The Washington Post just found out that irrational exuberance among CEOs, stock pickers, investment bankers, the financial press, and the stock exchanges caused a stock market bubble to form during the 1990s and then pop in March 2000, causing trillions of dollars of paper loses.
How else to explain the 30,000-word, six-part series, “Bubble: The Roots of the ‘90s Boom and Bust,” that the paper ran last week? The Post series, which includes such passé headline copy as “Investment Bankers Fuel the Frenzy” and “The Media Run With the Bulls,” arrives as many of the books about the crash—Dot.con, Dot.bomb, Bamboozled at the Revolution, Confessions of a Street Addict, The Godfather of Silicon Valley—wend their way to the remainder bin. Given this sort of news judgment, I suspect that a Post six-parter titled, “Quagmire: How the U.S. Got Mired in Vietnam” should appear any day now.
We could forgive the Post for telling an old story if there was anything new to say. Yet even though the Post’s reporters talked to a gazillion primary sources and obviously worked very hard in dragging the bloated series together, there’s not much here for the savvy business news consumer—who has seen better takes on John Doerr, the excesses of Nasdaq, the out-of-control telcos, cheerleading stock analysts, et al. in Fortune, Forbes, Business Week, and the Wall Street Journal—or the causal business news consumer who, if he survived the series, is likely as not to have responded, “Whaa?”
One subtext to the Post series is that the outrages against propriety and the law committed during the run-up by analysts, stock touters, venture capitalists, and entrepreneurs were transparent and egregious. How could the public have been fooled for so long? But if the crimes of greed were so apparent, why did the Post, like much of the rest of the media, accord the boom such credulous coverage while it was happening? For example, one week in March 2000, when the air was going out of Michael Saylor’s Microstrategy Inc., the Post was treating with reverence Saylor’s plans to donate $100 million to the establishment of an Internet university that would provide an “Ivy-league quality” education to anybody in the word. (It never happened.) Saylor also sailed onto the Post’s op-ed page that week with a mouthful of new-economy clichés.
To pick a few more random samples from the Post using the Nexis wayback machine, we find that when AOL and Time-Warner merged, David Streitfeld portrayed the online company as the tiger savaging the old media lamb (“AOL Rode a Wave, Time Missed the Boat; How Steve Case’s Crew Beat the Odds,” Jan. 16, 2000). On Feb. 14, 1998, Post Silicon Valley reporter Elizabeth Corcoran joined the hype brigade in publicizing Bill Joy’s “Jini” software project. Four and a half years later, the dream of Jini seems no closer to being released than it was then. And as the S.S. New Economy tipped aft and began its descent, the hyperventilating Sally Quinn was anointing the “tech luminaries” as Washington’s “new establishment” in a 5,300-word “Style” section piece (“Old Washington Meets Wired Washington,” April 5, 2000). Saylor, Russ Ramsey, Jim Kimsey, Raul Fernandez, Steve Case, Dan Snyder, and others were all knighted new establishmentarians by la Quinn.
It’s unkind to single out the Post writers above (please forgive me David, Elizabeth, and Sally!) because practically everybody covering the new economy, with the exception of Christopher Byron, has written something goofy and overenthusiastic at one time or another. Post coverage mostly mirrored the culturewide perception that we should all cash in—even if the boom was only a bubble.
Newspapers rarely engage in Maoist self-criticism sessions, so it’s too much to expect the Post to confess that it helped stoke the boom as it delivers late hits on John Doerr, the Nasdaq, investment bankers, and other bubble wizards. It’s probably also asking too much for the Post to report about the wild exuberance its parent company exhibited during the boom.
What kind of wild exuberance? The company has put at least $230 million into the online delivery of news during the last five years, according to an Editor & Publisher story that quoted Morgan Stanley analyst Craig Huber. That’s a big chunk of change, even for the Post Co. The analyst added that the company needed to stay the course and invest millions more lest some other dot-com swoop in and steal the Post’s classified business. It may be the best $230 million the company has ever spent or a folly worthy of a six-part series. (The same goes for Microsoft’s investment in Slate.)
In the Nov. 12 installment of the Post “Boom and Bust” series, a chart to a sidebar titled “New Media Fueled New Economy, and Vice Versa” attempts to illustrate how the “bubble spurred a dramatic rise in magazine advertising, and when it burst it caused an equally dramatic—and, in at least one case, fatal—fall.” The fatally felled publication in the chart is the Industry Standard. Oddly, nowhere does the series mention the Post Co.’s own entry in the new-economy-hyping business journalism genre, Washington Techway. Techway,a 25,000-circulation biweekly thatwent free to “qualified subscribers,” rolled up its eyes and went to the big magazine rack in the sky last month because of—you guessed it—a drop in advertising revenue. With typical prescience, the Post Co. started Techway in January 2000, just weeks before the crash.
Meanwhile, James K. Glassman, co-author of the science-fiction classic Dow 36,000, who should have had the good manners to commit seppuku when the market flushed, continues to shovel his go-go wisdom in the Sunday Post, and the “Business” section continues to plug local tech companies with generous daily coverage, albeit with a post-bust blush on its face.
If Post editors seek a model of humble self-effacement in the reporting of economic news, I direct their attention to the 1995 Washington Post Co. Annual Report, which details one of the company’s least lucrative financial gambles. The company had to write off its investment of $28 million in Mammoth Micro, a maker of CD-ROMs. “The write off at Mammoth simply reflects a bad decision Messrs. [Donald] Graham and [VP Alan] Spoon made in 1994,” the annual report states without qualification. “We acquired a company we had done business with for a couple of years. We were so impressed by its technical pre-eminence that we failed to note that there were, or soon would be, a hundred companies making CD-ROMs and few consumers buying them.”
Are you a boomer or a buster? I read my mail at firstname.lastname@example.org.