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Review - The Dot.com 'Revolution'

By Mark Leonard.

Has the dot.com 'revolution' encountered its Thermidor? Here, Mark Leonard, Director of The Foreign Policy Centre, reviews three books on the phenomenon, Dot.Bomb - The Rise and Fall of Dor.com Britain by Rory Cellan-Jones, Dotbomb – Inside an Internet Goliath - from Lunatic Optimism to Panic and Crash by J. David Kuo and The Internet Galaxy: Reflections on the Internet, Business and Society by Manuel Castells.

Dot.bomb The Rise & Fall of Dot.Com Britain: Rory Cellan –Jones (Aurum Press 2001)

Dotbomb – Inside an Internet Goliath - from Lunatic Optimism to Panic and Crash: J. David Kuo (Little, Brown and Co, 2001)

The Internet Galaxy: Reflections on the Internet, Business and Society: Manuel Castells (Oxford University Press, 2001)

For most people, the dotcom revolution is something that happened in 1999. Those hardy perennials of British retailing who were turfed out of the FTSE 100 to make way for silver-tongued graduates armed only with sketchy business plans must feel vindicated: – the Nasdaq is ailing, used office furniture is the only hot commodity in Silican Valley. Even in Britain, OFTEL recently reported the first fall in home internet use.

J. David Kuo's Dotbomb – Inside an Internet Goliath gives an insider's view on what it was like to be on the cusp of the wave. He joined ValueAmerica.com six weeks after it floated on the stock-market for $2.5 billion. This was a company that sought to cut the overheads normally associated with retail by liasing between manufacturer and customer to co-ordinate direct delivery from one to the other. Like clickmango or boo.com, it was a nice idea undetained by the prosaic realities of retailing. Manufacturers tended not to put their back into delivering one-off orders punctually (the designer ice-cream was invariably melted when it arrived) and the internet wasn't sufficiently entrenched in people's lives to make the economics work.

Kuo's is a freewheeling account, hot on personalities, excitement, adventure and misadventure. It combines a kind of Jack Kerouac narrative urgency with that faith in providence shared only by true believers: 'Craig Winn had been waiting for a revolution like this almost his whole life … It was, he argued, a historical inevitability that retail underwent a revolution every decade or so".

With scarcely less vim the BBC's Technology Correspondent Rory Cellan Jones serves up a picaresque tale of the rise and fall of Dotcom London. We get the predictably lurid anecdotes of swagger and excess –first class trips to New York for no clear purpose, call centre staff paid to do nothing for months, a culture that dismissed profit-making as the preserve of those who weren't prepared to invest for the long-haul. He skilfully describes the forces behind the maelstrom. PR companies promoting their dotcom clients and newspapers hungry for stories of instant riches conspired to vastly inflate prices. Bulletin boards in which small shareholders could swap tips led to huge stock market fluctuations as fact, rumour and misinformation became indistinguishable. Conflicts of interest arose as analysts, supposed to give impartial advice to institutional investors, were drafted in to publicise the latest internet floatations.

What is most striking is that everyone knew they were in the grip of madness – but they knew that if they were prepared to pay vastly over the odds for shares, someone else would be willing to buy them in a week for even more. But Cellan-Jones is a canny enough observer not to entirely believe the bright lights, big city cliches. The dotcom kids were more likely to be slumped over their keyboard at three in the morning than snorting lines in a Soho members club. For all the talk of taking on the old boy network, ushering in a brash, American business culture – many of the movers and shakers had met at Eton and Harrow and retained a decidedly English reticence about their bank-balances. Though the net was supposed to allow "virtual communities" to thrive and make "face to face" contact an irrelevance, all the entrepreneurs were clustered around Oxford Circus and hung out in the same bars. Far from being an atmosphere suited to the introspective geeks, the student newspaper vibe appealed because of its sociability.

Long-term, Cellan Jones sees the dotcoms as contributing towards a modernised Britain – the tyranny of dress-down has replaced the tyranny of pinstripe, and the financial service and budget airlines continue to be revolutionised by online sales.

In end, though, these books work better as navel-gazing romps through the beautiful people of London and California than they do as analytical works. They cover the seductive trajectory of bubble and burst at the expense of the quieter companies and less excitable voices. They play down the fact that serious figures in e-commerce retained a degree of circumspection at the time the market started taking notice of them, and justifiably retain a fair degree of optimism now, even when they are out of the limelight. Kuo's A to B narrative – demonstrated by his hysterical subtitle from Lunatic Optimism to Panic and Crash ignores this, because it would complicate the story – and doubtless make the film-rights to his story far less lucrative. A bulletin board-message quoted by Cellan-Jones reads: '"Lastminute.con [sic] may be well known amongst the Islington media luvvies as they're sipping their caffeine-free guacamole, but as far as most of the world's concerned it's "who gives a fuck.?" Quite.

For chapter and verse on what dotcom revolution really meant we have to turn to that seer of the information revolution: Manuel Castells. In his new book, The Internet Galaxy, he remains convinced that the internet will prove as revolutionary as the electrical grid and the electric engine. The web is the means through which we can harness the flexibility and adaptability of networks for the first time. Until now, networks were out-performed by organisations able to muster resources around centrally defined goals and "vertical chains of command and control". Three explosive social trends will bring about a new world: "management flexibility; the globalisation of capital, production and trade; the demands of a society in which the values of freedom and open communication become paramount; and the extraordinary advances in computing and telecommunications made possible by the micro-electronics revolution".

But he gives obvious warning, often lost in the fizz of the late nineties, that the web is "neither utopia nor dystopia" but "an expression of ourselves". September 11 showed the dark side of networks – if the web means that despotic regimes cannot banish the BBC, it also means that democratic regimes cannot keep out Al Quieda. In Bogota, enterprising kidnappers have taken to spreading their demands via email as gated communities become more difficult to access. Finally, he proves that the campus culture of individual freedom that motivated the web pioneers is alive and well: "Users are the key producers of the technology" who "adapt it to their uses and values, and ultimately transforming the technology itself". This is the true story of the web – best represented by the teenagers who took the phone companies by surprise by developing their own private language of text-messaging. In comparison, the antics of Martha and her mates were a just a sideshow.

Mark Leonard is Director of the Foreign Policy Centre