March 16, 2001

Americans Blame Greed and Clueless Executives for the Dot-com Meltdown

(Washington, D.C., March 16) — As the fortunes of Internet companies have fallen in recent months, Americans who have followed these developments believe that the difficulties of dot-coms are attributable to overeager investors looking for quick profits and poor business plans by dot-com entrepreneurs. A smaller number of Americans say that the youth and inexperience of management of Internet companies are major reasons behind the shakeout.

Some numbers from the Pew Internet and American Life Project”s February poll:

  • 67% of Americans who are aware of dot-coms” financial woes subscribe to an “irrational exuberance” theory of what has caused the dot-com downturn, namely that investors in Internet companies took too many risks because they were looking for quick payoffs from the dot-com stock run-up.
  • 56% of Americans who are aware of dot-coms” financial woes say the dot-coms” business plans were a problem; Internet companies lacked a clear plan to profitability, and this contributed to subsequent financial problems.
  • 38% of Americans who are aware of dot-coms” financial woes say the youth and experience of those running Internet companies was a reason behind the dot-com downturn.
  • 26% of Americans who have heard about the dot-com” troubles believe they will have a major impact on the U.S. economy. Some 61% say it will have a minor impact on the overall economy.

    “Americans are saying that greed and haste made waste among dot-com investors,” says John Horrigan, author of the Pew Internet Project report. “The desire to chase a huge windfall overshadowed clear thinking about how Internet companies would actually make money. But even if speculation got the better of a lot of Internet investors, Americans do not see the dot-com shakeout affecting the entire economy very much.”

    Americans have a high awareness of the reversal of fortune for Internet companies. Fully two-thirds of all Americans have heard of layoffs, closings, or falling stock prices of Internet firms, with one-third (30%) having followed the story closely. Most Americans (57%) think that some dot-coms closing is a good thing, because the Web had too many sites with too little to offer. About one quarter (28%) lament the closure of dot-coms, saying they believe it will result in fewer choices of content on the Web.

    In terms of impact, 31 million Americans have been directly or indirectly affected by the dot-com downturn. Some 9% know someone who has been the victim of a dot-com layoff, 7% of Americans say their family has lost money in a dot-com investment, and 8% of Internet users have had one of their favorite Web sites vanish during the shakeout.