The Internet Bubble and Infrastructure Reality Check (1995-2002)
1995-2002What Happened
The internet's commercial potential sparked massive investment in the late 1990s, with companies valued on vision rather than revenue. Then reality hit. Pets.com burned through $300 million in nine months. Infrastructure costs—servers, bandwidth, data centers—exceeded projections. When the bubble burst in 2000, trillions in market value evaporated. Only after this correction did sustainable business models emerge: Google's targeted advertising, Amazon's logistics mastery, eBay's network effects.
Outcome
Market crash wiped out hundreds of companies and $5 trillion in value from 2000-2002.
Survivors built the digital economy's foundation, but it took years and ruthless focus on unit economics.
Why It's Relevant Today
AI labs face similar tensions between transformative potential and infrastructure reality—Sam Altman admits having models he can't deploy due to compute constraints, echoing dot-coms with technology unusable at scale.
