Whether it's because the wounds are not yet closed, the resentments not faded or the period not yet sufficiently distant in time, a truly valuable insider's history of the Internet bubble has yet to be written.
"It's still a little early to have perspective on something that happened in the last 10 years," Eric Brewer was telling a couple of hundred connoisseurs of high-tech wreckage one evening not long ago.
"This is a first attempt to understand what the Internet bubble meant. Here's what it looked like," he added, projecting on an overhead screen the familiar Matterhorn-like outline of an Internet stock price trajectory. In this case, the path was that of Inktomi Corp., the search engine and network technology company he co-founded as a Berkeley computer science professor in 1996 and helped run until its 2003 acquisition by Yahoo Inc.
In his talk at the Computer History Museum in Mountain View, Calif., and in a later interview, Brewer -- at 37 an ex- billionaire (on paper) -- covered a few aspects of the technology crash that have all but dropped out of public memory.
One is that the crash encompassed not only dot-coms but also telecommunications companies. The crisis in the latter sector, in fact, is what brought down Inktomi, which sold network services to companies like WorldCom Inc. without realizing that they had borrowed so much money they were nearly insolvent. "The question we never asked was: Do you trust the money from your customers?" Brewer says.
Another is how the run-up in stock prices distorted the business judgment of even sensible managements. As Inktomi's market value soared toward its peak of $25 billion in 1998, it sought desperately to make itself worthy of the number.
"We knew what revenues we needed to justify the market cap long term," Brewer says. That led to wasteful investments in an online shopping service and wireless networking, "because the businesses we understood couldn't fill that gap."
Inktomi was never a household name -- by design. Unlike Yahoo and Google Inc., which aimed to build consumer loyalty by flogging their brands, Inktomi aimed to sell search capability to other websites -- to be "the arms dealer to the Internet," as Brewer says. By forswearing the chance to compete with its customers, the company figured it could sell to everyone.
