John’s Story : Dot-Com Bubble

In 1998, John is living in New York and working at Ford as a Supply Chain Manager, collaborating with teams in Turkey. At that time, collaboration isn’t easy; communication is mainly conducted via email. The idea of sending a quick message on Teams and getting a response in seconds, like today, is nothing but a dream.

Still, John senses that major changes are on the horizon in the tech world. Many technology companies are being founded around that time, and John is a curious person who follows these developments closely. Fresh out of college in Pennsylvania, his excitement fuels his ambition to grow both his career and his investments in technology.

Bill Gates is at the top of his game, dominating the tech agenda. John regularly tracks the NASDAQ and S&P 500 indexes and doesn’t hesitate to invest when he sees an opportunity. He owns shares in Microsoft and Yahoo, and even has his eye on emerging players like Amazon and Pets.com.

At first, he’s cautious, but over time he continues buying without paying much attention to price-to-earnings ratios. To him, the internet is the future, and investing in these companies seems like a solid move.

Meanwhile, tech companies are aggressively increasing brand awareness, running ads at huge events like the Super Bowl and launching campaigns to get more people online.

One day after work, John catches a news segment mentioning Alan Greenspan’s famous warning about “irrational exuberance” from two years earlier. Around the same time, Japan enters a recession—a noteworthy event, but John is too tired to give it much thought.

Then comes the big moment: Pets.com, a company John has been watching closely, goes public. Excited, he invests the equivalent of two to three months’ salary. To him, the company looks promising. But like many startups, Pets.com prioritizes growth over profit, pouring money into advertising with the belief that “we’ll take losses now and turn profitable later.”

The problem? Internet usage is still far from mainstream. Changing people’s shopping habits online is more of a long-term goal than a quick win. As a result, these companies burn through their cash reserves, but the revenue doesn’t follow. One by one, many startups start to fail right before John’s eyes.

Meanwhile, some investors panic and start selling their stocks rapidly. A sense of anxiety spreads through the market, and the signs of crisis begin to show. NASDAQ, which had risen by as much as 500% over five years, loses half its value in a short period. Shares of companies once considered “highly valuable” plummet.

With things unfolding this way, John is forced to sell his Pets.com shares at a significant loss. He leaves his other investments untouched but, like thousands of Americans, decides to step back from investing for a while. In the end, the United States enters a mild recession. This event becomes forever known as the Dot-Com Bubble.

And that’s the end of the first chapter in John’s story. Honestly, I’m just as curious as you are about part two—our seasoned friend will take entirely different steps and venture into new areas later on.

Exciting, right? 😊