March technology shares hit their all-time peak in London. In the previous six months their value had trebled. The signs of craziness had begun to emerge. I received letters in crabby handwriting asking for shares in Internet companies I had merely written about. The letters were from people who admitted they did not yet own a computer, knew nothing about the Internet, but planned to try to understand technology at a later date.

Over the winter the number of technology business plans floating around London was three or four times higher than it had been a year earlier. One leading technology venture-capital firm, Elderstreet, saw 69 plans in March 1999 and 232 in the same month in 2000. Many of these ideas were half-baked and were being touted at ridiculous values. Seasoned backers coughed into their soup at suggestions that three men or three women - with one idea between them were worth many tens of millions of pounds, or at any rate should be given tens of millions to start up a dotcom business.

Three months on and the future ain't what it used to be. …

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