The financial world is suddenly rich in tragedy. People once worth billions are now worth millions; ...
The financial world is suddenly rich in tragedy. People once worth billions are now worth millions; others, once worth millions, now are straining to make the payments on their Range Rovers.
These sort of reversals give rise to bitterness in the victims and glee in everyone else. During the internet stock boom of the late-1990s, the business sections of every newspaper reeked of the joy of the tycoons; now they reek of the thinly disguised glee of people who didn't have the nerve to become tycoons.
The message that the spineless horde wants to get across is the same message that the spineless horde always wants to get across when fiercely ambitious people fail: people who fly too close to the sun get burned.
Of course, this isn't completely true. People who fly too close to the sun often come away with a nice even tan-and to the extent it is true, it isn't very interesting.
What is interesting is the likely lessons that the ambitious people whose lives were changed by the internet boom will take away from the internet bust. A few possibilities:
1) Risk is risky. The late stages of the boom were defined by all kinds of unlikely characters, accountants, lawyers, lifers of big companies, leaping out of their jobs and into startups, out of the strange belief that startups offered a riskless path to great fortune.
The distinction between risk haters and risk lovers became blurred: everyone behaved like a risk lover (because there didn't appear to be any risk).
Interestingly, the risk haters who behaved like risk lovers are the people who have been most badly burned by the bust. They got none of the boom's benefits and all of its costs.
All over the industrialized world, certified public accountants who have run through their savings are now slinking back to their former employers and asking for their old jobs back. Once they get them, they will be less likely than ever to leave them again.
2) It's always better to be a risk lover than a risk hater. A lot of naturally risk-loving people will emerge from the rubble of the bust with large fortunes. Thus the main lesson to be learned from the boom was not that it was a bad idea to take a flying leap into the dark.
The main lesson is that, if you are inclined to take a flying leap, it's much better to do it first rather than last. The people who do this are by nature people who love risk. The world still belongs to them, and always will.
3) Financiers are not the ally of the entrepreneur but neutral parties without heart or soul, like Switzerland.
One byproduct of the boom was venture capitalism as we now know it. For the past several years the VCs have passed themselves off as more than just suppliers of capital but as stewards of the businesses they funded. Then came the bust, and the VCs were the first to turn tail and run.
The New Economy is littered with the corpses of entrepreneurs abandoned by their capitalists. There's still a lot of venture capital around but it's a lot more hesitant, and a lot less friendly toward little guys with big dreams. (This is great news for big companies like Microsoft and Oracle., which suddenly have a lot less to fear from little guys with big dreams.)
4) Idealism about money making is misplaced. One of the strange things about the boom was the way that all of the controversy went out of money. All through the second half of the 1990s, internet entrepreneurs and venture capitalists were treated far less skeptically than were Wall Street people even at the peak of the 1980s. In the 1990s it was good to get rich; nobody who made millions of dollars was obliged to feel guilty about it.
The internet economy created the illusion that money came from wonderful qualities: imagination, hard work, creativity, etc. The economy now gives a rather different impression: money comes from luck.
People who were lucky enough to get in and out early got rich; everyone else got hammered. If getting rich is largely a matter of luck, it's no longer so easy to admire for its own sake.
Michael Lewis in Paris through the Bloomberg New York newsroom
HL and Liberty SIPP slowest
Lifetime and annual allowances
'IFAs bore the brunt'
'Recovery or boom'