Dot Com Frenzy

According to Webmergers.com statistics, about 862 dot-com companies have failed
since the height of the dot-com bust in January 2000. Majority of these were ecommerce
and content companies. The shutdown of these companies was followed
by the folding up of Internet-content providers, infrastructure companies, Internet
service providers, and other providers of dial-up and broadband Internet-access
services.
From the perspective of the investment banks, the dot-com frenzy can be likened to a
gamble where the big money players were the venture capitalists and those laying their
bets on the table were the small investors. The bust was primarily caused by the players’
unfamiliarity with the sector, coupled with failure to cope with the speed of the Internet
revolution and the amount of capital in circulation.
Internet entrepreneurs set the prices of their goods and services at very low levels to gain
market share and attract venture capitalists to infuse funding. The crash began when
investors started demanding hard earnings for sky-high valuations. The Internet companies
also spent too much on overhead before even gaining a market share