Worst Buzzwords of the Boom
Remembering the annoying vocabulary from Silicon Valley circa 2000.
At the dawn of the New Economy, B2B companies used synergistic partnerships to monetize eyeballs. B2C companies, with their clicks and mortar strategies, also got in the game, even though many of them had significant burn rates.
Makes no sense, right? Dial it back to 2000, when dot-com millionaires actually spoke that way. Some buzzwords survived the crash, unfortunately. Advertising people are still trying, and largely failing, to monetize eyeballs.
For the uninitiated, or for the dot-com survivors who can't believe they actually used the jargon, here's a translator for that muck:
The 1990s ushered in the so-called New Economy. Economic growth accelerated due to higher productivity thanks to faster, smarter technology. We sent manufacturing jobs overseas and plotted our economic future on information and service sectors. Good times!
After the bubble burst, many concluded the New Economy was a myth, but some pundits believe its roots remain intact, even 10 years later. In the aftermath of the Great Recession, however, whatever was New certainly feels Old again.
Online-ad salespeople still use this one today, but it should have vanished along with the trillions of dollars of wealth in the tech-market crash. Monetizing eyeballs is the annoying dot-com translation of "making money from online traffic." It was regularly used to justify some astronomical acquisition prices for companies with loads of traffic but negligible revenues.
It went away for a few years after the NASDAQ crashed but a 2005 story in Business 2.0 declared its return, citing Dow Jones' $519 million acquisition of Marketwatch and America Online's (AOL) $25 million acquisition of Weblogs. The spate of sky-high valuations didn't exactly turn into a full-blown trend, and the recent retraction in online advertising has many web publishers wishing someone would come along to monetize their eyeballs for them.
Synergy died in 2000. Time Warner (TWX) murdered it in cold blood when it merged with AOL. No one knew about the funeral at the time, but in the following years, more and more people showed up to mourn the corporate term. Jeff Bewkes, who is now CEO of Time Warner, delivered the eulogy in a 2006 Wall Street Journal story, when he called the synergy message delivered by the two companies at the time of the merger "bullshit."
Dutch Auction IPOs
Most of the IPOs so far in 2010 are trading for less than their offering price. In 1998 and 1999, that was unheard of. Most IPOs skyrocketed on their first trading days, which meant the companies were "leaving money on the table." If the shares priced at $10 and immediately popped to $50, then the company theoretically could have priced them at $50 and raised five times as much money.
Enter the Dutch auction IPO. This pricing scheme sets the price high and lowers the price during the auction until the point at which bidders are willing to enter. Theoretically, this would show the true market value of the shares, and the company going public would maximize its funding. The highest-profile company to use the system was Google (GOOG), but the Dutch auction didn't exactly work: Shares still popped 15% on IPO day. The mechanism is still around today, although fewer companies use it.
For some reason, when that "e" found its place comfortably in front of the word "commerce," people went crazy for acronyms. B2B is an irritating little one that stands for business-to-business -- transactions that aren't to be confused with B2C, those done between a business and a consumer. Of course, B2B and B2C transactions went on long before the Internet, but for some reason doing them in the digital age inspired the masses to use the catchy new lingo. It was one of the precursors to our texting diction, which has sadly replaced the written word among younger generations. Unfortunately, most of the companies that launched during the bubble years during the B2B went bust. Plenty of B2C ones went belly up too, and now we prefer to call all of them simply "companies."
Clicks and Mortar
First were the "online-only" companies. Then existing companies that wanted a piece of the dot-com game flooded the scene and, almost overnight, everyone started saying "clicks and mortar." It was no longer good enough merely to have stores made out of bricks and mortar. You needed clicks, too. After a while, the world really went upside down when the online-only companies started building real stores. If Charles Schwab (SCHW) could be clicks and mortar, then E-Trade (ETFC) could, too.
A March 1997 cover story in Wired breathlessly predicted the death of the browser. In the future, the writers of the article predicted (with a 15-name byline, yet another relic), media would be pushed to consumers:
Sure, we'll always have Web pages. We still have postcards and telegrams, don't we? But the center of interactive media -- increasingly, the center of gravity of all media -- is moving to a post-HTML environment, a world way past a Web dominated by the page, beyond streamed audio and video, and fast into a land of push-pull, active objects, virtual space, and ambient broadcasting. You might not want to believe us, but a place where you can kiss your Web browser goodbye.
Not surprisingly, there was a rush to push, led by Pointcast, Marimba, and other companies you never hear of today. But 13 years later, HTML still rules. We do get news and information pushed to us now, but it's predominantly through the browser, whether it's on our computers or our phones. RSS feeds push. Twitter pushes. Even Facebook pushes. Wired told us to "Think text flickering over your walls" when imaging push. Thankfully, that never became reality.
Companies had burn rates before the Internet boom and they still have them now, but during those few years, burn rate was everything. It's the negative cashflow rate -- how much money a company burns through each month beyond what it brings in -- and it was commonly used to determine how much longer a company could survive. Say you raise $12 million in funding and your monthly burn rate is $1 million: You have 12 months to live. What about earnings, you say? Can't a company survive if it spends less than it makes? At the time, no one in Silicon Valley knew what the term "profit" meant. Even revenue was sometimes an afterthought. Who needs it when you've got venture capital?
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter