Dot-bomb fallout: Finding life in the dust

The market bomb left all these offices gutted. With a neutron effect, it wiped out the employees, but left the desks, chairs, computers, phones and even the candy machines untouched in a state of darkened hibernation. I saw the carnage as I moved through the trendy offices, but I also found rays of hope.

Like the last survivors of a ghastly war, I usually found two guys in the offices' only lit room, keeping the final vestiges of a once-vibrant company alive. They would be alone with some expensive computer equipment, a jar of peanut butter, Pop Tarts and a mini-fridge. For now, the technology they developed remains, but it's mostly in their heads--when they turn out the lights, it's gone.

The market values this technology as worthless; it's not. It's just not worth as much on its own as its backers thought, or they simply never developed a way to turn their technology into a viable business. The danger now is that we are about to throw away these valuable resources like the empty pizza boxes that pile up during an all-night coding binge.

Liquidation companies have descended on the failing dot-coms like hungry vultures. First came the office-equipment liquidation experts who auctioned off the desks, computers, Foosball tables and every other piece of excess that the venture capital money bought.

Tracking the real value
Now the software liquidators have stepped in and are trying to sell the code that made these companies run. But what they're missing is that code on the hard drives is only part of the value: the rest is in the creation process of the young minds that created the technology.

After more than 30 years in the high-tech world, I've found that software is involved in the solution to just about every business problem. The method of finding solutions is extraordinarily basic. First you must identify the problem (a good problem is one where a customer will pay for a solution), then a talented computer programmer comes up with the key idea, and finally, implements it. It's the same formula that has prevailed since the first programmers worked to compute ballistics equations on ENIAC in the 1940s and helped Bill Gates create Microsoft. Only this time, instead of solving a problem and moving onto the next problem, these talented programmers were handed marketing dollars and tried to build companies on little more than the idea. In many cases these companies had capabilities but no customers.

Just because the company failed doesn't mean that the idea is bad. Often the idea should just be part of a larger puzzle and it's up to someone to put the pieces together.

One company we found had developed fun online tests, like personality tests or sex tests. The trick was that to take these tests you had to register. This small operation had amassed millions of registered users, most of them female, and grabbed valuable demographic information about them. At one point these lists would have been worth $250 million. Today the market values this list at next to nothing. The fact is, the real value falls somewhere in between. The list may not be worth much on its own, but in the right hands with some additional information you have something marketers crave: women who want to spend money and are telling you how they want to spend it. For the right marketer it's almost like passing out a hat to collect money.

Despite the downturn, billions of dollars are still being spent online and there will always be a demand for more and better information about these spenders. What are they buying? Where are they from? What sites are they visiting? How do they get to those sites? This information is of particular interest if it's done in a way that strictly protects privacy.

The Web continues to grow as a commercial medium. But what is the best way to work with the Web's unique properties? I've been in a position to sit across from traditional marketers as we show them the deep view of their customers that we found using new applications of Internet technologies, and the light bulb invariably goes on; sometimes brightly, sometimes as if it were on a dimmer.

We can laugh at the sad survivors of the dot-com crash, and in many ways the crash provided a well-deserved comeuppance to those with more hubris than skill. But in the near future I think we'll see more of the technologies that were developed during this recent revolution being applied in new and exciting ways.

So throw out the pizza boxes and reassign the parking spaces, but don't turn out the lights just yet. The minds that fueled the dot-com revolution still have plenty of drive left.