How the World Got Wired · Three Ships and a Fire Sale

What All This Means

I am going to end this chapter by asking you to hold three things in your mind at once.

The first thing is that the three companies in this chapter, at their combined peak, were worth more than seven hundred billion dollars. That is more, in the dollars of their time, than the entire economy of most countries. By the end of the decade, almost all of that wealth was gone — vanished — converted into nothing.

The second thing is that the physical things those companies built — the cables, the switches, the patents — were not destroyed. They are still here. The cables are still on the seafloor, carrying our videos and our messages. The fiber backbones are still in the ground, carrying our phone calls and our streaming videos. The patents are still being used, every day, to make the smartphones we hold in our hands. Other companies own them now. Some of those companies — Lumen, Verizon, Apple, Microsoft, Google — paid almost nothing for these things, because they bought them in a fire sale, from sellers who had to sell.

The third thing is the part to really sit with. The technology was real. The infrastructure was real. The usefulness was real. What was not real was the price. When too many people believed the same thing about the future, all at once, they collectively built more than the future could absorb on schedule. The future eventually arrived — it is the world you are sitting in right now, with cables under every ocean, with bandwidth so cheap nobody notices it anymore. But by the time it arrived, the people who had bet on it being early had been wiped out, and a different group of people owned everything.

This is not a story unique to the internet. The same thing happened, in the mid-1800s, with the British railroad boom. Investors built railways everywhere, went bankrupt by the dozens, and left behind a transportation network that the rest of the country used for the next hundred years. It happened, in the 1830s and 1840s, with American canals. It happened, in the 1920s, with the radio industry. It happened, in the 1980s, with personal computers. It happens, more or less, every time human beings collectively decide that a new technology is going to change everything.

They are usually right that it will. They are almost always too early.

This is a fundamental rhythm of how the world gets built. The early believers fund the construction. The construction outruns the demand. The early believers go bankrupt. The infrastructure remains. The next generation, paying pennies for it, gets to build the next thing on top.

In the next chapter, we will meet a few of those next-generation companies. The ones who survived the wreckage of the bubble. The ones who, when the smoke cleared, found themselves standing on a vast amount of infrastructure that had been built for someone else, and who used it to build things bigger than the bubble had ever imagined.

That’s Chapter 13.

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