Page last updated at 11:53 GMT, Tuesday, 9 February 2010

What ever happened to the dotcom millionaires?

By Alex Hudson
BBC News

Benjamin Cohen in 2001
Benjamin Cohen admits he was an arrogant and difficult 17 year old

The office that once housed a dot.com company valued at £20m is now just a storage closet filled with toilet products and a vacuum cleaner.

"It's a very surreal experience. It's actually quite depressing," says Benjamin Cohen, returning to the place where 10 years ago, aged just 17, he became the UK's first dotcom millionaire - at least on paper.

Early in the year 2000, the bubble was about to burst on the first wave of internet start-ups.

The Nasdaq index of technology shares peaked in March 2000 before losing 80% of its value in two years - about $5 trillion in paper wealth.

Mr Cohen says that back then "the value of a company could be based on how much positive publicity you got."

Adding "e-" or dotcom to a company name could dramatically alter its share price

His company, JewishNet - a religious community site - was reported in the national newspapers as being worth £5m.

This turned out to be his own father's estimate, based on a similar site's more official valuation.

But the headlines spread and suddenly Mr Cohen was thrust into the spotlight.

Mr Cohen was touted as the "first millionaire teenage dotcom success story" by Jon Ronson of the Evening Standard.

The London Jewish News offered to invest in the company and a partnership was formed.

It was a time when adding "e-" or dotcom to a company name could dramatically alter its share price, a time when investors were willing to risk vast sums of money on young computer-savvy entrepreneurs with little more than idea and a catchy company name.

Broom cupboard

But it was less glamorous behind the headlines.

"I found him in a broom cupboard, basically, at the back of his dad's office with a mate," remembers BBC technology correspondent Rory Cellan-Jones, who was then a business and economics correspondent and interviewed Mr Cohen.

"It looked like boys playing at business."

In 2000, 63 dotcom millionaires appeared on the Sunday Times Rich List

The business's prospects quickly faded. Cohen says it was hard to keep the momentum going. And he is repentant about the way he acted to both his staff and his investors.

"I effectively sold them a pipedream and ruined a business," he admits.

The initial attempt to float the company on the stock market was postponed and when finally floated, his projected £5m worth turned out be shares worth £310,000.

He later sold them for just £40,000.

Virtual riches

Mr Cohen was not the only one to appear to find a new-found wealth that only ever existed on paper.

In 2000, 63 dotcom millionaires appeared on the Sunday Times Rich List. A year later there were just 26.

Mr Cohen was placed above Prince William but behind another dotcom teenager, Ben Way, creator of comparison site Pulsar.

Famously, Mr Way appeared in the list - just below Robbie Williams - the day his credit card was refused when buying a ticket for the London Underground.

His net worth was valued at £18.3m.

Ben Day in 2008
Ben Way says his early career was a great learning experience

"Did I have it in the bank? Absolutely not… but at that time people were talking about my company being worth £500m so part of me was like 'oh, they've undervalued me'," he says.

"I was under special investigation from the Inland Revenue for two years. It must have cost them hundreds of thousands of pounds to try and find all this net worth that never existed in the first place."

In 2001, Way lost everything after being removed from the company.

The amazing thing about the era was the sheer amount of money - whether real or not - that was being invested in these companies for the prospect of future profits - of just one company making it big.

"It was such a quick and fast process of becoming a millionaire overnight. It happened in just a blink of an eye," says Mr Way.

And it is this speed of rise - and the inevitable fall - along with the veracity of spending that will be the overriding things remembered about the period.

Virtual hair-do

Mr Cellan-Jones wrote about the subject extensively in his book dot.bomb.

"My favourite example was Boo.com," he says. "It spent money like it was going out of fashion."

Miss Boo
Miss Boo came to encapsulate the excess of the dot.com boom

The firm spent around $135m (£80m) in the 18 months of its existence, launching in a number of countries simultaneously before being placed in the hands of liquidators and its technological assets being bought for £250,000.

"They had a virtual figure call Miss Boo who welcomed people into the site," says Mr Cellan-Jones.

"They got very worried about her hair-do. They actually flew over one of New York's best hairdressers to come and re-style Ms Boo's virtual hair at vast expense.

"That really sums up the pretensions and extravagance of the era."

Survivors

But some companies did survive the crash, albeit after a struggle.

"Had we know in advance just how damn hard it was going to be, we might not have done a lot of things we did - and we might not have even started the company," says Brent Hoberman, chairman of Lastminute.com.

"The ability to sacrifice your life increases the probability of success."

The flotation of his company on the stock market marked the bursting of the bubble. Its share price jumped 40% the day it floated but had lost nearly half its value within three weeks.

Brent Hoberman and Martha Lane Fox of Lastminute.com
Lastminute.com was floated as the bubble burst on dot.com companies

But this is one of the success stories of the dotcom bubble. In 2006, after becoming stable, the company was sold for £577m and Hoberman, one of two company founders, remains as chairman.

Things have turned out well for both Mr Cohen and Way too.

Mr Cohen has switched sides of the camera to become the technology correspondent for Channel 4 News.

When interviewing Facebook creator Mark Zuckerberg, he concedes that there was a little bit of "that could have been me" but that he has grown up and "there is more to life that being a squillionaire".

Way, on the other hand, has worked to regain his millions by running an internet innovation company Rainmaker. He thinks that his failure in the dot.com boom years has really helped him in his current business.

"I see it as a great learning experience… because, to be quite frank, I've learned more from failure than I have from success."

And there is still plenty of time for them to learn, with both men still under the age of 30.

"I can still win young entrepreneur of the year," says Mr Way, "I checked - I've still got another five years."

Radio 4's I Was A Teenage Dotcom Millionaire is broadcast at 1600GMT on Tue 9 Feb or listen afterwards via BBC iPlayer .



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