Select one of the keywords
dot.con: The Greatest Story Ever Sold    by John Cassidy order for
by John Cassidy
Order:  USA  Can
Perennial, 2003 (2002)
Hardcover, Paperback, e-Book

Read an Excerpt

* * *   Reviewed by David Pitt

In case you hadn't noticed, the Internet hasn't turned out to be the retailing bonanza a lot of investors seemed to think it would. The question, business writer Cassidy asks in this remarkably user-friendly book, is why so many investors ever thought it would be a bonanza.

Have you heard of a company called eToys? In March of 2001, it went bankrupt - which is not surprising, considering it was $274 million in debt. When it went public, the company had a value of $10 billion, even though, as Ronson points out, the likelihood of the company ever making money was ridiculously low.

Here's another one:, an online convenience store in New York: you place an order for pretty much anything, even a pack of gum, we deliver it to your home. The company hired Lee Majors, the Six Million Dollar Man, for a series of television commercials, and talked a bunch of investors into giving them a ton of money -, for instance, invested, are you ready for this, $60 million. The company was even talking about expanding, moving into thirty cities by the end of 2000.

But, Cassidy writes, 'If hadn't had 'com' attached to its name, it would have had trouble raising any money from outside investors.' Why? Because there was no way the company could ever make money. Each delivery it made carried a $10 cost to the company (labor, overhead), and this didn't even include costs for promotion and the actual cost of the merchandise customers ordered. "Since the average customer order was for about $12, it was mathematically impossible for the company to turn a profit."

The same can be said for most online retailers: considering the very low click-through rates on the Internet (i.e., the number of people who click on an online ad, never mind whether they wind up purchasing anything), considering the cost of maintaining a company and filling orders, most e-tailers were doomed to failure from the get-go.

Why, then, couldn't investors - most of them normally very shrewd investors, I might add - see this? Because, Cassidy says, the initial excitement over the possibilities of the Internet created a classic 'bubble,' a phenomenon in which excitement turns into wild speculation, which in turns drives prices up, and people keep investing more and more money in something which, eventually, turns out to be very nearly worthless.

Early investors usually make a tidy profit, since they sell their cheaply-bought stock to other speculators when the prices inevitably go up. But people farther down the line ... well, they lose big-time. They pour millions of dollars into companies whose value is entirely on paper, disregarding all the common-sense clues that indicate the value is ridiculously inflated, and then: pop. The bubble bursts. Somebody finally realizes they've paid millions of dollars for shares of a company that isn't turning a profit, and likely never will. So they sell of their shares. And then other investors sell. And, soon, everybody's trying to sell, and nobody can get rid of their worthless paper.

When eToys went bust, liquidators couldn't even sell off the computer system that controlled the company's inventory (the system was valued at $80 million). Its inventory had to be sold off at three-quarters its original price. Nobody wanted the company, or any of its parts. And the investors? Wave bye-bye to your millions, folks.

This will become, I think, one of the classic business books. Its story of speculation gone mad, of greed and stupidity, is downright compelling. How did so many people wind up investing so much money in companies that turned out to be failures? Ultimately, the answer is simple - they got caught up in the boom, and couldn't see what Cassidy makes plainly simple to us: there was no way they weren't eventually going to lose their shirts.

Note: Opinions expressed in reviews and articles on this site are those of the author(s) and not necessarily those of BookLoons.

Find more NonFiction books on our Shelves or in our book Reviews