First, an age old story about the worlds newest industry .. The internet. Its a familiar saga of dreams and delusions, of big ideas and big money. Five trillion (Australian) dollars in fact, which just disappeared from the value of the U.S. stock market in the past year.It was the famous hi-tech boom, the new economy bubble, which like other famous bubbles, from tulips to south sea real estate, shone brightest just before it burst.
Two years ago we went to the capital of capitalism, New York, to focus on four smart young geeks as they moved from the back room to the board rooms to form their own dot com companies.Then, they made their own rules, built their own belief systems and lived their lives on paper promissoriesBut what they never had was some solid, old-fashioned profitsLast month we returned to the silicone alleys of Manhattan to discover what happened and to whom when the blue skies faded.
Madness indeed, and yesterday the riotous ride for the shareholders of the globe dot com ended with a whimper when they were officially de-listed from the NASDAQ exchange.
Byrne: The pundits are calling it mad Dow disease. Tom Leonessa calls it greed, pure and simple.
And Tom should know. For twenty years hes delivered the news headlining Wall Streets record-breaking boom and its recent giddying fall.
This morning Toms route runs through the heart of Americas once super-charged economy -- Silicon Alley.
Tom: They go from one side of the street to the other side of the street. They dont care, as long as they get the fare.
Byrne: Along with its Californian cousin, Silicon Valley, its the scene of one of the most spectacular smash-ups in American capitalism: The Tech Wreck.
Tom: Ive been driving for twenty years, Ive seen them come, Ive seen them go. Dot.com, Dot.gone, who gives a shit.
Joseph: Veteran Silicon Alley company Snickleways Interactive has finally closed up shop.
Byrne: Joseph Gallivan shares a front row seat at the Tech Wreck, chronicling the carnage in his New York Post column, Dead Dot Com of the Day.
Joseph: We terminated virtually all our employees Tuesday. Technically speaking were not out of business we hit a liquidity crisis.
Byrne: Already more than 200 Dot.coms have gone bust and another 20 die each month.
Byrne: Do you feel sorry for them at all?
Joseph: No, not really. I mean on the way up they were very boastful of what they were going to do. They were going to change the world.
The head of Razor Fish, which is a web shop here, he said This is a revolution, were packing rifles. And now theyre not worth anything Theyre underwater as they say.Music
Byrne: Steph Paternot is now an aspiring actor learning lines he never needed in his old life as a master of the universe, a Wall Street legend. But the tech wreck ended all that.
Person: So, did you meet him?
Steph: Yeah, we met him.
Person: Nice guy.
Person: So, you'll shoot him then?
Steph: Not a chance in hell.
Byrne: Fresh out of college, Steph Paternot co-founded white-hot Internet company The Globe.com or Tee Glow.
Person: talk to him so we can coordinate some deals in LA.
Byrne: Shares opened at $9 and jumped to $97 on its first day of trading. Then, Steph Paternot was worth close to $100 million. Today his shares are worth under 20 cents a piece. Which makes Steph worth
Paternot: Almost nothing. That's the sad part of it all.
Byrne: But didn't you, I mean, you sold on the way through, you must have
Paternot: Barely, no, no, we had one time to sell in the secondary offering which netted me under a million dollars and I lost a lot of that trying to make more money by investing in other Internet companies. Big mistake.
Byrne: So you're not a millionaire any more?
Paternot: No, I mean not cash-wise. I've very little cash but, you know, I have a nice apartment and, you know, hopefully my TGLO stock will go back up one day. Otherwise, Ive got to get a regular job.Music
Byrne: Remember the old days? The mid-90s? Then, the streets of Silicon Alley ran with gold. The Internet was a revolutionary force, the economy an unstoppable train, and the boring old business cycle was declared dead.
It was in the midst of this frenzy, that Steph and partner Todd Krizelman went public with theGlobe.com.
NASDAQ Reporter: TheGlobe.com come in public today selling three million shares to the public, the stock opened to 87 and has been on upside ever since and currently we have it priced at $70 a share for a gain of $61 a share.
Byrne: Investors queued up to throw money into the bonfire. The hype ran rampant.
Steph: This is almost like letting the people of the planet know that they are now the masters of the universe and for the first time they can realise it and try it.
Todd: Oh yes, good. Steph, how are you?
Byrne: As joint bosses of The Globe, Todd Krizelman and Steph Paternot were inseparable. Today, they talk on the phone.
Like most of the Internet dream merchants, they attracted millions to their business but never worked out how to turn a profit.Jason: If I went out to corner and I
sold hundred bills for ten dollars, I would have a very good business and a lot of customers until I ran out of hundred dollar bills, and there were a couple of examples of companies like that. I think theGlobe was one of those companies. They were spending so much getting people to come to their website and making nothing, or very little when they got there.
Jason: Yes, good boy.
Byrne: Now, of course, everyone and his dog knows better.Jason Calacanis is publisher and owner of the Silicon Alley Reporter.
His company wasnt just a booster for the Internet revolution.
It shared its alternative values.
Jason: And what is this?
Woman: That's from
Byrne: Despite this, Calacanis has always been suspicious of The Globe.Jason: I wrote an editorial the day they went public, that was titled theGlobe dot-com is a scam. Basically
reporting how it wasnt worth what the price was, and how it became worth that price, and how the truth was that said they had bought a lot of traffic and spent a lot of money, but that it wasn't going to be a sustainable business and they were the one of the best examples of a company that was built on hype.
Paternot: You know, Amazon burns through a billion a year, no one raises an eyebrow, we burn through 50 and people go, oh my God. No, no, I mean, its all relatively speaking. We lived through a mania and we were part of that mania, it was, you know, modus operandi, regular way of doing everything in those days. And for anyone that outside of this world even losing 1 million was ludicrous to them
Byrne: Through much of the madness, old school analysts like Larry Wachtel clung to their faith in the fundamentals. When I talked to him two years ago, the Internet market was at its frothiest but it smelt like tulips to him.
Wachtel: Everybodys invested, everybodys happy, everybodys making money: somethings wrong here,
Byrne: Even Larry Wachtel, eventually, succumbed to what he now agrees was mass hysteria.Wachtel: It was happening before my eyes.
I saw stocks go up 30 and 40 points a day. And I said why cant I join in the fun. But most of the people said, maybe these young guys are right. Im old, they're young, maybe they know. So, we followed the youth and that was our calamity.
Byrne: Why were people who, frankly should have known better, prepared to be maniacs?
Wachtel: Well, you know, greed begat greed. And it was just a spiral upward and at some point you should have recognized that it was too late but we deluded ourselves, yes, it was a delusion, yeah.Music
Byrne: To see just how deep this delusion ran, we introduce Josh Harris Internet millionaire turned Internet exhibitionist, in his Soho loft apartment.
Harris became such a true believer in the power of the net he decided to broadcast his life on it twenty four seven. He calls it We Live In Public Dot Com.
Harris: Hey, its Josh Harris, is he around.
Byrne: Three years ago Josh Harris was worth 36 million dollars.
Harris: Fine, you know, buy like three grand worth of that, buy in at 15 cents and see if anyone picks it up.
Byrne: Today he buys and sells penny stocks and lets the whole world watch every gruesome detail of his final hi-tech stand.
Harris: All right, so there's 32 cameras here.
Byrne: All the time, 24 hours?
Harris: Twenty four seven. They are - there's a variety of kind of cameras that do different functions, so on these poles you have pan and tilts that hang down and each camera also has a microphone. So there's 32 cameras -
Byrne: And were talking everywhere?
Person: Everywhere. Well, you can see all these poles hanging down, they full coverage here. There are the pan and tilts on the side so you can get a different angle. Okay, so, so, for the can-cam -- the guys that made this, Controlled Entropy Ventures, are perverts. I mean theyre like rocket scientists meet perverts and they, you know, these small dots are the infra-red cameras and the big one is the camera.
Sometimes like Ive had parties here, I had one party in particular during Fashion Week and for whatever reason I just didnt like the party, I didnt like the people and then I projected everything that happens here out in my main hallway here, the main space. You know, of course these are all hip fashion kids and it was, theyre never seen this one. Theyd seen everything, but they hadnt seen this one.
Harris: Like I'm a jerk or something. Well, yeah, sex sometimes you do weird things when you have sex. I cant do weird things No you werent.
Woman: Living * just made me nervous okay, Im just nervous.
Byrne: But Josh couldnt stop there. The Internet was more than a way to make money, it was his obsession and he had to be on it whatever the cost.
Woman: Just hire a hooker, its easy.
Harris: Ill just find somebody else that I enjoy having sex.
Woman: Okay, good.
Byrne: In the end We Live In Public Dot Com cost Josh Harris the last of his precious millions and his girlfriend.
Hes now reinvented himself as a pop artist producing, not soup cans, but Gilligans, dozens of them.
But his delusions of grandeur about his final moments on the Internet remain intact.
Josh: Its defining for me personally, its defining an end to being an Internet millionaire and, yeah, I think its poetic. You know, theres points when you think kind of, you know, am I a loser? You know, just totally screwed up and, you know, the more I'm thinking about it, no way. I'm - it worked. Ill look back on this literally because its on videotape and Ill be amazed. I really will be because, you know, I punctuated well in my life.
Byrne: Josh Harris began to punctuate in the late 80s - his first net venture made him an instant multi-millionaire; his second was an online TV network called Pseudo, broadcasting, well, all sorts of things.
Music
Announcer: So please join us in the chat-room, listen and enjoy because you are about to get freaked out.
Byrne: Being the boss had its perks. Once a week Harris appeared on his own network as a character he imaginatively called The Josh.
Woman: I dont know much about The Josh but I can tell you that every single time I watch it, it disturbs me.
Byrne: It didnt disturb the moneymen, who invested some 20 million dollars in Josh Harris. They lost it all when, a year later, Pseudo went bust.
John Barry is the venture capitalist who bankrolled The Josh.
Barry: The reason to have backed Josh Harris is at the time that we invested in Pseudo programs it was unclear how soon the convergence of the Internet and television broadcasting would arrive. Sometimes youre simply too early. Sometimes the pioneers get the arrows and the settlers get the land.
Byrne: Mr. Barry, did you meet Josh Harris?
Barry: Yes I did meet him.
Byrne: Did he strike you as a good risk?
Barry: Oh well, Mr. Harris did not run the company. He was in effect Mr. Outside, Mr. Visionary, Mr. Idea-man with no operating authority whatsoever. We would never have backed him as a manager.
Josh: Thats the sensor. Thats the, thats the
Byrne: Visionary is one way of describing Josh Harris. Barking mad is another. Youve got to wonder, what was it that prompted responsible investors to finance such foolishness?
Byrne: So that you actually see you lying here -
Harris: Doing whatever youre doing the more important thing is again, theyve miked this thing
Byrne: Was it a scam all along?
Yardeni: Scam implies that there is some villain that, you know, plotted this whole thing and conspired to basically bilk and steal from the public. We have met the enemy and the enemy is us.
Byrne: Senior analyst at Deutschebank, Dr Ed Yardeni.
Yardeni: Yeah, you can round up the usual suspects on Wall Street and you can round up the usual suspects on Silicon Valley and the venture capitalists but, you know, I dont think there was any real villains here, I think it was a mass delusion.
Byrne: Others take a darker view. Patrick Byrne, for instance, who makes a lucrative living out of dead dot coms, buying their merchandise at fire-sale prices and flogging it off on the net.
In short, hes a vulture capitalist.Patrick Byrne: I tell people
I want to be the bacteria in the gut of the catfish at the bottom of the food chain. Let all those other clowns fight about it up there Im just going to sit and it all floats down to me.
Byrne: While Byrne is more than happy to pick the bones and take the profit hes keen to point out who else did too.
Patrick Byrne: ** public collected in 1999, also collected 4.3 billion dollars in fees for bringing to the public all kinds of slop that they should have never have bought.
Byrne: So was it just another mania or was it something more sinister.
Patrick Byrne: Whats really happened is the public investor, and there is a lot of pension funds and a lot of mom and pop investors who I think really were betrayed by, I call them, Wall Street pimps. I mean the people who did this were pimps.
Byrne: Not everyone in the dot com world succumbed to the siren song of Wall Street. Some realised there was money to be made if you kept your head. One of them was cyber-pioneer John Borthwick.Borthwick: It was one of those experiences, it was so black and I couldnt
sleep for two or three days, I mean literally I would lie in bed and I would be just restless, I would be tossing and turning thinking of things and ideas that, that I could do.
Byrne: Inspired by this vision of a new world, Borthwick raised 70 thousand dollars and in 1994 started Digital Cities, an online guide to New York.
It wasnt long before he was forced to make a strategic choice -- take the company public, using money offered by the VCs, or sell out to the big kid on the block AOL. Borthwick chose to sell and move in. It was a traumatic shift for a small start-up.
Borthwick: Oh my. Well, this is a big change from the old office. How are people reacting?
Man: Depends on where theyre sitting.
Borthwick: Wheres that?
Woman: Chicago.
Byrne: Today Borthwick and most his team are still at AOL alive and profitable -- hunting out new products for the giant.
Borthwick has no doubt where theyd be now if he listened to the moneymen.
Borthwick: What happened in some cases is that, you know, the venture capitalists sort of and the bankers, particularly the bankers, felt like that they could sort of strap all these booster rockets onto the back of the entrepreneur and, you know, push him forward, give him enough money, get him to the IPO, sort of in the IPO would light up the booster rockets and off they would go and, you know, people would see how high it could fly and when the entrepreneur had reached as high as they could go, people would take their money.
Byrne: And what happened -
Borthwick: And the entrepreneur would be left there to figure out, okay, what do I do now?
Music
Byrne: For Josh Harris, Internet millionaire the ride is now over. This is the last stop on the dot.com express, it's been highly lucrative, perhaps a little desperate but now he's packing up leaving his loft and cameras behind and heading off to India and a very private life.
Harris: Yeah, Im pretty battered, Im emotionally battered from the experience and I need to go and recuperate.
Byrne: Alone?
Harris: Alone.
Steph: When his thing went down, it was just the greatest delight. He was just I remember him squealing in the newspaper, look what you people have done with my stock.
Byrne: And then theres Steph Paternot who, when hes not acting, is writing a book about his time in the big league.
Paternot: You know that Wiley is just going through the whole book.
Person: Really?
Paternot: Remember I mentioned that there were 54 Fucks and 53 Shits.
Person: Yes.
Paternot: Theyll be one of each by the end it.
Person: Really?
Paternot: Yep.
Paternot: I still love The Globe. It's still my baby. You know I'm never going to hate my own company or anything. I love it and I want to help it any way I can. But at the same time, Im not 50. I'm not retiring. I need to figure out what I'm going to do for the rest of my life. I need to make money.
Byrne: As for his former partner, Todd Krizelman, well he is still at the Globe, working for its new CEO.
Chuck: You cant* your way there, if you generate the revenue what are you going to do?
Byrne: Chuck Peck is everything Todd and Steph werent. Which makes him the companys best hope for survival.
Byrne: Are you absolutely 100 per cent confident that Globe dot com will be there next year?
Todd: Yes.
Byrne: Three years?
Todd: Yes.
Byrne: Five years?
Todd: I don't know five years.
Music
Byrne: The tech wreck is a bit like a train smash in which miraculously no one died. The victims may be battered, they may be bruised and they certainly are a lot poorer, but they survived, they walked away alive. The amazing thing is how many of them are prepared, after a period of recovery, to get right back on the train and resume their cyber ride.
Jason: There's 300 million people on the Internet right now, depending on who you believe. Its probably a little bit more. But that number's going to go to a billion, and then it's going to go to two billion, three billion, until I believe, every single person on the planet is going to have access to the Internet.
Yardeni: Technology was a bubble but, you know, its really not tulips. I mean tulip mania just when that bubble burst it was just pretty flowers at the end of the day. When the oil bubble burst it was just a commodity and there was lots of it.
The technology industry is pretty inventive and I have no doubt at all that sooner rather than later theyll come up with the next new, new thing and well all get hyped up about it again. Its the madness of crowds, I mean it really it.
Two years ago we went to the capital of capitalism, New York, to focus on four smart young geeks as they moved from the back room to the board rooms to form their own dot com companies.Then, they made their own rules, built their own belief systems and lived their lives on paper promissoriesBut what they never had was some solid, old-fashioned profitsLast month we returned to the silicone alleys of Manhattan to discover what happened and to whom when the blue skies faded.
Madness indeed, and yesterday the riotous ride for the shareholders of the globe dot com ended with a whimper when they were officially de-listed from the NASDAQ exchange.
Byrne: The pundits are calling it mad Dow disease. Tom Leonessa calls it greed, pure and simple.
And Tom should know. For twenty years hes delivered the news headlining Wall Streets record-breaking boom and its recent giddying fall.
This morning Toms route runs through the heart of Americas once super-charged economy -- Silicon Alley.
Tom: They go from one side of the street to the other side of the street. They dont care, as long as they get the fare.
Byrne: Along with its Californian cousin, Silicon Valley, its the scene of one of the most spectacular smash-ups in American capitalism: The Tech Wreck.
Tom: Ive been driving for twenty years, Ive seen them come, Ive seen them go. Dot.com, Dot.gone, who gives a shit.
Joseph: Veteran Silicon Alley company Snickleways Interactive has finally closed up shop.
Byrne: Joseph Gallivan shares a front row seat at the Tech Wreck, chronicling the carnage in his New York Post column, Dead Dot Com of the Day.
Joseph: We terminated virtually all our employees Tuesday. Technically speaking were not out of business we hit a liquidity crisis.
Byrne: Already more than 200 Dot.coms have gone bust and another 20 die each month.
Byrne: Do you feel sorry for them at all?
Joseph: No, not really. I mean on the way up they were very boastful of what they were going to do. They were going to change the world.
The head of Razor Fish, which is a web shop here, he said This is a revolution, were packing rifles. And now theyre not worth anything Theyre underwater as they say.Music
Byrne: Steph Paternot is now an aspiring actor learning lines he never needed in his old life as a master of the universe, a Wall Street legend. But the tech wreck ended all that.
Person: So, did you meet him?
Steph: Yeah, we met him.
Person: Nice guy.
Person: So, you'll shoot him then?
Steph: Not a chance in hell.
Byrne: Fresh out of college, Steph Paternot co-founded white-hot Internet company The Globe.com or Tee Glow.
Person: talk to him so we can coordinate some deals in LA.
Byrne: Shares opened at $9 and jumped to $97 on its first day of trading. Then, Steph Paternot was worth close to $100 million. Today his shares are worth under 20 cents a piece. Which makes Steph worth
Paternot: Almost nothing. That's the sad part of it all.
Byrne: But didn't you, I mean, you sold on the way through, you must have
Paternot: Barely, no, no, we had one time to sell in the secondary offering which netted me under a million dollars and I lost a lot of that trying to make more money by investing in other Internet companies. Big mistake.
Byrne: So you're not a millionaire any more?
Paternot: No, I mean not cash-wise. I've very little cash but, you know, I have a nice apartment and, you know, hopefully my TGLO stock will go back up one day. Otherwise, Ive got to get a regular job.Music
Byrne: Remember the old days? The mid-90s? Then, the streets of Silicon Alley ran with gold. The Internet was a revolutionary force, the economy an unstoppable train, and the boring old business cycle was declared dead.
It was in the midst of this frenzy, that Steph and partner Todd Krizelman went public with theGlobe.com.
NASDAQ Reporter: TheGlobe.com come in public today selling three million shares to the public, the stock opened to 87 and has been on upside ever since and currently we have it priced at $70 a share for a gain of $61 a share.
Byrne: Investors queued up to throw money into the bonfire. The hype ran rampant.
Steph: This is almost like letting the people of the planet know that they are now the masters of the universe and for the first time they can realise it and try it.
Todd: Oh yes, good. Steph, how are you?
Byrne: As joint bosses of The Globe, Todd Krizelman and Steph Paternot were inseparable. Today, they talk on the phone.
Like most of the Internet dream merchants, they attracted millions to their business but never worked out how to turn a profit.Jason: If I went out to corner and I
sold hundred bills for ten dollars, I would have a very good business and a lot of customers until I ran out of hundred dollar bills, and there were a couple of examples of companies like that. I think theGlobe was one of those companies. They were spending so much getting people to come to their website and making nothing, or very little when they got there.
Jason: Yes, good boy.
Byrne: Now, of course, everyone and his dog knows better.Jason Calacanis is publisher and owner of the Silicon Alley Reporter.
His company wasnt just a booster for the Internet revolution.
It shared its alternative values.
Jason: And what is this?
Woman: That's from
Byrne: Despite this, Calacanis has always been suspicious of The Globe.Jason: I wrote an editorial the day they went public, that was titled theGlobe dot-com is a scam. Basically
reporting how it wasnt worth what the price was, and how it became worth that price, and how the truth was that said they had bought a lot of traffic and spent a lot of money, but that it wasn't going to be a sustainable business and they were the one of the best examples of a company that was built on hype.
Paternot: You know, Amazon burns through a billion a year, no one raises an eyebrow, we burn through 50 and people go, oh my God. No, no, I mean, its all relatively speaking. We lived through a mania and we were part of that mania, it was, you know, modus operandi, regular way of doing everything in those days. And for anyone that outside of this world even losing 1 million was ludicrous to them
Byrne: Through much of the madness, old school analysts like Larry Wachtel clung to their faith in the fundamentals. When I talked to him two years ago, the Internet market was at its frothiest but it smelt like tulips to him.
Wachtel: Everybodys invested, everybodys happy, everybodys making money: somethings wrong here,
Byrne: Even Larry Wachtel, eventually, succumbed to what he now agrees was mass hysteria.Wachtel: It was happening before my eyes.
I saw stocks go up 30 and 40 points a day. And I said why cant I join in the fun. But most of the people said, maybe these young guys are right. Im old, they're young, maybe they know. So, we followed the youth and that was our calamity.
Byrne: Why were people who, frankly should have known better, prepared to be maniacs?
Wachtel: Well, you know, greed begat greed. And it was just a spiral upward and at some point you should have recognized that it was too late but we deluded ourselves, yes, it was a delusion, yeah.Music
Byrne: To see just how deep this delusion ran, we introduce Josh Harris Internet millionaire turned Internet exhibitionist, in his Soho loft apartment.
Harris became such a true believer in the power of the net he decided to broadcast his life on it twenty four seven. He calls it We Live In Public Dot Com.
Harris: Hey, its Josh Harris, is he around.
Byrne: Three years ago Josh Harris was worth 36 million dollars.
Harris: Fine, you know, buy like three grand worth of that, buy in at 15 cents and see if anyone picks it up.
Byrne: Today he buys and sells penny stocks and lets the whole world watch every gruesome detail of his final hi-tech stand.
Harris: All right, so there's 32 cameras here.
Byrne: All the time, 24 hours?
Harris: Twenty four seven. They are - there's a variety of kind of cameras that do different functions, so on these poles you have pan and tilts that hang down and each camera also has a microphone. So there's 32 cameras -
Byrne: And were talking everywhere?
Person: Everywhere. Well, you can see all these poles hanging down, they full coverage here. There are the pan and tilts on the side so you can get a different angle. Okay, so, so, for the can-cam -- the guys that made this, Controlled Entropy Ventures, are perverts. I mean theyre like rocket scientists meet perverts and they, you know, these small dots are the infra-red cameras and the big one is the camera.
Sometimes like Ive had parties here, I had one party in particular during Fashion Week and for whatever reason I just didnt like the party, I didnt like the people and then I projected everything that happens here out in my main hallway here, the main space. You know, of course these are all hip fashion kids and it was, theyre never seen this one. Theyd seen everything, but they hadnt seen this one.
Harris: Like I'm a jerk or something. Well, yeah, sex sometimes you do weird things when you have sex. I cant do weird things No you werent.
Woman: Living * just made me nervous okay, Im just nervous.
Byrne: But Josh couldnt stop there. The Internet was more than a way to make money, it was his obsession and he had to be on it whatever the cost.
Woman: Just hire a hooker, its easy.
Harris: Ill just find somebody else that I enjoy having sex.
Woman: Okay, good.
Byrne: In the end We Live In Public Dot Com cost Josh Harris the last of his precious millions and his girlfriend.
Hes now reinvented himself as a pop artist producing, not soup cans, but Gilligans, dozens of them.
But his delusions of grandeur about his final moments on the Internet remain intact.
Josh: Its defining for me personally, its defining an end to being an Internet millionaire and, yeah, I think its poetic. You know, theres points when you think kind of, you know, am I a loser? You know, just totally screwed up and, you know, the more I'm thinking about it, no way. I'm - it worked. Ill look back on this literally because its on videotape and Ill be amazed. I really will be because, you know, I punctuated well in my life.
Byrne: Josh Harris began to punctuate in the late 80s - his first net venture made him an instant multi-millionaire; his second was an online TV network called Pseudo, broadcasting, well, all sorts of things.
Music
Announcer: So please join us in the chat-room, listen and enjoy because you are about to get freaked out.
Byrne: Being the boss had its perks. Once a week Harris appeared on his own network as a character he imaginatively called The Josh.
Woman: I dont know much about The Josh but I can tell you that every single time I watch it, it disturbs me.
Byrne: It didnt disturb the moneymen, who invested some 20 million dollars in Josh Harris. They lost it all when, a year later, Pseudo went bust.
John Barry is the venture capitalist who bankrolled The Josh.
Barry: The reason to have backed Josh Harris is at the time that we invested in Pseudo programs it was unclear how soon the convergence of the Internet and television broadcasting would arrive. Sometimes youre simply too early. Sometimes the pioneers get the arrows and the settlers get the land.
Byrne: Mr. Barry, did you meet Josh Harris?
Barry: Yes I did meet him.
Byrne: Did he strike you as a good risk?
Barry: Oh well, Mr. Harris did not run the company. He was in effect Mr. Outside, Mr. Visionary, Mr. Idea-man with no operating authority whatsoever. We would never have backed him as a manager.
Josh: Thats the sensor. Thats the, thats the
Byrne: Visionary is one way of describing Josh Harris. Barking mad is another. Youve got to wonder, what was it that prompted responsible investors to finance such foolishness?
Byrne: So that you actually see you lying here -
Harris: Doing whatever youre doing the more important thing is again, theyve miked this thing
Byrne: Was it a scam all along?
Yardeni: Scam implies that there is some villain that, you know, plotted this whole thing and conspired to basically bilk and steal from the public. We have met the enemy and the enemy is us.
Byrne: Senior analyst at Deutschebank, Dr Ed Yardeni.
Yardeni: Yeah, you can round up the usual suspects on Wall Street and you can round up the usual suspects on Silicon Valley and the venture capitalists but, you know, I dont think there was any real villains here, I think it was a mass delusion.
Byrne: Others take a darker view. Patrick Byrne, for instance, who makes a lucrative living out of dead dot coms, buying their merchandise at fire-sale prices and flogging it off on the net.
In short, hes a vulture capitalist.Patrick Byrne: I tell people
I want to be the bacteria in the gut of the catfish at the bottom of the food chain. Let all those other clowns fight about it up there Im just going to sit and it all floats down to me.
Byrne: While Byrne is more than happy to pick the bones and take the profit hes keen to point out who else did too.
Patrick Byrne: ** public collected in 1999, also collected 4.3 billion dollars in fees for bringing to the public all kinds of slop that they should have never have bought.
Byrne: So was it just another mania or was it something more sinister.
Patrick Byrne: Whats really happened is the public investor, and there is a lot of pension funds and a lot of mom and pop investors who I think really were betrayed by, I call them, Wall Street pimps. I mean the people who did this were pimps.
Byrne: Not everyone in the dot com world succumbed to the siren song of Wall Street. Some realised there was money to be made if you kept your head. One of them was cyber-pioneer John Borthwick.Borthwick: It was one of those experiences, it was so black and I couldnt
sleep for two or three days, I mean literally I would lie in bed and I would be just restless, I would be tossing and turning thinking of things and ideas that, that I could do.
Byrne: Inspired by this vision of a new world, Borthwick raised 70 thousand dollars and in 1994 started Digital Cities, an online guide to New York.
It wasnt long before he was forced to make a strategic choice -- take the company public, using money offered by the VCs, or sell out to the big kid on the block AOL. Borthwick chose to sell and move in. It was a traumatic shift for a small start-up.
Borthwick: Oh my. Well, this is a big change from the old office. How are people reacting?
Man: Depends on where theyre sitting.
Borthwick: Wheres that?
Woman: Chicago.
Byrne: Today Borthwick and most his team are still at AOL alive and profitable -- hunting out new products for the giant.
Borthwick has no doubt where theyd be now if he listened to the moneymen.
Borthwick: What happened in some cases is that, you know, the venture capitalists sort of and the bankers, particularly the bankers, felt like that they could sort of strap all these booster rockets onto the back of the entrepreneur and, you know, push him forward, give him enough money, get him to the IPO, sort of in the IPO would light up the booster rockets and off they would go and, you know, people would see how high it could fly and when the entrepreneur had reached as high as they could go, people would take their money.
Byrne: And what happened -
Borthwick: And the entrepreneur would be left there to figure out, okay, what do I do now?
Music
Byrne: For Josh Harris, Internet millionaire the ride is now over. This is the last stop on the dot.com express, it's been highly lucrative, perhaps a little desperate but now he's packing up leaving his loft and cameras behind and heading off to India and a very private life.
Harris: Yeah, Im pretty battered, Im emotionally battered from the experience and I need to go and recuperate.
Byrne: Alone?
Harris: Alone.
Steph: When his thing went down, it was just the greatest delight. He was just I remember him squealing in the newspaper, look what you people have done with my stock.
Byrne: And then theres Steph Paternot who, when hes not acting, is writing a book about his time in the big league.
Paternot: You know that Wiley is just going through the whole book.
Person: Really?
Paternot: Remember I mentioned that there were 54 Fucks and 53 Shits.
Person: Yes.
Paternot: Theyll be one of each by the end it.
Person: Really?
Paternot: Yep.
Paternot: I still love The Globe. It's still my baby. You know I'm never going to hate my own company or anything. I love it and I want to help it any way I can. But at the same time, Im not 50. I'm not retiring. I need to figure out what I'm going to do for the rest of my life. I need to make money.
Byrne: As for his former partner, Todd Krizelman, well he is still at the Globe, working for its new CEO.
Chuck: You cant* your way there, if you generate the revenue what are you going to do?
Byrne: Chuck Peck is everything Todd and Steph werent. Which makes him the companys best hope for survival.
Byrne: Are you absolutely 100 per cent confident that Globe dot com will be there next year?
Todd: Yes.
Byrne: Three years?
Todd: Yes.
Byrne: Five years?
Todd: I don't know five years.
Music
Byrne: The tech wreck is a bit like a train smash in which miraculously no one died. The victims may be battered, they may be bruised and they certainly are a lot poorer, but they survived, they walked away alive. The amazing thing is how many of them are prepared, after a period of recovery, to get right back on the train and resume their cyber ride.
Jason: There's 300 million people on the Internet right now, depending on who you believe. Its probably a little bit more. But that number's going to go to a billion, and then it's going to go to two billion, three billion, until I believe, every single person on the planet is going to have access to the Internet.
Yardeni: Technology was a bubble but, you know, its really not tulips. I mean tulip mania just when that bubble burst it was just pretty flowers at the end of the day. When the oil bubble burst it was just a commodity and there was lots of it.
The technology industry is pretty inventive and I have no doubt at all that sooner rather than later theyll come up with the next new, new thing and well all get hyped up about it again. Its the madness of crowds, I mean it really it.