Pollner Lecture
When dot-coms went bust, the fastest-growing magazine in history followed
But legacy of creativity and innovation not lost, former editor says

Jonathan Weber, the J-school's first T. Anthony Pollner professor, said he has no regrets about his role in the rise and fall of The Industry Standard, a magazine that covered the dot-com phenomenon. (photo by Ray Ekness)

By Lacy Chaffin

The technology explosion of the 1990s caused many businesses to grow too big too fast and ultimately fail, the former editor of an Internet business magazine said at the J-school's inaugural Pollner lecture last month.

"The theory in the Internet boom that I think really was wrong was that if you spent enough money, you could go from a standing start to world domination in three years," said Jonathan Weber, the University of Montana J-school's first T. Anthony Pollner distinguished professor.

The presentation in the UC Theater was a tribute to T. Anthony Pollner, a 1999 Journalism School graduate who was killed in a motorcycle accident in May 2001. In his memory, Pollner's family created a fund to bring a distinguished journalist to UM for one semester every year to teach, work with Kaimin students and deliver a public lecture.

Pollner's family was also on hand for the April 22 lecture.

Weber was witness to the Internet explosion when, in 1997, he was left his job at the Los Angeles Times and help start a new publication focusing on business changes caused by the rise of the Internet. That publication was The Industry Standard, which would become the fastest-growing magazine in history.

Many people questioned his move from a large, successful newspaper to start a small publication with a questionable future, but Weber said that for him and many others it was an understandable choice. Creating something from the ground up was a tremendous opportunity, he said.

As a magazine, The Industry Standard reported on the enormous growth and failure of the Internet; as a business it fell victim to the same problems.

"The Industry Standard became kind of a symbol of the whole dot-com thing," Weber said.
The first symptom was its explosive growth. The magazine was launched in 1998 and by the time it was a year and a half old it had become the flagship of a new media company — Standard Media International — worth $200 million. In a period of 18 months the magazine hired 100 additional editorial staff, and Standard Media at its peak had more than 400 employees.

The nature of the Internet industry encouraged companies who were growing rapidly to expand even further, Weber said.

"The general belief was, there's a new way of doing business, and success is going to go to the first movers, to the people who can kind of get in there and get big really fast," he said.

Weber now knows that this was ultimately where the business went wrong. But it was difficult for managers and investors to resist the pressures for rapid growth that were created by "momentum investing" - investing spurred by rapid growth of a company, rather than its actual value.

After its initial success, investors were eager to put money into the Standard, and the company raised $30 million from venture capitalists. It continued to expand, and even started up an Industry Standard in Europe.

But in March 2000 the Nasdaq crashed. To The Industry Standard and many other companies this was a setback, but they thought the crash would merely "weed out some of the chaff."

At first, Weber said, The Industry Standard didn't suffer much. Advertising stayed strong, But by November 2000, things began looking grim. Weber and others at the Standard became extremely concerned, and by early 2001 ad revenues were in a free fall.

"Losing a million dollars a week is a scary thing," he said.

At this point, the company that owned a majority stake in The Industry Standard, International Data Groups, decided to buy out outside investors, move the publication to one of its own buildings, and share resources to minimize costs.

However, after another couple of months of problems, the company changed its mind.
JP Morgan offered $20 million to help the company out, but IDG declined this offer and in August 2001 The Industry Standard was forced to file for Chapter 11 bankruptcy. The company hoped to save the assets of the business and kept about 10 people running the Web site. But after Sept. 11, no one was looking to buy anything, much less a company like The Industry Standard.

The magazine and similar businesses were not total failures, Weber said. He joined in the first place because he liked the absence of bureaucracy, which fostered more creativity.

"The legacy still is a lot of creativity, a lot of people who learned a lot, a lot of infrastructure that was built, a lot of technologies that were developed," Weber said. "And so things will come back around again."

In the future, Weber said he would like to start another publication like The Industry Standard.

"I have no regrets about any of this," he said. "It was a tremendous experience."