Sunday 14 March The gong that signalled the end of the business day on the Amsterdam stock exchange sounded particularly ominously when it rang out on Friday, 17 March, a decade ago. It closed the first day's trading in shares of World Online. The internet bubble, which had created a slew of paper millionaires and a fair clutch of real ones, was beginning to burst. The so-called "new economy" was turning out to be nothing of the sort: After the weekend, World Online shares crashed to earth.

In London, investors started bailing out of Lastminute. It quickly became a rout that pushed scores of businesses to the wall and ushered in a technology recession that lingered at least until the arrival of Google on the American stock market in the summer of And an estimated trillion dollars of investors' money went down the drain as the contagion spread to the communications infrastructure sector.

They had argued that in a gold rush the real winners were the ones who sold the shovels and pickaxes — in the internet's case, the actual equipment of the web — but they quickly discovered that in a recession, everyone loses. Companies which had poured hundreds of millions into building huge fibre-optic cable networks and data-hosting centres suddenly found their mantra of "build it and they will come" sounded hollow. They had built, but the dotcom clients suddenly were not coming.

But out of the mess emerged a new way of doing business. The internet did have a profound effect on both society and commerce, just not as quickly as the "digerati" from the dotcom boom, with their inflatable boardrooms and dress-down style, had hoped. Some of the technology trends that everyone now takes for granted were born in the boom, from instant unmetered internet access, web TV and "cloud computing" to social networking and the mobile web. They may have been born in the boom but only in the past few years have they come of age.

There was already unrest in the air when World Online floated. The week had started with the publication of the annual statement to investors in Berkshire Hathaway by its investing guru boss, Warren Buffett.

Having refused to invest in tech stocks because he did not understand them, he was forced to apologise for the fund's poor performance in the previous year, but warned: The move ripped a hole in its business model — it had made money from call charges — but chief executive John Pluthero said it would mean more people would spend more time online and Freeserve would make money from content, e-commerce and advertising — a battle the ISPs are still waging.

Even back then, analysts were unconvinced, starting to doubt the crazy revenue projections built into their financial models. Then on the Tuesday, Lastminute. The shares rocketed from p to p within minutes of the opening but the nearly , retail punters who had registered to take part in the float were left disappointed, given just 35 shares each.

The Dot-com Bubble |

At their height on that first day, Lastminute. But the dotcom boom was all about the creation of a new paradigm for business.

Companies could not be valued on multiples of revenues or profits, the dotcom crowd argued. As Julie Meyer, founder of internet networking event First Tuesday and one of the UK digerati's fiercest evangelists, said on the day of Lastminute's ascension: And it was a brave person who denied the power of putting a small 'e' in front of any business model, be it e-venturing or e-commerce. There had been a lot of "moonshots" — companies whose shares soared on their debut — created out of the stock of dotcom businesses.

In the US, for instance, between and only 39 IPOs doubled in value on their first day. In , achieved it. By the middle of March , 43 had already doubled in value on their first day. There were mammoth gains to be made and the effective takeover of Wall Street bellwether Time Warner by digital upstart AOL at the start of really had seemed to signal an unstoppable revolution.

Such talk helped the Dow Jones Industrial Average race up points — its biggest one-day gain — fuelling concerns on Capitol Hill about the "casino mentality" gripping US markets. This side of the Atlantic, traders were becoming nervy.

Investor sentiment was turning against 'dotcommery'. By the end of the following week Lastminute. In Germany, shares in Lycos Europe dipped under their issue price within moments of the company going public.

In the US, the Nasdaq still had some life in it and touched a high of But the rot had set in. Even Joanna Lumley's endorsement could not help health and beauty site Clickmango, for instance, while the demise of fashion retailer Boo. Also headed into the deadpool were so-called business-to-consumer — or B2C — firms with such webby names as Letsbuyit. Business-to-business — B2B — firms, e-finance boutiques and so-called dotcom incubators were wound up or sold on the cheap. By the end of , World Online itself had been taken over by rival Tiscali.

The pendulum had swung wildly from "everyone's going to be a millionaire by Christmas" to the "internet is dead", remembers web entrepreneur Jamie Riddell, one of the British pioneers of internet advertising who launched his own agency, Cheeze, in late We had gone from one extreme: We did not have a fish tank in the stairs or anything crazy, we kept it sparse.

It was beans on toast for six months," he said. Eventually the company prospered and three years ago was scooped up by the Digital Marketing Group. Part of the reason the post-dotcom collapse was so prolonged was that while the boom provided fertile ground for new ideas, the technology of the web lagged behind. The internet connections being offered by the likes of Freeserve, for instance, were 56Kb per second dial-up. The average home connection today is more than 80 times faster.

Most home connections struggled with the overly complex sites created by many B2C companies, such as Boo. Telewest experimented with virtual worlds as it tried to drive sales of faster cable connections, but two years later it had abandoned its experiments as it struggled with its debts. It was another two years before BT started properly rolling out broadband services and only in the last few years has it become ubiquitous.

Back in , data-hosting companies talked of corporate clients storing information on the web, or switching to an application service provider ASP model, under which many of the programmes used by their employees would be run on the internet. Few companies, however, were confident enough about their web connections to plot such a move.

But now, companies like Google are challenging the might of Microsoft by providing corporate clients with everything from document management to calendars and email through a browser, and so-called "cloud computing" is one of the hottest topics in tech.

The dotcom boom also saw the sale of licences to operate the next generation of 3G mobile phone services. The mobile phone operators had already tried unsuccessfully to get consumers to try a pared-down version of the internet — using technology called Wap — but it took years for 3G services to take off.

It was not until the arrival of the 3G iPhone in , which spawned a host of copycat touchscreen devices, that 3G services came of age. Please choose your username under which you would like all your comments to show up. You can only set your username once.

International edition switch to the UK edition switch to the US edition switch to the Australia edition. The Guardian - Back to home. In the internet bubble spectacularly burst, now technology has caught up with some of the ideas it spawned. This article is 7 years old. Topics Technology sector The Observer. Martha Lane Fox Telecommunications industry Nasdaq eBay news. Order by newest oldest recommendations.

Show 25 25 50 All. Threads collapsed expanded unthreaded.

The crash of - Jul. 19,

Loading comments… Trouble loading? Signed in as Show comment Hide comment. Your comments are currently being pre-moderated why? Please keep comments respectful and abide by the community guidelines. The Guardian back to top.