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Recently in Salon Technology

Copyright -- or wrong?
The Church of Scientology takes up a new weapon -- the Digital Millennium Copyright Act -- in its ongoing battle with critics.
By Janelle Brown
[07/22/99]

Short attention span theater
Is the Web the perfect place for short films? Cheaper and easier than a trip to the cinema, it may spawn a rebirth of the 10-minute talkie.
By John Geirland
[07/21/99]

Silicon Follies
Silicon Follies
Chapter 37: Liz and Paul's dating game
By Thomas Scoville
[07/21/99]

Books
What will it take to survive the Web's evolution?
In "Digital Darwinism," Evan Schwarz predicts which online business models will prove the fittest.
By Janelle Brown
[07/20/99]

One step ahead of the law
As the gory killsport game Kingpin hits the street, the gaming industry toys with self-regulation to avoid government action.
By Mark Boal
[07/19/99]

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Gather hundreds of Internet executives in a room and ask them about the Internet economy -- as the Industry Standard did earlier this week at the Ritz-Carlton in Laguna Niguel, Calif. -- and what do you hear? Almost exactly the same messages.

It's always a little risky to look to an industry conference, with its predictable eruptions of spin-doctoring PR and self-promotional hot air, for any kind of accurate assessment of a business. But these gatherings -- which are lucrative enterprises in their own right -- can provide a fascinating temperature gauge for the mood and mind-set of an industry's leadership.

As executives and financiers like Yahoo's Tim Koogle, America Online's Bob Pittman, Softbank's Masayoshi Son, Amazon's Jeff Bezos and John Doerr of Kleiner Perkins stepped forward to detail strategies and rate competitors, the room became suffused with a strange mixture of giddiness and paranoia, self-confidence and insecurity -- the heady psychic brew that fuels most Internet companies today. We're unstoppable -- but we never stop looking over our shoulders! This is as big as the industrial revolution -- but if we're not careful we'll wind up as yesterday's fad! Stock prices are unreal -- but we're buying as fast as we can!

The contradictions in these leaders' messages were echoed in the sentiments of the larger crowd, which registered opinions via a wireless real-time polling system, punching "yes" and "no" buttons like focus-group participants (68 percent, for example, said they felt Yahoo's stock price is too high).

Scott Rosenberg's column appears once a week in Technology + Biography + Archives

Softbank's Son, whose early investment in Yahoo has become the cornerstone of a loose-knit online empire, teased out the biggest paradox with two questions: First, do Net stock prices represent a "bubble"? Forty-nine percent said "yes" -- not quite a majority, but an extraordinarily high number, considering how Net-besotted a crowd this was. (Son said that other audiences tend to vote 70 percent "yes" on the same question.) Second: In 10 years, will the market capitalization of Internet stocks exceed that of personal-computer stocks? Ninety-nine percent said "yes." Yet, Son declared, today's Net stocks are valued at only 10 percent of PC stocks. His conclusion: "I say Internet stocks are too cheap."

That, of course, assumes that Net stocks will surpass PC stocks by growing 10 times -- and not because of some collapse of PC company valuations. Even the executives with the most dour outlooks -- oddly, the gloomiest panel was a lineup of venture capitalists, all shaking their heads at the stratospheric market's "over-hyped deals" -- share a deep long-term optimism. When they talk about the "need for a correction," they're imagining a six-month pause in the Internet's victory march -- not the kind of general, sustained retreat that would follow if this really were a "bubble" and it went pop.

Mostly, it seems, the poobahs of the Net are not worrying about the stock market a whole lot. And it's not as if the stock market is giving them reason to do so. In what more than one speaker referred to as "an era of permissive capital," investors seem to have thrown the market's traditional yardsticks, like price-to-earnings ratios, out the window -- at least for now. The future's so bright, who wants to bother wearing green eye-shades?

"Revenues? We don't need no stinkin' revenues!" read one entry on a top 10 list of "Reasons to Go Public" that one of the conference hosts, Bill Gurley of Benchmark Capital, read to the amusement of the crowd. Bezos offered a similar quip: When book publishers miffed at Amazon.com for allowing customers to post negative reviews would tell him, "You don't understand our business -- we sell books to make money," he'd reply, "No, you don't understand our business -- we don't make money."

Ha, ha. In the context of such humor, a reminder from Charles Schwab president David Pottruck that this is an "unusual time" -- and ultimately "you need to have a clear sense of how you're going to make money" -- came off as the nag of a party-pooping fogey.

Next page | What's worth more than John Doerr's tie and Katrina Garnett's dress?