Americans say greed led to dot-com demise

Researchers find that almost 70 percent of dot-com-savvy Americans blame an "irrational exuberance" for the heady inflation and dramatic decline of Internet stocks.

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Greedy investors and clueless executives caused the dot-com meltdown.

That's the conclusion of a report released Friday by the Washington-based Pew Internet and American Life Project, where researchers asked 2,096 Americans who they think should shoulder the blame for the downturn roiling the technology industry.

Researchers found that 67 percent of Americans who are aware of dot-coms' financial woes blame "irrational exuberance" for the heady inflation and dramatic decline of Internet stocks, while 56 percent faulted flimsy business plans.

Only 38 percent of Americans blame the "youth and inexperience" of the people who ran Internet companies in the late 1990s. Although it is impossible to determine the average age of an e-commerce company's work force, it was not uncommon for only a handful of workers at a given dot-com to be above 35 when the companies were first emerging in the mid-1990s.

"I thought more people would blame youth," said John B. Horrigan, senior research specialist with the Pew Internet Project. "Americans generally have an encouraging attitude toward youth going out and taking a risk. But given all the stories of 25-year-olds with big houses and several cars, I thought people would get annoyed. For the most part, they didn't."

Although young people escaped much of the blame, not everyone let them off scot-free. About 44 percent of Americans over 50 cited youth and inexperience as a "major problem" in the downturn, compared with only 34 percent of those between the ages of 18 and 29 who responded that way.

The study also found that, although relatively few Americans took big losses from the dot-com meltdown, the vast majority of people are aware of the phenomenon. Two-thirds of all Americans have heard of layoffs, closings or falling stock prices of Internet companies, and one-third have followed the story closely in the media.

see Special Report: Assessing the carnage Only 7 percent of Americans say their family has lost money in a dot-com investment; 8 percent of Internet users have had one of their favorite Web sites vanish during the shakeout; and 9 percent know someone who has been the victim of a dot-com layoff. That means that roughly 31 million Americans have been personally touched by the downturn, according to the Pew survey.

But the effect of the downturn has disproportionately stung certain demographic and geographic groups--particularly in the Western United States, according to the report. Although only nine out of 100 Americans know someone laid off by an e-commerce company, 14 out of 100 Westerners are familiar with the dot-com pink slip.

Researchers also found that "early adopters"--people who began using e-commerce in the mid-1990s, before it caught on en masse--were disproportionately hurt by the downturn. One out of four people who got burned have household incomes in excess of $100,000, half are college educated, and the vast majority is male.

Researchers called this pained lot "dot-glums." Statistically, 38 percent of dot-glums live in the West, compared with 22 percent of the U.S. population at large.

"That's telling you that the Seattle-California corridor has been taking the fall, just as they had been taking the windfall early on," Horrigan said.