Dark Side of the 90's Season 3 Episode 10
Dark Side of the 90's Season 3 Episode 10
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00:00The 90s was a time to cash in.
00:10Just ask E-Trade.
00:11Why?
00:12What is it?
00:13He's got money coming out the wazoo.
00:14A financial frenzy.
00:16It's a pretty addictive thing when you see other people making so much money.
00:20Fueled by the magic words .com.
00:25Just take your business online.
00:27Anybody can access anything from anywhere.
00:30And watch your wealth magically take off.
00:32I was surrounded by internet millionaires.
00:34What everyone called this gold rush.
00:35You didn't want to be left out.
00:36But what goes up?
00:38This was hubris.
00:39Flying too close to the sun.
00:41Must.
00:42You know the rest.
00:43People getting laid off en masse.
00:45Companies shuddering.
00:46People had to move back in with their parents.
00:48I just remember being devastated.
00:57Today, I'm talking to some city pets.
01:15Hey, poodles!
01:16Did you know that Pets.com delivers food, treats, and toys?
01:22By the late 90s, Pets.com would be in a three-way battle over where online customers would buy
01:27their pet food on the internet.
01:30The online competition for the pet space was incredibly cutthroat.
01:37But just a few years earlier, morning news anchors struggled to even understand what
01:42the internet was.
01:43Can you explain what internet is?
01:45Or how it worked.
01:46That little mark with the A and then the ring around it?
01:50At?
01:51That's what I said.
01:52Katie said she thought it was about.
01:55Yeah.
01:56Oh.
01:57The information superhighway can be a confusing mix of on-ramps and off-ramps.
02:01The internet starts as a military communication network in the 60s and spends the next 20
02:06years being further developed in university computer science labs.
02:10But it was the creation of the World Wide Web in 1990, a series of web pages connected
02:15by hyperlinks, that made the internet become something that the average person can use.
02:20It's your link to literature, the arts, the world at your fingertips.
02:24The free transfer of information in as accessible a way as possible.
02:28You know, we're going to make it so that anybody can access anything from anywhere.
02:32I was like, well, that's kind of a cool idea.
02:35And who better to latch onto a cool new idea than baby boomers Bill Clinton and Al Gore?
02:40When they get elected in 1993, the World Wide Web is at the center of their proposed tech-based
02:46economy.
02:47Eisenhower had built the interstate highway system.
02:50Well, Clinton and Gore were going to bring in the age of the information superhighway.
02:55Clinton makes good on his promise, but he gets some much needed help from a company
02:59that builds an on-ramp to this new digital future.
03:03I'm Roseanne Sino, and I was a vice president of corporate communications at Netscape.
03:09I was the 19th employee and I believe the second female to be hired.
03:15There was me and a lot of very, very young, smelly engineers.
03:20The company is founded in 1994 by Mark Andreessen, a 23-year-old computer science grad from the
03:26University of Illinois, and Jim Clark, an established Silicon Valley entrepreneur.
03:32Jim Clark became convinced in talking to Mark that the internet space was wide open for
03:38the taking.
03:39Yeah, this thing that was right now being used for scientific purposes could potentially
03:44be used for commercial purposes.
03:46He could envision that we might want to sell things.
03:49He could envision that it could be used for widespread communication.
03:53In the early 90s, the web is slow and hard to navigate.
03:56It's the domain of academics and computer geeks.
03:59But Clark and Andreessen have a vision to make the web accessible to everyone.
04:04We ended up sort of in the middle of the night starting this project.
04:06What we were trying to do was put sort of a human face on the internet.
04:09True to its namesake, the browser is a navigator to the web, making surfing as easy as point
04:14and click.
04:15Netscape Navigator was the first commercial version of a web browser that spawned Apple
04:23Safari.
04:24It spawned Google Chrome.
04:25All of a sudden, the power of the internet that had been there for years was available
04:30to everybody in an easy way, point and click, the universal language.
04:34I'm Tara Hernandez, and back in the 90s, I helped launch the World Wide Web.
04:39That's a little much.
04:40Let me do that again.
04:41I was able to witness the birth of the World Wide Web.
04:44I like that better.
04:45I don't want to take credit for any of that.
04:49Netscape was foundational.
04:50This wasn't just a nice to have.
04:53Having the browser was absolutely essential to internet commerce, for entertainment, for
05:00communication, all these things.
05:02I'm Margaret O'Meara.
05:03I'm professor of history at the University of Washington in Seattle.
05:07The very first email I sent outside of my building was in late 1993.
05:11I thought it was amazing.
05:12Is everybody listening?
05:13To begin, let us introduce you to our first college recruit.
05:19I'm, in fact, the first college recruit.
05:23With Netscape recruiting employees fresh out of college, traditional workplace culture
05:27of tech giants like IBM is getting replaced.
05:31Geeks run this startup, and they write the rules as they go.
05:35Imagine going into a frat house that has an adult living there, and that adult is Jim
05:42Clark, and Jim Clark is trying to help a bunch of young college boys figure out that they're
05:48now doing something that has to be ready for business.
05:54One of the engineers I worked with brought in a remote-controlled car and attached a
05:57very early remote camera on it.
05:59It didn't work very well.
06:02We had little traditions like saving our cans and building things out of them.
06:07We had a massive rubber ball fight.
06:11We really kind of made it a space that we enjoyed being in.
06:15There was a lot of silliness going on, but also a lot of hard work.
06:19Netscape people got into work and maybe didn't go home that night, maybe worked all the way
06:24through the night.
06:25I have a nice couch, a little mattress under there I can sleep in.
06:29Work became the life, and that was sort of the only life you had.
06:33That tied into that concept of sort of manic innovation.
06:37What did your doctor say, Tara?
06:40My doctor said, interestingly enough, that I work too much.
06:47The web's ruled by the under-30s set, and 94, 30-year-old Jeff Bezos creates Amazon
06:52out of his garage.
06:54The same year Yahoo, a searchable web directory, is launched by 20-somethings Jerry Yang and
06:59David Velo.
07:00Yahoo had an exclamation point at the end of its name.
07:05It was Yahoo exclamation point.
07:07That was the way you had to print it in the newspaper.
07:09So this playfulness with the front men, kind of these young, geeky types that clearly weren't
07:16the popular jocks in high school.
07:18We are trying to get him into long pants.
07:21I have threatened, I don't know how many times.
07:24Mark represented sort of the, this is what's coming.
07:27You know, it's not this polished, you know, suit and tie kind of thing.
07:32Andreesen's rise from geeky undergraduate to tech rock star is whispered about in Silicon
07:38Valley, but his story goes mainstream when he lands the cover of Time magazine.
07:44A year into Netscape, Time magazine saw how exciting all of this was and how perfect of
07:50a face Mark Andreesen was.
07:53Young and nerdy, perfect for the moment.
07:56So they came up with this idea of putting him on a throne, kind of looking like a guy
08:01who just came out of college.
08:06And he had no shoes on.
08:07And everybody gets focused on his toenails.
08:09Why isn't this kid clipping his toenails?
08:11I'm like, why are people looking at his feet?
08:15He was evidently the first person to appear on a cover of Time magazine with bare feet.
08:22Netscape and its shoeless co-founder helps to redefine the image of an American success
08:27story.
08:28Sales double every few months and Netscape grows to control 80% of the browser market.
08:34But Jim Clark, the adult in the room, sees problems on the horizon.
08:39We were making money, which was good, but we were certainly not profitable.
08:43So Jim was very concerned about, let's grow fast.
08:46We have, you know, speed was what we had on our side.
08:49Don't do things 100%, do them 80%, do them 80%, get them out there, get people on board
08:55with us and try to outrun Microsoft.
09:00Microsoft was a behemoth at the time.
09:0220-year-old Microsoft rules the personal computer market, but its founder, Bill Gates, is slow
09:08to see the potential of the internet, even dismissing it as a fad to Tom Brokaw in 1994.
09:14A lot of people just getting on to the internet because they feel that they have to get on
09:18to the playing field, so to speak.
09:20But it's very hip to be on the internet right now.
09:23But just a year later, Gates realizes the net is no fad.
09:26Microsoft begins developing Internet Explorer, a browser to compete with Navigator.
09:32Netscape sees a war coming, one that will require more money to wage.
09:36We were a young company.
09:38We needed the cash infusion.
09:40So the conversation started to turn to, you know, should we go public?
09:46Going public allows a company to raise capital quickly, and that's just what Netscape needs
09:51to compete with Microsoft.
09:52In the summer of 95, this young company launches an IPO, an initial public offering to sell
09:58shares to investors.
10:01We decided it really was to the advantage of to seize the moment, just seize the moment
10:05and go public, even though we'd only been in business not even a year and a half.
10:10At 11 a.m. this morning, Netscape stock went public and Wall Street went bonkers.
10:15Netscape went IPO August 9th, 1995, also known as the day Jerry Garcia died.
10:21Whether or not he died in disgust is a discussion for the philosophers.
10:25Initially offered at a price of $28 a share, Netscape shot up to $72 within minutes.
10:30Netscape's stock price explodes.
10:33Investors are anxious to own a piece of the company that is bringing the Internet to the
10:36world.
10:37And everyone with stock in the company, especially its founders and employees, is poised to get
10:43rich.
10:44In a room that was full of people that I considered my peers, all of a sudden, you know, the eyes
10:48started getting bigger as the number of zeros in those calculations started happening.
10:53And all of a sudden, on paper, I was surrounded by Internet millionaires.
10:56Nobody was working.
10:58We were running around being crazy, drinking champagne.
11:01When trading closes for the day, Netscape is valued at $2.2 billion.
11:06It's the best opening day for a stock in Wall Street history, and Netscape's executives
11:11are multi-multi-millionaires.
11:14No stock had ever behaved the way our stock did.
11:18We broke so many records at the time for amounts above asking price that the shares opened
11:25at, the growth in a day.
11:28Nobody had ever seen anything like it before.
11:31Early investors who invested in these companies, their IPO was all they needed to get their
11:36payday.
11:37Netscape's success redefines the letters IPO into Internet Pays Off.
11:41For tech companies, the road to riches now runs straight down Wall Street with an overscribed
11:46public offering.
11:47And for investors, the key is to get in early on an Internet company and wait to collect
11:52your jackpot.
11:54People started to say, how do I get a piece of this Internet business, this worldwide
11:57web thing that's going on here?
11:59And while some warned it felt like a get-rich-quick scheme, the new tech-savvy investors countered
12:06by asking, who wants to get rich slow?
12:09People were buying boats, cars, vacation homes.
12:18By mid-decade, the U.S. stock market is reaching historic highs.
12:22Browser company Netscape's hugely successful IPO in 95 shifts the attention of America's
12:28best and brightest away from careers in finance and out west to Silicon Valley, where almost
12:34daily an Internet company is launched to capitalize on the worldwide web.
12:39People were graduating from business school and coming out to the Valley to work in a
12:43startup or start a startup of their own.
12:45There were 20,000 new college graduates that showed up every year in the Bay Area.
12:51And then you would go to bars and there were, you know, tons of people, young people your
12:54age who were all working at Internet startups.
12:58If you went out into Silicon Valley, you saw venture capitalists everywhere meeting with
13:03young guys, mainly guys, pitching crazy ideas, sometimes pitching not so crazy ideas, but
13:10many of them were kind of outlandish ideas.
13:13But as long as the idea ended in .com, it was likely to get funded.
13:18You have Cosmo.com with bicycle couriers who are delivering a pint of Ben and Jerry's
13:23and a Blockbuster video to your door.
13:25I think I'll go get a video and some chocolate ice cream.
13:28You're going to go out for that?
13:29Cosmo.com has videos and ice cream.
13:32And decades before Bitcoin, Blues.com tries to create an online digital currency, one
13:38you can trust because, well, Whoopi Goldberg tells you to.
13:41It's just like money.
13:42You send it by email, they spend it at some of the web's coolest stores, and you come
13:45out hip and smart.
13:47There was Webvan, which did grocery delivery.
13:50Hello, Instacart, you know, same thing, 20 years earlier.
13:54Maybe they were ahead of their time, but they were building the airplane while in flight.
13:57Everything was moving so fast.
13:59And if none of these new wonders of the World Wide Web has answers to life's mysteries,
14:04Razorfish.com is there with its promise to find solutions to hard problems.
14:09Maybe it's indiscreet of me to ask how much you're worth, but how much you're worth?
14:13I don't know.
14:14That may be indiscreet of you to ask.
14:16Somewhere around $180 million.
14:18That was the kind of crazy that fueled people to believe that you could do anything and
14:24get millions.
14:26This was hubris, flying too close to the sun.
14:28It was just stupid money chasing after stupid things.
14:32As stock prices for dot-com companies rise, so did the number of extravagant dot-com parties.
14:39People were buying new cars, people were buying boats, vacation homes in Lake Tahoe.
14:46At the parties, boy, everybody wanted to get invites to the best parties.
14:51The Razorfish guys threw a legendary, and not in a good way, belly dancer party where
14:56drag queens served White Castle burgers to 2,000 guests.
15:00I believe it became more of a competition to throw the best party than it did to create
15:06the best product.
15:07Rents and house prices rise, and Silicon Valley parking lots fill up with expensive and flashy
15:13cars.
15:14All of a sudden, a lot of money started showing up.
15:15There was a Ferrari dealership that was not too far away from Netscape.
15:19I don't know that I personally knew anyone who bought a Ferrari.
15:21I probably would have mocked them, but it was there, and it was there because they had
15:25buyers.
15:28A lot of these companies are traded on the NASDAQ exchange, which just starts going hockey
15:35stick.
15:36Extraordinary numbers.
15:37And getting reported in the business press, you know, story after story after story, the
15:42average reader is like, oh, my gosh, what's going on, and how do I get a piece of it?
15:47Enter CNBC, who early on becomes the go-to cable network for Americans looking to get
15:53in on the dot-com action.
15:56Future Fox News mastermind Roger Ailes transforms the almost forgotten network into a channel
16:05where financial news is reported in the breathy, action-packed style previously reserved for
16:10sports reporting.
16:11CNBC turns buying and selling stocks or profiling companies into something like watching ESPN
16:18and seeing sports teams.
16:19The audience responds to the insider style of reporting, often live from the floor of
16:24the New York Stock Exchange.
16:26It's a pretty addictive thing when you see other people making so much money.
16:29The constant stock ticker and all of this information was usually only Wall Street brokers
16:34had access to.
16:35In the past, trading stocks was a relatively expensive proposition that required working
16:40through old, established brokerage firms who preferred old, established money.
16:45And well-known firms like E.F. Hutton were happy to help.
16:48What does your broker say?
16:49Well, my broker is E.F. Hutton, and Hutton says, when E.F. Hutton talks, people listen.
16:59But all that changes in the 90s with what's termed the digital disruption.
17:03Discount brokerage services like E-Trade and Ameritrade start advertising their services.
17:08Let's buy 100 chips.
17:09All right, click it in there.
17:10OK.
17:11How about 500?
17:12100's do it.
17:13Now, anyone with a little dough can join the stock-buying craze.
17:18And while investors no longer need expensive brokers to buy stocks, they are drawn to free
17:23professional advice.
17:25Analysts are brought on to CNBC.
17:27They are, you know, suddenly become celebrities.
17:30CNBC regularly features internet stock analysts like Henry Blodgett and Mary Meeker, who push
17:36certain companies and downplay others.
17:39What people didn't realize is they're coming on and they're pumping up stocks that their
17:42companies have investments in.
17:44They have a stake in what they're selling.
17:46When you have someone who's a really telegenic young analyst like Henry Blodgett on CNBC
17:51saying, oh, yeah, this is this company, this is why it's great, this is why I rated a buy,
17:56you're like, I'm going to go on my E-Trade account and I'm going to buy that.
17:59That makes a lot of sense.
18:00And, you know, people made money that way.
18:03As newly formed digital companies go public and celebrate as their stock prices soar,
18:09Netscape, that company that got the party started, finds itself being targeted by the
18:14most powerful corporation in tech, Microsoft.
18:18Netscape was, of course, one of Microsoft's software developers.
18:22And we were invited up to their campus, as all other software companies were, to show
18:28what we were developing on Windows 95.
18:32I remember one of my employees called me.
18:35She said, Roseanne, you're not going to believe who's hanging around at our booth.
18:40Bill Gates, he just is staring at our browser.
18:42He just won't leave.
18:44He was tuning in.
18:45They wanted to create something just like this.
18:47And they did.
18:48In 1995, Microsoft launches the Internet Explorer browser and includes it with every copy of
18:54its Windows operating system.
18:57Netscape discovers fewer willing to buy their browser when they get Microsoft's for free.
19:02Once Internet Explorer started to become the de facto on every new computer that was purchased
19:08that had the Windows operating system, you know, the market share just plummeted quickly.
19:12This was the way Microsoft had learned to kill software companies.
19:18Netscape sues.
19:19And Microsoft will also face antitrust charges for using the power of Windows to slam shut
19:24other software companies.
19:26That whole process did end up eventually causing a judgment against Microsoft.
19:33But it really was too little, too late, and certainly too late for Netscape.
19:38As of 1.30 this morning, I concluded our negotiations and agreed to sell our company to AOL.
19:50Congratulations, Skippy, you've got mail.
19:52It was a very sad day with my beloved colleagues who had put their heart and soul into this
19:58company and really believed in it.
20:01The quote that came out of this article was Netscape lived fast, died young, and left
20:06a tired corpse.
20:07In four short years, Netscape goes from Internet trailblazer to Microsoft roadkill.
20:12It left behind an Internet with seemingly unlimited commercial potential until one company
20:17proves there are boundaries.
20:20Crossing those boundaries can have devastating financial consequences.
20:24Part of the story of the dot-com boom is many people lost their fortunes.
20:31In the late 90s, a company will launch whose name becomes a shorthand for the excess and
20:35greed that dooms the decade of the dot-coms.
20:38It is not about the fame or the success or anything like that.
20:42It's just about the animals, you know, and are you getting the whole thing?
20:47That company is Pets.com.
20:49But in 1998, Pets.com is simply one of the first online retailers to sell pet supplies
20:54to Americans.
20:56Its CEO, Julie Wainwright, prepares to face competition from both brick and mortar pet
21:01stores and other web entrepreneurs hoping to cash in on the online pet market.
21:06Wainwright needs to build out Pets.com as fast as she can, no matter the cost.
21:11You know, that's the rule of Silicon Valley, elbow everyone out of the way so you can be
21:15first to market and you can dominate the market and be the market.
21:21The office was in a garage in the south of market, which is where all the auto repair
21:25shops were.
21:27I'm Oscar Yuan.
21:28I was employee number 30-something at Pets.com.
21:32Everyone brought their dogs and their cats.
21:34So right there, right from the beginning, you knew it was different.
21:38But what was really unique was just the energy.
21:40There was a buzz.
21:41They were hiring me for an assistant marketing manager.
21:43The business itself was secondary.
21:45I was getting into what everyone called this gold rush, the internet.
21:49It was what was happening.
21:50You didn't want to be left out.
21:52Early on, Pets.com gets a boost when one of the web's most successful pioneers decides
21:57to put his own money into the company.
21:59One of the major investors was Jeff Bezos.
22:01Even back then, Amazon, even though they only sold books, was kind of seen as the forefront
22:06of e-commerce.
22:07And so the investment from Jeff was exciting.
22:11He came to the office, and he went around talking to everyone and asking what we were
22:15doing.
22:16And a lot of us joined a little bit on faith.
22:19So every little nugget that you had to give you faith that we were doing the right thing
22:23was a huge confidence booster.
22:25In fact, Amazon is already worth a staggering $30 billion.
22:30Bezos, always looking to expand his piece of online commerce, buys a 50% stake in Pets.com.
22:37He's now locked in a three-way competition to capture the online piece of the $23 billion
22:43pet products market.
22:44Discover paradise at Petopia.com, the internet pet paradise.
22:52There were three big players.
22:53There was Petopia, Pets.com, and then there was PetSmart.
22:57The online competition for the pet space was incredibly cutthroat.
23:04My roommate from New York also got a job, and it was a competing pet food website.
23:11She said, but now if you work at Pets.com, we can't be friends anymore.
23:15She goes, you have no idea what it's like in the dot-com world.
23:20We were determined to be the number one, the winner in the pet category.
23:23We felt like we were transforming the economy, right?
23:26We're giving people access to a huge number of products they weren't able to access before,
23:32transforming how commerce works.
23:34But buying products online is not something people naturally think about doing.
23:38People needed time to really get the idea that, oh, I can buy anything and have it delivered
23:42to me.
23:43Like that whole notion was still a little bit like, really, I'm going to give my credit
23:47card on the internet?
23:49To help change that, Pets.com hires ad agency, Shia Day.
23:53Shia Day was one of the hottest agencies in the 80s and 90s, and it began in the 80s certainly
23:59with the iconic 1984 Apple Super Bowl spot, the dystopian sort of future.
24:11They also did the Think Different campaign for Apple in the mid-90s.
24:15And then there was Taco Bell with a chihuahua.
24:19Shia was known at the time for taking brands from being brands to being a part of culture.
24:27I'm Scott Duchon.
24:28I was a copywriter at Shia Day many moons ago, and I am one of the creators of the Pets.com
24:36sock puppet.
24:37Sorry.
24:38I'm going to free the socks.
24:40You're welcome.
24:41Sorry.
24:42Run.
24:43I got you.
24:44Fly away from here.
24:45Go.
24:46Why a sock puppet is a question I've asked myself for 20 years now.
24:52No.
24:53Pets.com executives love the idea, and a mascot is born.
24:57I'm a Pets.com sock puppet, but you can call me Pets.com sock puppet.
25:03Michael Ian Black, an improv artist best known for his early 90s sketch comedy series The
25:08State on MTV, is hired as the voice and hand of the Pets.com sock puppet.
25:14This is the happiest day of my life.
25:17This improv approach was really important to us as far as the entire tonality of the
25:23campaign, because pets are not actors.
25:27I don't know if you know this, but they're not.
25:30And so you need somebody who could just go with the flow of a dog starting to do weird
25:36shit.
25:37Oh, yeah.
25:38This is my kind of party.
25:39I'm a professional happy puppet thing.
25:43It was like the puppet was created for Michael.
25:46He just knew what to do with that weird sock.
25:50Puppets make good money, man.
25:52I'm Melissa Menta, and I'm a puppet publicist.
25:56The process of Pets.com hiring me was very quick.
26:00They saw on my resume that I had the Jim Henson company.
26:05They thought, oh my God, this is the perfect match, and I had the job.
26:08Today, I'm overseeing some deliveries for Pets.com, purely in an advisory role.
26:14The first Pets.com commercial was filmed during the summer of 1999.
26:19We were packed really tightly in this van, and Michael just started throwing jabs at
26:23the driver.
26:24I like your shorts.
26:25You're a good looking fella.
26:27The driver's reactions are perfectly dry, and Michael Ian Black is just pretending like
26:32he knows pets at different homes.
26:34I know the guy who lives in that house.
26:36He's got a snake, and he's got an iguana.
26:38He was thinking about getting a cockatoo for a while, but I kind of talked him out of it.
26:41We just rode around holding our laughter in so that we didn't ruin the takes.
26:47He went ahead, he got the cockatoo, and I was wrong, man, because they get along great.
26:50It's like the Brady Bunch with snakes, iguanas, and cockatoos.
26:53When we came back, the van opened, so we come off, we're like, we've got it.
26:57It's amazing.
26:58Did you get all these things at Pets.com?
27:00Oh, wow, he's got a stuffed thing.
27:02I love stuffed things.
27:04Come on, I see the delivery for the parakeet.
27:07Let me go surprise him.
27:09Pets.com spends a then shocking $20 million for a marketing campaign that soon transforms
27:14the sock puppet into a TV celebrity.
27:17Come on, jump, jump.
27:19Got it.
27:20We put out the ads, and suddenly you start getting people chatting about it.
27:23In today's terms, it would be called going viral.
27:26And now, Al and Katie, here's one pooch who is a VIP.
27:30That's one very important pet.
27:32Al, this is your favorite television commercial.
27:34Macy's actually reached out to Pets.com and said, we want you to be in the parade.
27:38Usually it's a huge fight to get in the Macy's Day parade.
27:41By Pets.com, you may have seen this sock puppet on television.
27:44Look, he's got a stuffed thing.
27:46I love stuffed things.
27:48Everybody at Pets.com was glued to their television.
27:51And I can't help but think, I hope those people at Petopia and PetSmart are jealous.
27:57Then we did a holiday campaign.
27:59What is it?
28:00I can't wait.
28:01I can't wait.
28:02I can't wait.
28:03What is it, iguana?
28:04Hey, Max, you're going to give me a concussion.
28:05Uh-oh, mistletoe.
28:06Who wants to kiss a puppet?
28:07It was not just a fun flash in the pan.
28:10We were actually seeing the results of what was happening.
28:12We were seeing site traffic, which is a huge metric that we were looking at.
28:15Soon, the sock puppet will deliver his message about Pets.com in front of television's biggest audience.
28:21If you're trying to win in a competition, the best way to do that is to get in front of the millions and millions of people who watch the Super Bowl every year.
28:31There's no bigger stage in the world of traditional marketing than the Super Bowl.
28:37The NFL Super Bowl will also end up being the big game for dot-coms, a push-all-your-chips-into-the-pop moment to get noticed, scare off competitors, and lock in your market dominance.
28:49And like any high-stakes game, there will be winners and losers.
28:57For companies that can afford it, advertising during the Super Bowl is an unrivaled opportunity for your brand to get noticed.
29:04Every dot-com was buying up the media space to be on the Super Bowl.
29:08And that reached its peak in 2000, along with the greatest show on turf, St. Louis Rams beating the Tennessee Titans, and Christina Aguilera and Enrique Iglesias performing at the halftime show.
29:19The 88 million viewers were bombarded with an almost endless series of dot-com advertising.
29:24I think there were 17 different dot-com companies that bought ads at millions and millions of dollars apiece, so it became known as the dot-com Super Bowl.
29:34Internet companies like Hotjobs.com and E-Trade each pony up $2 million for a 30-second spot.
29:40E-Trade, with its chimp mascot, even calls attention to the outrageousness of all this dot-com spending.
29:46The 2000 Super Bowl was really a classic example of tech companies with money run wild.
29:58This meeting is a real drag. Y'all should be meeting online with WebEx.
30:05Even RuPaul makes a commercial appearance shilling for WebEx, a pre-Zoom web video conferencing service.
30:13The amount of money to do a 30-second spot is so phenomenal and was even then.
30:18The idea of that being your way of marketing your way into popular imagination seems crazy.
30:25For Pets.com, there's more at stake than selling pet supplies to football fans.
30:30About to go public, the company needs to sell investors that the future of pet stores is online.
30:36For the Super Bowl spot, we decided to just go back to the simple premise.
30:39You don't have to leave to go to a pet store.
30:54We had a Super Bowl party watching the ads versus watching the game.
30:58I was working, but I also knew I was winning because we were getting the most publicity.
31:04I was top five on the USA Today ad meter for the Super Bowl, so it was a big success.
31:10The Super Bowl brings an entirely new level of fame to the Pets.com mascot.
31:15A couple days after the Super Bowl, I answered the phone and it was Good Morning America.
31:21They said, we want the Pets.com sock puppet to come on and do an interview.
31:27And literally, we finished Good Morning America and my flip-top cell phone, which I had at the time, rang.
31:34And it was Regis and Kathie Lee. And then it just started snowballing.
31:39I got you, babe. I got you, babe.
31:44It was just one after the other. Nightline and Charlie Gibson and Diane Sawyer.
31:49Oh, hey, Charlie, Diane, I'm here at a big Oscar party in Hollywood, California.
31:55Now, I wasn't exactly invited, and technically I'm not supposed to be here,
32:00but I'm going to try to interview as many celebrities about their favorite movies.
32:04We did an Oscar party at the Beverly Hills Hotel, and we were just walking around and talking to celebrities.
32:11Are you flirting with me, Anna Nicole Smith?
32:14How you doing?
32:16I'm doing good. How you doing?
32:18I'm doing good. How you doing?
32:21That was the weirdest moment of my entire life.
32:24It was incredible.
32:26The sock puppet might be hobnobbing with Hollywood, but it's not translating into profits.
32:31Pets.com is spending four times as much as they earn on marketing.
32:35We were spending a lot of money on advertising on our team. We moved to new offices.
32:40Some of the traditional metrics that we had always measured, you know, revenue, sales, profit,
32:44were almost secondary at the time, which is a little bit counterintuitive.
32:49Counterintuitive is 90s speak for flawed business strategy.
32:53By early 2000, visitors to the Pets.com website are rising, but revenues are falling.
32:58So the company tries another counterintuitive idea, free shipping.
33:03The free delivery started to raise a little bit more of a question for some of us.
33:08Like, how do you deliver 60 pounds of dog food for free?
33:12Pets.com hadn't quite figured out how to ship the way that we just take for granted today,
33:20that you can order something from Amazon this afternoon and have it tomorrow morning.
33:24Profits are an afterthought for 90s.coms.
33:27The rules are grow fast, sell products at a loss to gain market share,
33:31and spend whatever it takes on advertising and brand awareness to crowd out competitors.
33:37That certainly was the rule that Pets.com was trying to follow, was following that playbook.
33:42Look, it makes sense if you're trying to convince a big consumer market of pet owners
33:46to buy things on the Internet that they used to buy in person,
33:49if you're trying to get ahead of your competition fast.
33:52Then Pets.com makes a fatal miscalculation.
33:55The public was not as excited about it as we were.
34:00The millennium had come and gone,
34:03and although things like flannel shirts and beanie babies didn't survive the 90s,
34:07the Internet was here to stay.
34:09For investors in Pets.com,
34:12the aughts is their chance to finally cash in on the now well-known e-commerce site.
34:17As the market gets higher and higher and higher and higher,
34:20there was a lot of pressure for investors to say,
34:23oh, no, no, no, I'm not going to give you another round of funding.
34:26You should go public, because I want my payday,
34:29because I'm going to make a lot of money on this.
34:31Investors may want a payday, but for Pets.com,
34:35its huge advertising expenses and losses from free shipping
34:39leaves it $62 million in debt,
34:42so it needs to go public in order to survive.
34:45Super Bowl's in end of January, early February.
34:48Pets.com goes public only a few weeks later,
34:52and everyone's like, okay, this is going to be another rocket ship.
34:55Anyone with stocks in Pets.com, from the executives to assistants,
35:00prepare to become overnight millionaires.
35:02It was exciting to turn on the news and actually hear analysts
35:06talk about your company and what you're doing,
35:08and you get swept up in the belief that you're going to transform the economy.
35:13On February 11, 2000, Pets.com debuts on the stock exchange,
35:18hoping to raise $100 million in their initial stock sale.
35:22All the senior executives had gone to New York for the IPO,
35:26and the rest of us were in the office.
35:28We were all checking the stock price.
35:30We see the stock price creep up, and there's a good amount of energy,
35:33and then we see it kind of creep down.
35:35It settles at 11, and it sticks at 11 for the rest of the day.
35:39It's a disappointing price, but the IPO still raises $82 million for the company.
35:45CEO Julie Wainwright tells her staff it's back to business as usual.
35:50The day after the IPO, we all went back to work again.
35:53We continued as we were doing.
35:55There was so much commitment to what we were building and had built
36:00that we almost thought of it as a small road bump
36:03in the grand scheme of where we were headed.
36:05Just like every other dot-com at the time,
36:08it almost didn't matter if it was going to succeed.
36:11It was still a future bet that made it a successful opening.
36:16And so you couldn't really tell up from down, I think.
36:19But dot-com frenzy is on the decline.
36:22The stock market has woken up to the reality that many of these companies
36:26are losing much more money than they're making.
36:29The internet may produce something else, the next big wave of bankruptcies.
36:33The downslide has wiped $16 billion.
36:36And a lot of once promising companies are coming to the end of the line.
36:40In March 2000, the NASDAQ hits its high peak and starts going down.
36:46And investors start getting cold feet.
36:49And of course, people get really excited as a group.
36:51And then they're like, wait a minute, someone's starting to sell Amazon.
36:54Oh, I should sell it too. And da-da-da-da-da-da.
36:56For all of the growth of the internet, the market itself and the valuations
36:59were outpacing where it was at.
37:01At least 135 dot-coms went belly up.
37:05They are roadkill on the information superhighway.
37:08And the carnage is just beginning.
37:10CEO Julie Wainwright needs a way to weather the financial storm.
37:14And the sock puppet seems to be her best bet.
37:17We ventured into the world of character licensing, which can be very lucrative.
37:23So we signed a toy licensee who manufactured a Pets.com sock puppet
37:29that wasn't as cool as the real ones, but they were pretty cool.
37:33Then they started to get savvy with the puppet.
37:36Dog bowls and lots of other things that had the puppet's likeness on it.
37:40And they owned that.
37:42So when Wainwright learns of another pooch besmirching the sock puppet's good name
37:46in the media, she's quick to pick a dog fight.
37:49This is what I hear, Pets.com.
37:51I hear your stock's going down faster than me on a Pekingese.
37:56Triumph the insult comic dog, the creation of comedian Robert Smigel,
38:00is a staple on Late Night with Conan O'Brien.
38:03His act includes making fun of other dogs, including Pets.com's beloved mascot.
38:09To stop the alleged damage, Pets.com slaps Smigel with a $20 million defamation lawsuit,
38:15and Conan responds on the air.
38:18It's literally a sock puppet suing a sock puppet.
38:22A sock puppet suing a rubber puppet.
38:25And why can't those two kinds of puppets learn to get along?
38:28Take a look at this lawsuit.
38:30Now I know why human beings wipe their ass.
38:35I just threw away my arm, too.
38:38There was this fear that Triumph was going to ruin the Pets.com brand
38:43because of all of his insults and really do some damage to our brand integrity.
38:49Well, listen, I like the press, too. Check it out.
38:52But the lawsuit backfires, and Pets.com ends up on the wrong end of the publicity stick.
38:58To avoid more bad press, puppet publicist Melissa Menta goes to work.
39:03I kept saying, it's got to be Puppet vs. Puppet,
39:07not Puppet vs. Evil.com that's trying to take over the world.
39:12The Pets.com sock puppet should have a press conference
39:15and discuss why he is not a knockoff of Triumph.
39:19We went to New York, and we hosted a press conference.
39:24The sock puppet said he was innocent because he was an ancestor of Knickers from the Mayflower.
39:30And the next day, the cover of the, I believe it was the New York Daily News,
39:35had the puppet on the front cover, and the words were, I am innocent.
39:40And suddenly the narrative changed,
39:43and people weren't bashing Pets.com as much after that press conference.
39:49But will saving its brand integrity be enough to help the battered dot-com survive?
39:57In late 2000, Pets.com's total debt is a staggering $147 million.
40:04Even 50% shareholder Jeff Bezos, already worth $4.7 billion,
40:10isn't willing to chase good money after bad.
40:13So Pets.com, once the poster child for a thriving dot-com, announces they're shutting down.
40:21What I notice amongst the failures is they think if they just throw the words dot-com at people,
40:27they will come, and they won't come.
40:29There's a cascading line of companies waiting to go under, unfortunately.
40:33I have no idea what I'm going to do.
40:35The message is clear.
40:37In its two years of its existence,
40:39Pets.com, like many other dot-coms,
40:42had spent their money frivolously on over-the-top advertising and free shipping to customers.
40:47But for Oscar and his co-workers, their job was about so much more.
40:51We believed we were transforming commerce.
40:54We loved our co-workers.
40:55It was something that we had dedicated so much time and energy and commitment to, and so much belief.
41:01But it wasn't enough to keep Pets.com afloat.
41:05The last day was hard.
41:06We showed up for work, and there were news cameras and the news teams in front,
41:11and they wanted to talk to all of us, but we just wanted to get in to the office,
41:16kind of wrap up our things, say goodbye.
41:18I just remember being devastated.
41:23I just remember being just so sad and definitely crying a lot.
41:28We did go to someone's house after that, and we held a vigil for the sock puppet.
41:33This creature made of socks and a button.
41:37In the end, we almost felt that he was human, he was real.
41:40He is symbolic of the team that put all the work into it,
41:43and also, of course, the era that we all lived through together.
41:47It was like a death. It was.
41:50It was like a death of a company and a group of people that I love so much,
41:54and I just didn't want it to end.
41:58The good times were followed, short order, by dark times.
42:01You suddenly had people getting laid off en masse, companies shuttering,
42:05all these cool office spaces in the south of market in San Francisco that were just empty.
42:10Pets.com was the canary in the dot-com coal mine.
42:13By the start of the millennium, 100 million individual investors across the country
42:18had lost $5 trillion in the stock market.
42:21The amount of money lost was phenomenal.
42:24The people who really got hurt in the dot-com bust were mom-and-pop investors,
42:28people who had their money in tech stocks that they believed were going to be their retirement.
42:34People had to move back in with their parents.
42:37Just, you know, were so devastated or frustrated,
42:40they just got out of the industry altogether.
42:43In 2003, CNBC media darling analyst Henry Blodgett
42:47settles fraud charges related to several companies he analyzed
42:51during the late 90s.
42:53He's fined $4 million and banned from the industry.
42:57Julie Wainwright is the CEO and founder of the successful luxury consignment site The RealReal.
43:04And Pets.com star investor Jeff Bezos can afford a vanity trip to space.
43:09But before the sock puppet is put to bed, one final insult would strike deep
43:14when E-Trade, one of the last dot-com standing,
43:18takes aim at Pets.com's spectacular rise and fall in a 2001 Super Bowl ad.
43:24There was the E-Trade ad with the chimp on the horse
43:28looking through this desert of other failed internet companies
43:31and kind of the last one that he comes upon is Pets.com.
43:39There is a little bit of indignance that they would use you and the work that you had done,
43:44but at the same time there's a little bit of pride.
43:46We're the finale of this ad, right?
43:48We're the one that people remember.
43:50Hey, the sock puppet was the best thing that came out of the 90s.
43:53Let's just face it.
43:56What sort of message do you have for all of us?
43:59Don't invest in dot-com.