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Memories of the first Nasdaq 3000 in 1999

Published: March 15, 2012 | 8:09 am
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SAN FRANCISCO — Just two weeks after the Nasdaq closed above 3000 for the first time in November 1999, Microsoft Corp. co-founder Bill Gates gave a keynote address at the Comdex trade show.

Remember that? For those of you who have no idea what I am talking about, Comdex used to be the tech industry’s big show. But even back then, the sprawling show was starting to feel behind the times in the midst of the roaring dot-com boom that was sweeping the nation.

Fast forward to 2012: the Consumer Electronics Show has usurped Comdex as tech’s annual gathering, but Microsoft MSFT -0.21% will no longer participate. Giant industry trade shows are becoming increasingly irrelevant, expensive and inefficient in the world of social media, where many just watched CES press conferences webcast on Facebook.

As the Nasdaq bounces around 3000 again, it might be useful to walk down memory lane and look at the tech world over a decade ago, to see what has changed and what — if anything — we learned. Read more about the markets and tech stocks.

In 1999, there was no such thing as Facebook, Twitter or smartphones. The Palm Pilot was the tool for the cool young Gen-X hipsters and the gadget freaks, many of whom were plotting strategies to flip their Internet startups and cash out as millionaires in one of the many fly-by-night dot-coms. There were approximately 289 Internet-related IPOs in 1999, raising a staggering $24.66 billion. The Yahoo Inc. YHOO +0.34% neon sign flickered over San Francisco’s on-ramp to the Bay Bridge. Read about the wackiest and weirdest moments of the tech bubble.

One of the most memorable of those now-defunct dot-coms is Pets.com, perhaps more so for its iconic sock puppet used in its vast advertising campaign. On Nov. 4, 1999, just one day after the Nasdaq closed at 3028.51, Webvan went public. Two years later, the online grocery company, which spent millions setting up a nationwide distribution system, went bust. Now Safeway.com sells groceries over the web.

Today, the vestiges of Palm Inc., purchased by Hewlett-Packard Co. HPQ -0.14% in 2010, are pretty much gone. Many of those dot-commers are now in their 40s and some call themselves serial entrepreneurs, with a slew of successes and failures under their belts.

Carly Fiorina was then chief executive of H-P, Steve Jobs was orchestrating Apple Inc.’s AAPL +0.51% turnaround with the popular fruit-colored iMacs, and the company had yet to introduce the iPod and iTunes, which would forever change the music industry. The Twin Towers stood tall at the foot of Manhattan, and the city was promoted by some as “Silicon Alley” for its growing number of multimedia and Internet advertising startups.

Google Inc. GOOG -0.30% was still private, but the young company had just hired its first chef, Charlie Ayers. Ayers won the job in a cook-off judged by the company’s 40 employees. He previously had catered for the Grateful Dead.

Microsoft and Intel Corp. INTC -0.11% dominated the PC industry, Microsoft was battling antitrust allegations, and a year later, at the 2000 Comdex, Gates would demonstrate a tablet that used electronic ink, one that never saw the light of day.

Today, both giants are playing catch up in the mobile arena, Apple has upended up even more industries, including mobile phones, and it shook up the PC industry with the first successful tablet, the iPad. Its legendary co-founder Jobs passed away last year, and about-to-go public Facebook Inc. FB 0.00% CEO Mark Zuckerberg is the latest idol of tech CEOs.

Many things have changed dramatically in tech in the last 12 years. But Internet IPOs, after a long drought, have made a comeback, and venture capitalists are still investing in copycat, me-too startups. The dot-coms of 1999 have become the social media darlings of 2011 and 2012. And a lot of companies are still trying to figure out the best way to monetize “eyeballs.”

The valuations of money-losing companies such as Groupon Inc. GRPN +0.71% , with a market cap of nearly $9 billion, are troubling to some. Zynga Inc. ZNGA +0.15% , a social game company that makes money selling virtually nothing, also has a market cap just above $9 billion. According to Renaissance Capital, in 2011, four of the five largest U.S. Internet IPOs ever — Bankrate, Groupon, LinkedIn LNKD -2.42% and Zynga — raised $2.4 billion.

And the Yahoo sign no longer glows over San Francisco.


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