How the Internet Became Commercial: Innovation, Privatization, and the Birth of a New Network (The Kauffman Foundation Series on Innovation and Entrepreneurship)

by Shane Greenstein

The breadth and number of opportunities in the late 1990s extended across virtually every sector of the economy, which meant that every important actor in the economy was investing in the Internet at virtually the same time. That placed enormous strains on the ability of firms and labor to supply inputs and services. The symptoms of impatience were everywhere and manifested themselves as resource shortages in IT labor markets and entrepreneurial managerial markets. Said succinctly, the factors that started the boom differed from the factors that sustained it. A network effect manifested as a virtuous cycle in the late 1990s. That it is distinct from a gold rush—namely, the factors that catalyzed investment in the middle of the 1990s.