The New Old Thing

My favorite is the free-food indicator, but there are many other signs: There’s the impending Google IPO ($20 billion? $30 billion?). There’s the tripling, or quadrupling, or quintupling, of almost all of the Internet stocks (at least all of the remaining Internet stocks—the dogs as well as the good ones). There’s Barry Diller’s plans for the first Internet monument—a Frank Gehry building on the Hudson that will be the headquarters for Diller’s InterActiveCorp with its 27,000 employees. There’s the news that Fred Wilson, who ran the much-vaunted New York venture-capital firm Flatiron, which rose brilliantly and sank as ignominiously, is opening its doors again. Even Bob Pittman is out and about, reportedly involved in buying And there’s the Paris Hilton sex tapes—proof once again that the Internet can drive the culture (or lack of it).

The metrics (or what we used to call the metrics) are nearly operatic: usage, ad sales, shopping, even profits, through the roof. But beyond the numbers (which have been misleading before), there is, of course, everywhere, the crazy power of the thing.

The music business has been upended, and now Hollywood is under siege (the Internet is the storm, the entertainment industry the Outer Banks). Everything everybody used to say about the rise of new media and the fall of old is, it turns out, true. Odds are, you won’t be reading these words in the magazine in which they appear. They are more likely the product of a search—not least of all because I’ve used the words Paris Hilton sex tapes. In fact, large numbers of the Websites attached to old-media companies—which became, during the past few years, dreary backwaters—are all of a sudden making steadily increasing profits.

There’s politics. The Internet quite likely will select a presidential nominee next summer.

Then there is the digital transubstantiation of financial services, retail, travel, romance, job classifieds, and education (the University of Phoenix, a for-profit university—whatever that is, exactly—is, rather remarkably, selling boatloads of online college degrees for big-ticket tuition prices).

And there’s the free food.

For several years, I had a social life built almost entirely around the Internet business. Every night of the week, it was possible to join a large and convivial table at the best restaurants in Manhattan and San Francisco—with someone else picking up the check. It was a culture of excess, but it was very civilized excess (getting rich makes people finer social animals). And then, with some embarrassment and sheepishness and a new sense of propriety, it ended.

I haven’t had such a meal in almost three years—until the other evening. I didn’t even understand what it was until I got there. It was like a surprise party.

There was Patrick Spain, an old friend, the former CEO of Hoover’s, the Internet business-information company, who now has a big package of venture financing for his new search company, Alacritude. And Elisabeth Demarse, who left Bloomberg (old media) to run the fledgling (new media), which pathetically traded as low as 50 cents a share and which now is at $14. And Jay Sears, whose Edgar Online made it through the downturn (the rather surprising thing is how many companies turned out to have made it through). Bill Martin, who founded the financial-gossip site Raging Bull, was there. And so was Robin Johnson, the former CEO of Infoseek (“When did we last see each other?”).

Everybody looked great.

But I don’t mean this to be about the Internet’s return exactly, but about the emotional complexities of its second coming. To be among the people who enjoyed the most heady and transforming experience of the age but who failed categorically and miserably, who were cast out utterly (or felt themselves to be), and who are now looking squarely at the likelihood that they were right all along: The Internet is turning out to be all the things the most far-fetched said it was going to be. How do you deal with that?

I don’t think anyone has ever quite vividly enough portrayed the condition of the Internet dispossessed. What it was to be kicked out of paradise like that. Not just the dashed expectations. Not just the reversal of fortune. Not just the quality of humiliation. But how certain people of the boom came necessarily to question the nature of reality—or, anyway, their ability to decently measure and grasp it.

Between 1993 and 2003, the Internet created hundreds of thousands of jobs in New York and shed most of them. Now, a good many of the people who held those jobs are the (still) twentysomethings who have only known the upswing dot-com profession and the downswing dot-com profession. They’re like mine workers (the Internet was always a class-ridden profession) waiting to be called back to work.

But then there’s the entrepreneurial strata, the capital holders, that sudden class of prescient or lucky people who reconceived their lives—their status, their perspectives, their friendships—around the Internet boom. Some of these people made it out with money enough to lead comfortable (if slightly stunned and stunted) lives on the sidelines; and some made the humbling return to old media; and some, deeply freaked out, went through rough periods of personal and professional reevaluation (to go from being a Master of the Universe to being a joke is hard); and some, stubbornly or vaingloriously, or without other options (or, at any rate, not prepared to go into the food-services industry), kept at it.

It’s the people who were, however briefly, transformed who are pinching themselves hardest and who are most wary of the return.

It’s a little like getting back together with an abusive lover just out of rehab.

Or it’s a Candid Camera moment. Is there anyone so foolish as to really think it is happening again?

A new bull market, according to one of those lovingly subscribed-to Wall Street adages, never starts with the old leaders. And yet many hoary and eerie names are back. It’s not just eBay, Amazon, Yahoo! (the last two still pretty inexplicable) but So many stocks left for dead have suddenly been resurrected.

And, indeed, there is some of that same bewildered, no-explaining-it sense of a few years ago that clearly fuels the speculative process. Nobody is investing on strict valuation—but, rather, because the train seems to be leaving the station. The dumb and foolish make money. The smart and cautious go broke.

Here’s the calculation: Is it 1994, which means it’s just getting started again? Or is it 1995 and the Google IPO is Netscape, which means a year of pure mania before the first dip? Indeed, if this online Christmas season is as good as many people think it’s going to be, if the Google IPO goes out at maximum or even undreamed-of levels—sheesh, we could see dot-com ads back by the Super Bowl. Or is it all speeded-up—some new version of Internet time, with boom and bust compressed? Real boom or cruel boomlet?

There are, too, the passionate, defensive explanations—delivered with the aphoristic certainty that technology (or its vagaries) produces:

“It’s the people who were, however briefly, transformed who are most wary of the return. it’s like getting back together with an abusive lover just out of rehab.”

It’s less about a faster pipe than a constant and consistent pipe. An always-on connection speaks to the innate impulsiveness of the modern consumer. The Internet has finally become the ultimate point of purchase.

The excess has been wrung out of the system. Anybody who survived the nuclear winter of 2001 and 2002 has developed some reasonable and reliable survival strategies. Now it’s the toughest of the breed who are left.

It’s about liquidity, pure and simple, as it always is. Liquidity began to dry up in 2000 and the land was wholly parched by 2001, but now, with V.C.’s and hedge funds sitting on cash for two or three years—which if it stays uninvested for too much longer will have to be given back—the market is being flooded.

It’s search. It’s Google (making between $200 million and $500 million a quarter) and Overture and the paid-search model that has captured the hearts and minds of a new generation of investors (or, really, the same generation, just a few years older). Indeed, paid search—at least for anyone unfamiliar with the Yellow Pages—seems like one of those secrets of the universe revealed.

It’s social media. It’s Friendster—and its growing number of variations. Eighteen-to-24-year-olds who disappeared from television are turning up on the Internet—advertisers are going to have to abandon traditional media! It’s The Internet is one huge membership organization awash in incremental charges.

My friends who were back at the lovely table in the fine restaurant (Fifty Seven Fifty Seven at the Four Seasons) were hardly euphoric. They had just come from an information-business conference, which was mostly devoted to survival stories of the past couple of years. Of course, it is not nothing to be able to reflect on your own survival, but such reflections are a kind of self-consciousness (even existential outlook) that can get in the way of euphoria.

“I’ve gotten used to being unfashionable,” said Patrick Spain. “Actually, I have rather gotten to enjoy it. I don’t know if I’m ready to go back to being fashionable again.”

“Everybody is beginning to say this won’t last,” said Elisabeth Demarse about the soaring share prices of the Internet sector. “On the other hand, it’s just begun.”

“Wouldn’t that be funny if it were really back?” said Jay Sears.

The information-technology sector is expected to lose 234,000 jobs this year. But this is positive news. It lost 540,000 jobs last year.

The wild, inclusive, upending-anything-in-its-way, reinventing-everything, behavior-changing, relationship-altering claims about the Internet, which were commonplace (and ridiculous) a few years ago, are much rarer now. But they are demonstrably truer. It’s happening.

Now, it is possible that this could continue to happen quietly—just the incremental effect of new technology in our lives. Just better new appliances. But that is unlikely.

If you have felt it before, you know it’s coming—whether you quite want it to or not. You’ll even probably start to feel that you knew all along it would be back—even that it had never really stopped.

Anyway, I had the halibut.

The New Old Thing