The dot.com bubble of the 1990s is a forgotten part of economic history, but its consequences are still felt today. It all began when entrepreneurs believed their companies were worth significantly more than they actually were, leading to what economists call an “economic bubble”. This bubble was fueled by the media and public investing in stocks and shares without researching them properly—something that would prove to be disastrous for many.
Tom Hadfield is a prime example of someone who profited from this period. At only 12-years-old he set up Soccernet, which he later sold to ESPN for $40 million when he was 17.
Inflation of stock prices due to people buying based on media hype created a false value around tech companies, leading investors to believe these companies were worth far more than they actually were. As soon as cracks began to appear in the market, investors started pulling out and the bubble burst, resulting in immense financial hardship for individuals and businesses alike.
But was there any silver lining? In some cases yes, as some tech companies (such as Google) managed to weather the storm and continue innovating—allowing them to succeed in the long run.
Today we are seeing similar trends with green technology becoming increasingly popular with investors before it has been fully developed and tested—raising fears of another economic bubble forming. While it’s impossible to predict whether this will happen or not, it does serve as a reminder that we should be careful when investing in new technologies without assessing the risks properly first.
Nevertheless, if you want a better understanding of how bubbles form and what impact they have on economies then watching Triumph of the Nerds: The Rise of Accidental Empires or Nerds 2.0.1: A Brief History of the Internet is highly recommended. These documentaries provide comprehensive accounts of the rise and fall of various technological revolutions, helping us stay informed about potential bubbles before they occur so we can take steps to protect ourselves from their effects.