Real-life lessons from CEOs on the front lines
"We find that ... millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly. ... Money, again, has often been a cause of the delusion of multitudes."
Author Charles Mackay wrote those words in the 40th-anniversary edition of his classic 1841 book, Extraordinary Popular Delusions and the Madness of Crowds. Back then, nobody could have conceived of anything like the World Wide Web, but the hysteria that surrounds it today would have seemed awfully familiar. Think tulips.
We've read and heard so much about the Internet that it's hard to figure out what's real. All that business about how the rules are changing or there are no rules but here are the new rules is exhausting. It breeds myths and the madness of crowds.
What we say is that reality always tends to be more complicated than the hype would have you believe. The Web really is a great frontier of opportunity. It certainly does move fast. But common sense still applies. A business still must have the basics: customers, suppliers, employees, a plan.
The companies profiled here learned that lesson the hard way. They're led by smart CEOs who were burned after buying into the hype. To cast perspective on their experiences, we have included comments from some of the most influential figures in the new economy. They remind us about what really matters for every business.
In 1932, at the nadir of the Great Depression, financier Bernard Baruch wrote a foreword for a new edition of Mackay's book. He reflected on the crash of 1929: "I have always thought that if, in the lamentable era of the 'New Economics,' we had all continuously repeated, 'two plus two still make four,' much of the evil might have been averted."
It was too late then, but it's not too late for us.
THE 7 MYTHS OF THE WEB ECONOMY
Emily Barker is a senior staff writer at Inc. Anne Marie Borrego is a researcher. Mike Hofman is a staff writer. Researcher Ilan Mochari and reporter Jill Maxwell also contributed to this article.