In Madrid, there is always cause for a party. Legions of madrileños, the young and the old, seven days a week, partake in La Marcha, a moveable feast of pedestrians peculiar to the Spanish capital. Festivities kick off around 9 o’clock at night, with tapas, and end around 3 .a.m., sometimes with chocolate con churros, or if not then perhaps with copas.
On any other Wednesday night, I would’ve been loitering after hours with other expatriates at the Café Central — just off the Plaza Santa Ana, by the hotel where the matadors sleep — savoring sloppy jazz and sherry like any good, decent Castilian man. Yet, my Spanish friends never could comprehend my unabashed, American reflex to turn in early – especially tonight, having just flown back from Germany, exiting a fog of Cuban cigars after an impromptu jaunt to meet a cohort of real, live Internet entrepreneurs.
It was the fall of 1999, and those mythical American dot-coms had just begun to cross the Atlantic. As a result, Internet anything was worth a business trip, especially if you were a technology reporter for Dow Jones Newswires. Though at the time living in Madrid, where a friend had called me two days prior with his invitation, I prevailed over my laconic London editor to permit my acceptance of the all-expenses-paid junket to Berlin. The trip did not disappoint.
Upon my arrival at Berlin Tegel Airport, a chauffeured black Jaguar awaited me on the curb. My driver, Gregor, wearing a Baltic assassin’s scowl, sped through the Unter den Linden to the Pariser Platz by nightfall, careful never to stray into East Berlin. When I arrived at the hotel, and thus the evening’s festivities, Gregor escorted me down a red carpet to the Davidoff cigar bar, where Austrian sirens in tartan skirts posed with me for pictures. Someone plunged a cigar in my mouth. Someone handed me a snifter full of Louis XIV. Barrel-chested men with shaved scalps; the dealmakers in sartorial cashmere; Swiss bankers who spoke English with Long Island accents, Timothy Leary’s ex-wife (apparently), and many, many women named Paulina or Claudette. Everywhere were buckets of champagne and canapés of smoked fish and cordials and hand-clapping — and, most of all, an overall sense that life would always go on this way. Oh, the bonhomie! We were all so lucky to be here together, to clink our crystal together and toast to capitalism’s unfurling eastward. Or at least as far as West Berlin.
One Paulina kissed me on both cheeks, spoke something in French into her earpiece and now we were off, heading to see Ferdinand, my host. I had met him months earlier at another Bacchanalian fête, this one in Barcelona, for an Internet summit at the Hotel Arts — a sea-squatting glass high-rise with an exoskeleton of white steel and a Frank Gehry-designed copper whale facing the Ibiza, 50 miles away. The Hotel Arts was the tallest thing in a city hunched in gorgeous Gothic gloom, tall-seeming even three miles back. Inside, holding court among reporters and would-be rentiers, Ferdinand was a sort of Gore Vidal personality in the occult European start-up scene. No one seemed able to answer the question of who he was … Although, truthfully, no one ever seemed to ask.
“Eric, I am so glad you are here!” he exclaimed. And just like that I was swept up into his Austro-Habsburg embrace. I thanked my host, then let slip the question of the hour: “So, where are these guys?”
These guys were the show — a couple of hotshot entrepreneurs who’d started a buzzed-about e-incubator — sort of like a virtual consulting/investment firm designed to help other start-ups navigate the Spanish commercial climate, only sans the investment capital and actual consulting staff. It was just Ken and John.
Truth be told, Ferdinand told me, “these guys are raising tons of money as we speak for their own venture. You must write about them. How is your cigar? Isn’t Paulina lovely?” She wore rubies on her pinky that formed a heart.
* * *
There had been enough luxury at that single party to fill an entire book on the excesses of the New Economy – as it was then called. I would be remiss, though, not to mention the many other exuberances encountered while reporting on the tech beat in Madrid.
There was, for one, the time when I lunched with a Lehman Brothers banker, a good source of mine, at Viridiana. In order to impress me (which admittedly he did), he ordered expensive eel sushi, and the chef himself materialized table-side with a live eel, struggling for air within his clenched, fat fist. The sushi was very fresh that day.
And that’s before even mentioning the acrobats from the Cirque du Soleil I watched rappel down ropes from the vaulted ceiling of a prominent cava producer’s home, an androgynous SWAT team amid fuchsia strobe lights at a dinner for media at the Credit Suisse First Boston conference (also held earlier that day at the Hotel Arts). I had seen two entrepreneurs for lunch at once who told me in gunfire-fast Spanish that they had planned to sell groceries to Spaniards “online.” And I had sat aghast while a pornographer, Berth Milton, CEO of Private Media, confessed his urge to stream video onto cellphones “someday.”
Hearing so many intimacies of dot-com boom’s innovators, I was an accomplice in fomenting the unsustainable market froth. Writing on the tech beat, I saw plenty of ritzy business gatherings. What I didn’t see a lot of at all of these many business gatherings was, well, the actual business.
Of all the men I encountered – and they were all men back then, at least in Spain – some were dead wrong about the future, and some were right. The ones who were wrong had no plan, and as such were unable to share any details about what their plans actually entailed. That was’t a problem, though, because no one, including me, was asking real, detailed, concrete questions.
Relevant context: To actually get to the Internet in Barcelona in 1999, one had to traipse down alleys amid youth hostels and locate the now extinct Internet café, where the reliable, dial-up connections were consistently third-world. My own preferred café was actually a women’s hair salon in my neighborhood that placed a computer on a pedestal on the sidewalk, presumably to drum up business. I checked Hotmail there because, you see, my millennial readers, there was no Wi-Fi back then or iPhones or broadband in Spain and you could not imagine how anyone with money might be contemplating, in this state, trying to sell anything on the Web to people who were, almost without exception, existentially disabled in the ways of Web browsing.
So yes, I was an accomplice in this froth, until I was not.
Months after Ferdinand’s party, I connected with Ken and John at the launch of their e-incubator, First World E Commerce. The Wall Street Journal Europe had agreed to run a feature by me on the company, and now here I was, again, at the Hotel Arts.
Over the course of the weeks I spent interviewing them, something interesting happened: I started to ask questions. And when I didn’t like the answers, I asked more questions.
My feature began this way:
Ken Wrede hasn’t taken his family on vacation in almost four years and there are no plans for one anytime soon. His wife hasn’t bought any new clothes since January. The kids drink water during the week and can have Coca-Cola on the weekend. Usually, the refrigerator is almost half-empty.
But tonight at the five-star Hotel Arts there are open trays of smoked salmon and brie, an open bar beside the olive trees on the seaside patio where Mr. Wrede has invited nearly 50 friends and business contacts…They have only one client; only now are some of their three employees being paid.
The story ended with a dark scene: Ken strumming Jimmy Buffet songs alone at night — specifically, a “Pirate Looks at 40” — and planning a fundraising trip to America to keep the lights on.
“How the fuck could you do this to me,” hollered a broker over the phone the next day, after reading the piece. (In retrospect, he may have been a silent investor.) The start-up fizzled months later and First World E-Commerce soon became a dot-com fatality. Efforts to locate Wrede for comment were unsuccessful.
* * *
This month marks the 17th anniversary of Alan Greenspan’s first mention of “irrational exuberance.” It was Dec. 5, 1996. Greenspan was then enthroned as the paterfamilias of our economy, delivering a speech to the American Enterprise Institute, a conservative think tank. Those words, “irrational exuberance,” were meant as a warning to investors, who, at the time (thanks in part to the Internet), were playing day trader with the family savings account. Greenspan, prone to coining neologisms for phenomena in the equities markets, would later mint the wondrously descriptive metaphor “froth in the market.” But that wasn’t until the shit had finally hit the fan.
Where are we now? Barely a decade removed from the dot-com crash, and there are signs that the froth has returned. Have we learned any lessons?
There is a new bubble enlarging before our eyes. You don’t have to take my word for it. “Back East, the Wall Street money is starting to worry that it feels like 1999 all over again. Money-losing technology companies are going public at you’ve-got-to-be-joking prices,” wrote the New York Times’ Nick Bilton before Thanksgiving. “The founders of Snapchat are getting multibillion-dollar offers — and turning them down. Is this time different? Out in Silicon Valley, many insist it is. But for the average investor, there are reasons for caution.”
Beware of this new bubble; it casts a long cultural shadow, unimaginable in the dot-com heyday. You see, the Web in 1999 was still in its infancy. Abroad in Spain, its availability was sporadic, unreliable. Applications were abstractions. Covering tech back then was the drudge work of scribing pieces on infrastructure investments in esoteric things like 3G spectrums. Hardly sexy, especially to a 24-year-old reporter trying to make his mark. So when sexy came, I was all too willing to lionize my share of companies and their market-making potential.
Web entrepreneurs today now enjoy the sine qua non of Internet infrastructure and mobile connectivity that their predecessors from ’99 could only dream of. Investment in the “pipes” of the Internet — combined with the arrival of devices that expedite and encourage access to it (iPhones, iPads) — paved the way for porn to play effortlessly on flip phones, and aided our digital fetishes of all varieties. Want to know the weather? There’s an app. Want a taxi? There’s Uber. Want a doctor? Soon there will be an app for that too.
Still don’t buy it? Imagine spending $3 billion on a Tibetan sand mandala: Buddhist monks construct intricate designs from colored sand – and destroy them once finished, a flourish to underscore the life’s impermanence. Now, in Snapchat, there’s an app for that. (From a Stanford grad, of course.) Once viewed, a message in Snapchat will disappear, much like the drawings in Tibet. Any image, no matter how scandalous it might be, vanishes forever.
This unicorn, Snapchat — which Facebook tried to buy last fall for $3 billion – is all the rage among millennials and punch-drunk techno-hedonists, having grown at a feverish pace. However, despite its exploding user base, the company still doesn’t have an especially compelling answer to one very basic question: How will you make money? Meanwhile, tech reports expound on the “warrior mentality” of its young founder. Hmm …
* * *
As a graduate of the media class of the original dot-com crash, I feel much like T.S. Eliot’s Prufrock, who declares, “I am Lazarus, come from the dead, come back to tell you all, I shall tell you all.”
Well, I want to tell you all that we remain etherized, because our technology today is so enameled in “cool.” We love, of course, the Valley’s Bauhaus aesthetics, clever apps and manifest destiny expansionism. The technology industry is churning out these remarkable inventions at such a torrid pace that Silicon Valley is a de facto appellation that confers automatic cool and prestige.
These days, however, the products are not the end of the story. Newly minted millennial billionaires are willing to deploy their fortunes for activism – political and moral – a theme George Packer examined so well in the New Yorker last spring. And the media, much as in 1999, is more than willing to chronicle their fervor, and their “change the world or bust” coda. Today’s techno-visionaries have another tailwind at their backs that their dot-com predecessors did not: cyber-topians.
Many in today’s financial press are doing a fine job as present-day pasticheurs of dot-com era vanity. But why? Why their reluctance to deliver real, incisive business journalism? Why give a free ride to the Mark Zuckerbergs and Marissa Mayers of the Valley? Well, to put it simply: For these journalists, it’s simply more fun to write “features” rather than do the hard work of writing hard news.
I could, if necessary, refer to the Vogue spread on Mayer in August; the juicy bits about how she made excel sheets to document her favorite cupcake recipes, or how she slips quietly upstairs mid-party, her “CEO exit”; the 3-foot tall frog statues in her backyard (“sprinkled,” the piece goes, with Mozart concertos). Of course, Vogue could have nested this trivia within a candid portrait of Mayer’s Yahoo tenure, major accomplishments being: redesigning the corporate logo; overseeing the development of what Vogue calls “a gorgeous new weather App”; and the $1 billion acquisition of Tumblr — yet another Web platform without a revenue stream and a vaporous business model, which, in Yahoo’s earnings statements, was revealed to have been valued at around $750 million in goodwill. (In other words: Mayer assessed its potential value at nearly $1 billion.) Unfortunately, goodwill does not sustain jobs. Then again, bad press does not sell fashion magazines.
I could likewise refer to Forbes’ feature on Elon Musk last spring. An ideal way to ensure that you gain entrée for future interview requests with a billionaire is to do a piece that fawns like so:
I ask Musk if he has a dog. Yes, he says, two. But no dish, leashes, or chew toys are in sight.
As he drives to work—his Montblanc aviators, retrieved from the floor of the Lotus-bodied coupe, perched on his nose—we talk about his favorite drives (he favors Highway 1, unsurprisingly), his favorite music (when not rocking to Robbie Williams, he’s more a Beatles-and–Pink Floyd classic-rock man), and his favorite cars (the 1967 Jag E-Type is “like a bad girlfriend—very dysfunctional”).
We remain, nevertheless, tantalized by the tinsel of our time’s toys, our neighbor’s new Tesla, by apple-cheeked boy wonders.
Like Dr. Pangloss in Voltaire’s “Candide,” some claim that we live in the “best of all possible worlds.” We live, it’s true, amid a period of perpetual and impressive disruption that will effect a great many advancements. The nanolennials who will eventually spring from the loins of millennials (will there be enough quinoa and chai left in the world for them?) will have some big shoes to fill if we go on applying Moore’s law to humanity, believing we can ascend Maslow’s pyramid of needs with every new app or software update. To think that with technology we can render the pain from life is folly.
Amazon CEO Jeff Bezos, however, has devoted his entire professional career to disintermediating humankind from inconvenience, the last painful pangs of the analog era. “If you go back in time 18 years, I was driving the packages to the post office myself, and we were very primitive,” said Bezos to Charlie Rose. Soon, our Amazon orders shall arrive by drone.
Yet, having lived through the mad rush to technologize once before, having chronicled that era’s astounding failures, I would now rather we live with the buffer of those painful, precious, uncharted 18 minutes – to ponder, to imagine, to think. Free time, however, being the archenemy, Bezos, I’m guessing, would have us spend those 18 minutes some other way, someplace less taxing on our spirits, hypnotically shopping online, so that we do not have to remember this verse from the Book of Wisdom:
What has been will be again,
What has been done will be done again;
There is nothing new under the sun.