Saturday 19 October/ Sunday 20 October 2019
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I
twastwodecadesago,butIremem-
ber exactly where I was when I got
the call. At the time, I was a mid-
level magazine journalist, working
in a dark, low-ceilinged office in
midtown New York, spending hours
upon hours rewriting prose sent in by
correspondents from abroad. It was
there, in my tiny office strewn with
empty coffee cups, that I picked up the
phonetoaheadhunterwhotoldmethat
a group of London investors were keen
to have me join them to build “scale”
and “synergy” in the burgeoning Euro-
peaninternetmarket.
I was breathless with excitement. In
the late 1990s, pretty much anyone
under 40 with loads of ambition wanted
to be in the dotcom “space”. The com-
pany I was being wooed by was a high-
tech incubator called Antfactory, a
start-up venture group comprising
former investment bankers and emerg-
ing market investors, looking to scout —
wait for it — “pan-European b-to-c
media deals”. In English, that meant
internet media businesses that would
produce content for consumers across
thecontinent.
In retrospect, the fact that a bunch of
rich guys with very little operational
experience were willing to hire a jour-
nalist who had never worked in either
technology or finance as a partner in
their firm, and give her a six-figure sal-
ary and thousands of stock options, was
clearly the sign of a market top. It didn’t
feel like it then, though. This was my
opportunity to jump on the first dotcom
bandwagon.Andreader—Idid.
I’ve thought about this period in my
life a lot in recent years, as the technol-
ogy sector has risen to ever frothier
heights. A record amount of money has
been poured into the sector over the
pastdecade.Theadventofhugeventure
funds such as Japan’s SoftBankhas
added fuel to themarket.(SoftBank
helped push up the value of WeWork,
which ultimately pulled its IPO.) Shares
in once-touted unicorns such as Uber
and Lyft have been falling. And yet,
the money keeps flowing. One of the
Valley’s oldest and most respected
funds, Bessemer, recently announced a
new bucket of money to invest in later-
stage start-ups that want to stay private
longer,presumably to avoid the fate of
WeWork. All this sounds very familiar
tome.
Attheturnofthemillennium,thetech
frenzy was still new. Internet usage asw
becoming the norm as connectivity
improved. eopleP were actually excited
to use a Yahoo mail address. Amazon
wasn’t scary but cool, so much so that
Jeff Bezos was named Time’s 1999 “Per-
son of the Year”. It was the same year
that Americans’ online Christmas shop-
pingdoubled.
The tech market was different back
then — frothy, yes, but also fresh. In ret-
rospect, though, it also had much of the
hype that I have felt in the technology
sector over the past couple of years.
Then, as now, all asset classes had
boomed in sync,fuelled byderegula-
tion, loosemonetary policyand too
much debt. Tax relief had thrown kero-
sene on a hot market — one of the trig-
gers forthe dotcom bubble 1.0 was the
Taxpayer Relief Act of 1997, which low-
ered the top marginal capital gains tax
rate in the US from 28 per cent to 20 per
cent, and in turn made more people
more interested in becoming specula-
tive investors. Just like the 2017 Trump
tax cuts, which mainly benefited large
corporations,theyaidedanassetbubble
butnotmuchelse;andthelion’sshareof
the benefits went to a handful of firms
andpeople.
Then, as now, too few people were
thinking about experience, or long-
term value, or even profits. They were
looking for highly mobile young tech
enthusiasts who could, as Uber co-
founderTravisKalanickwouldlaterput
it, “always be hustling”. Antfactory’s
Panglossian goal was to become the
Idealab of Europe; a place where start-
ups would be not only funded but also
created and shaped.In those very far-
away-seeming days of “Cool Britannia”,
it somehow managed to persuade a
range of companiesincluding Citigroup
to give them $120mto invest in Euro-
peandotcomstart-ups.
They found me because I had just
written a cover story for Newsweek on
Europe’s internet boom. “Europe’s Got
NetFever,”screamedtheheadline.“The
Symptoms Are Clear — Hot New Com-
panies, Job Offers Featuring Ferraris
and a Certain Swagger as Bright Young
Businessfolk Stake Their Claims in
Cyberspace.” Yes, it’s abit embarrassing
to write these words now. If I had
thought much about it, I’dhave realised
I was coming in as the roller-coaster was
shifting into freefall. The covers of
American news magazines have been
proven to be a reliable counter-indica-
torofwhat’shappeninginthemarkets.
The slide began a little over a year
after that cover. But there was still
plenty of time to spin a story of building
“scale” and “synergy” in the as-yet frag-
mented European internet market.
Unlike the US, which already had a base
of 121m users who spoke the same lan-
guage and wanted to buy more and
more of the same stuff online, Europe
wasacollectionofcountries,eachwitha
unique culture and individual internet
markets; the euro had only just been
introduced.But optimism was the com-
monlanguage.
Antfactory, its founders touted, as
they collected cheques from established
investors in the City, would sit in the
centre of it, leveraging these wonderful
new economies of scale. It would find
the best European dotcoms — in travel,
in music, in finance, in health — and
mash them together, boosting their glo-
bal presence and stock valuations.
Exchanges from London to Frankfurt to
Paris would compete to take these new
companies public. Riches would be had
by all. After all, why have six different
travel-booking sites (serving France,
Italy, Spain, and so on) when you could
haveone?
From where I sat, in my dingy Man-
hattan office, this was an appealing
proposition. In the US, he migrationt
from print publications to online was
under way. At Newsweek, we were
partner and scout deals at the height of
the dotcom boom was exciting. The
stock options might actually be worth
something. In a worst-case scenario, I
told myself, I would go back tojournal-
ism knowing a lot more about the tech
industrythanIdidbeforeIworkedinit.
I moved to London in December 1998
and plunged into the dotcom scene,
where I soon encountered the European
equivalent of Laurel’s brainchild — a
networking salon–cum–headhunting
site called First Tuesday. It had been
founded in part by Nick Denton, a
former Financial Times journalist who
would eventually go on to start Gawker,
and a Silicon Valley transplant named
Julie Meyer. Both of them were more
businesspeople than technologists.The
DNA of the London start-up scene
reflectedtheDNAofthecityitself:itwas
aboutmoneyanddealmaking.
Of that, there was plenty. New jobs —
andnewcompanies—werebeingposted
on First Tuesday’s website every few
minutes. At networking events, Denton
and Meyer made it easy to see where the
money was — potential investors wore
red dots on their lapels; the “talent”
wore green. The reds, who were rarer
and inevitably more popular, would
often emerge exhausted afterfighting
off eager greens over cheap wine and
snacks. The group claimed that $100m
worth of deals had been cut in this man-
ner. I didn’t really believe them, but I
didn’tentirelynotbelievethem.
Either way, one thing was clear: there
was money to be made. It was the roar-
ing ’90s after all, in London as well as in
Silicon Valley. If the 1980s began the age
of greed, then the late 1990s cemented
it. It was the era of Bill Clinton and Tony
Blair,who continued much of the mar-
ket deregulation that had started under
Reagan and Thatcher. It was a period
whenthe notion of retiring comfortably
with a gold watch and a pension began
to slip away, replaced bysoccer moms
reading Money magazine and hoping to
become stockpicking millionaires over-
night. (My own mother, a first grade
teacher, was — incredibly — dabbling in
biotech stocks, an experiment which
shaved30percentoffherretirement.)
Antfactory was, essentially, doing the
same — dabbling in things nobody knew
enough about. But it wasclear to me
Continued on page 2
beginningtosuspectourworldwouldn’t
be the same for much longer. Free din-
ner was still served to editorial staff in
the wood-panelled penthouse that had
once been a conference room for Gen-
eral Motors. But the company had, to
the dismay of the old-timers, finally
started cutting back on the expense-
able (and often excessive) drinking on
the nights that we’d go to press. That,
too,wasthesignofamarketshift.
So were the fortunes of people like
Laurel Touby, one of the freelance writ-
ers for the last magazine I’d worked for,
Working Woman. Laurel had left jour-
nalism to start up a networking group
for creative typesin online media.I
remember once saying to her, “Laurel,
you should really give up journalism
and start a business.” She did,growing
her informal networking groupinto
mediabistro.com,which cornered the
market for media and PR job listings
and was later sold for $23m. She
promptly bought an apartment so stun-
ning it was featured in the New York
Times,andbecameastart-upinvestor.
The idea of trading in the punishing
demandsof reporting to partake of the
riches of the internet was certainlyon
my mind as I considered Antfactory’s
offer. I lovedbeing a journalist, but it
offered a predictable trajectory: write
more features, maybe become a senior
editor or a columnist, watch my salary
inchupbyapaltry2percenteveryyear.
Antfactory, on the other hand, offered
something new and inherently appeal-
ing to a business journalist: the chance
to get into the game, rather than just
write about it. I told the Ants that I’d
cometoLondontodiscusstheoffer.
The partners, as it turned out, didn’t
know much more about technology
than me. One had worked mostly in
entertainment and luxury brands. Two
others were London finance guys,
including one whose family was big in
Greek shipping.I was a good enough
reporter to appreciate the shortcomings
of the team.Still, the idea of being able
to waltz into a high-tech incubator as a
I joined a
tech start-up
in 1998.
What could
possibly go
wrong?
Rana Foroohar jumped on the first dotcom
bandwagon just as the wheels fell off. Two decades
on, she is beginning to have a feeling of déjà vu
From main:
Rana Foroohar
photographed
for the FT by
Amy Lombard;
investors and
entrepreneurs
meet at a 2000
First Tuesday
event in Paris;
Yahoo staff at a
meeting in
1998 —Getty Images;
Zuma/Avalon
The partners, as it
turned out, didn’t know
much more about
technology than me
TheBookerbrouhaha lus interview with co-winner Bernardine EvaristoP — PAGES 2 & 11
OCTOBER 19 2019 Section:Weekend Time: 10/201918/ - 13:20 User: andrew.higton Page Name:WIN1 , Part,Page,Edition:WIN , 1, 1