Professor to dissect dot-com disaster

He and his wife victims, UM business teacher will chronicle the era

July 05, 2002|By Andrew Ratner | Andrew Ratner,SUN STAFF

COLLEGE PARK - David A. Kirsch recalls when his wife's Internet business was going great guns.

"Friends were leaving messages on our voice mail, `You guys are going to be rich!'" he said, recalling Broadband Sports Inc., which produced Web sites for pro athletes and whose brief life belied some spectacular press clips. "You started to believe it."

Kirsch, a professor of entrepreneurship at the Robert H. Smith School of Business at the University of Maryland, is about to study what he and his wife, and thousands of others, experienced.

With a $300,500 grant from the Alfred P. Sloan Foundation, he's leading a research project that intends to be the most extensive multimedia chronicle of the dot-com era of the late 1990s.

He has begun collecting business plans, PowerPoint slide presentations and other electronic documents from failed Internet-based enterprises. By the end of 2004, he hopes to have interviewed hundreds of principals and workers of former dot-coms to probe deeper into the causes of one of the more turbulent business periods in modern history.

He also hopes to collect various remnants from that exuberantly irrational era (Alan Greenspan's description), everything from home videos shot at outrageously lavish parties to receipts for ridiculously expensive office furnishings, climbing walls and other trappings of the so-called new economy. The eventual record will be stored at the university library, available to all.

Kirsch hopes that the project not only produces an archive for the dot-com age but also mines some insights into its failures. He also wishes it to produce some pointers for future successes. Whether lessons from one era's investment phenomenon are transferable to the next is debatable, though.

"It's like saying to the dogs at feeding time, `These are the rules about eating.' When you throw the meat out there, the rules get thrown out the window," acknowledges Tim Miller, an Internet business researcher in San Francisco whose company,, is assisting the University of Maryland project.

Whether it is possible to make a buck off the medium by selling dog food, the Internet can well accommodate a nontraditional research project. For example, entrepreneurs can offer their business plans for the study via the Web at www.businessplan .

"If we don't collect it, we're going to lose it," said Kirsch, who notes that Web sites and e-mails may be more perishable than paper business records that have lasted for centuries. "I'm out to prove that we don't know the whole story, and the stories we've heard are from the people who had the resources to tell them."

The researchers believe that plenty of people who worked for Internet-dependent businesses, once estimated at 7,000 companies or more, will be willing to recount what went wrong - or right.

"It seems to have hit a nerve with a certain amount of entrepreneurs who seem to feel they have some unfinished business," Miller said of the study.

But the researchers also acknowledge that wounds may still be too fresh for some failed Web entrepreneurs or laid-off technology employees for them to want to tell their stories.

"That whole bubble was distraction. There was a deep discomfort of the boom here by people who had been in the industry for a long time," Miller said. "As a friend likes to call them, you had `Biff' and `Buffy' of the dot-com land who had less perspective and thought this was the next big thing."

Miller agrees with Internet guru Stewart Brand, who in a speech at the Webby Awards in San Francisco last month reminded that lean business cycles are more typical when lasting tech innovations are born.

Kirsch sees parallels between the dot-com era and the advent of the automobile a century earlier, another period he has studied and written about. In the 1890s, much capital flowed the way of conventional wisdom - that electric passenger cars would naturally follow the electrified trolleys rumbling through American cities. That idea, and those investments, dried up with the introduction of the internal combustion engine.

Kirsch is determined to remain neutral and dispassionate about his subject, although it would be understandable if he were a bit wistful. He'd spent years at College Park as a mentor of students as they busily sketched business plans on napkins during the boom, and advised companies, including the one involving his wife that raised, and consumed, $60 million in venture capital.

Now he struggles to even recall when her e-business folded - an unintentional, if poignant, reminder of how fast the era's recollections can vanish.

"I think it died in early 2001, but I'm not sure," he said, shaking his head. (It was February 2001.)

"Geez, I owned a million shares and I can't even tell you when it died."

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