In the three years since I completed Unleashing the Killer App: Digital Strategies for Market Dominance, the mania for digital technology spread far beyond the modest world of business strategists and into private investing and the public markets. At the same time, it has leapt from startups and technology companies to the executive suites of the most staid businesses in the most stable of industries. By the beginning of 2000, even my retired Aunt Dorothy was writing to ask whether I thought she could make money by changing her last name to Com and claiming to be the original "Dot Com."

The festive mood changed abruptly in March 2000. That's when Judge Thomas Penfield Jackson issued his opinion in the ill-conceived antitrust suit against Microsoft, which was in many ways an indictment of the way high-technology companies had operated for 25 years. Jackson sounded a particularly loud wake-up call for investors, who began to wonder if Washington's efforts to help what was being called "the new economy" would instead kill the goose laying the silicon eggs. After two and a half years, boom turned to bust.

Ventures that had been launched with plans to reach profitability in five years were suddenly told to reach it in the next quarter. Strategies were scrapped, desperation set in, and companies failed. Day traders bailed out of public Internet companies and venture capitalists hunkered down with their existing portfolios to see which of their companies could be salvaged.

Like Captain Louis Renault, the character played by Claude Rains in Casablanca, investors were "shocked, shocked" to discover that they had sunk millions of dollars into companies that were little more than concepts hatched in first-year business school courses (more likely after class). They had given their money to kids who knew nothing about technology, let alone operating a business larger than a paper route.

Some ideas were just plain bad. Internet incubator E-Companies famously spent $7 million simply for the rights to the Internet address for "business.com."

The New York Times Magazine ran an admiring cover story in the fall of 1999 about the day-to-day activities of a group of entrepreneurs who had launched a company called "The Man," a dot-com focused on teaching affluent young men the fine points of manipulating women. TheMan.com was to be a "lifestyle Website" that would sell everything needed by a first-rate Lothario. "This could be a really, really major public company," the Times quoted twenty-something CEO Calvin Lui. The company ran through $17 million and shuttered its Website less than a year later, without ever posting the valuable "content" it had promised would draw shoppers.

A more sinister story was that of Pixelon, a Silicon Valley company that was building specialized software to compress and transmit high-quality video from its customers' Websites. The company received millions of dollars in venture funds from seasoned technology investors, based largely on the strength of patents held by the founder and CEO, Michael Fenne. The company, trying to establish its "brand" and build "buzz," spent nearly all of the proceeds of a $20 million round of financing on a "launch party" for Silicon Valley insiders which included live music from Kiss, Tony Bennett, the Dixie Chicks, and The Who.

The party was not their worst excess.

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