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Totally Wired, a tale of dot-com madness

The boom-to-bust story of internet entrepreneur Josh Harris mirrors that of the 1990s dot-com bubble, writes Alan White.

Totally Wired: On the Trail of the Great Dotcom Swindle

Andrew Smith

Simon and Schuster

Andrew Smith's first book, Moondust, was an investigation into what happened to the astronauts who walked on the moon after they completed their mission. His second book is likewise about a man who ascended to uncharted heights, and fell to Earth. Like the astronauts, he saw things no other person had seen before, and like the astronauts, it left him burnt out. Who is he, and what did he see?

His name is Josh Harris, and a ludicrously inadequate description would have him as an internet entrepreneur. His sparse Wikipedia entry – he reached his professional zenith at a time before our every move was catalogued online in forensic detail - describes him as "the founder of […] Pseudo.com, a live audio and video webcasting website founded in 1993, which filed for bankruptcy following the end of the dot-com bubble in 2000".

Totally Wired is both Josh's story and that of the dot-com bubble. His rise and fall mirrors that of his industry, but the thematic crossover is a lot more abstruse than that. For a start, just as he can hardly have been said to be a businessman, so the "industry" in which he worked was always more complex than the many others that are born to meet a demand and thereby make a profit.

As we know, the internet wasn't born of commercial considerations – quite the opposite. In the 1970s, the hallucinogen-using hippie computing pioneers of San Francisco saw parallels between their work and the Eastern mind because it propagated the idea that everything is connected. Cyberspace was a counter-cultural, out-of-body experience – a channel to things "they" didn't want you to see.

The relationship between the internet and capitalism that began 20 years later would therefore be difficult: "Business was about ownership and control, and the web's design made these things impossible." In 1995, Time magazine had a story about The Battle for The Soul of the Internet (and had to explain to its readers exactly what this "Internet" was).

On August 9 that year, Netscape Navigator - the browser that finally opened the web to all - was floated on the stock market. It was the most dramatic issue of its size in Wall Street history. An engineer who'd joined the firm in July would be worth US$10 million (Dh36.7m) by September. Suddenly, everyone wanted in, and due to Federal Reserve chairman Alan Greenspan's deep rate cutting and purchase of treasury bonds, there was a lot of cheap money to spend: "Capital came to be treated as just another commodity, with debt […] a medium in its own right."

The baby boomers had pensions to manage and, with interest rates low, the solution was to gamble on stocks: "The medium was the message and money was the medium […] relationships between players in the economy grew looser, more ephemeral."

Which, at a practical level, at least, was at odds with the ethos of the dot-commers, few of whom had worked out how to make money from their products, besides allowing their ideas to float on the stock market. In hindsight, the madness is barely believable. EarthWeb, a puny site-hosting firm, had accumulated losses of $14m - but its offering raised $29m and at one point it was valued at half a billion dollars, while "an online venture called Pets.com forgot to wonder how profit could grace a business selling $10 bags of cat litter which cost $20 to deliver". An analyst reports being called "unpatriotic" by a client after saying tech stocks were overpriced.

Such lunacy doesn't happen by accident - it would give away the book's shocking conclusion to say exactly how it happened, but rest assured this is a tale that tells us a lot about what happened in 2008. What matters is how it ties in with Josh Harris, and what he saw.

As Smith notes: "Almost no one commented on the curious way in which firms were being sold as stories." This is a book in which three concepts meet: "Reality. Unreality. Virtuality." Josh Harris, from the moment Smith meets him, sheltered away from the world on a small farm in Ethiopia and demanding that he be brought works of classic literature, seems to be selling him a shaggy dog story - or at the very least, a performance. That's why The Great Gatsby lurks behind Smith's conception of him: at one point, he even opens a chapter with a quote from the book, in which his personality is described as "an unbroken series of successful gestures".

But why this tendency? The answer is that Harris - a genius, a possible autistic, a mystery - saw into the future, and it changed him. Here are the bare facts - hard to believe though they are. Pseudo Programs Inc was an attempt to create YouTube, Facebook and Second Life, all rolled into one, in 1995. As a result of this venture, Harris amassed a personal fortune of $85m. This occurred despite the fact his company - which he has since disavowed as an "art project" - was largely staffed by dissolute creatives, with many of the early years spent in a haze of hedonism, during and after work.

It'd be a hard enough story to swallow on its own. But what's more incredible is the fact that before the dot-com bubble burst, taking Pseudo with it, Harris had moved on from using his projects to correctly predict what the web would look like, to what it would do to us as individuals. Or rather, to us as a collective. He developed an art project called Quiet: We Live in Public, in which 100 volunteers were placed in a huge basement, with webcams following their every move. A little later, he started another experiment, in which he and his girlfriend put webcams all around their flat, and lived under 24-hour surveillance, with thousands of viewers around the world invited to submit their feedback on what they thought of the pair's every action.

Consider: Quiet only began as Big Brother hit Dutch television screens - and in internet terms, a lifetime before social media would find us living our lives under the watchful gaze of hundreds of others - compelling us to create and augment our stories for the most positive reception possible. Harris was living our life, nearly a decade before anyone else.

So it's no wonder there's an element of the self-creator about his personality. When he tells Smith that all the money and opulence (which he lost, in a few days) didn't mean anything to him, the facts bear him out, but they also suit his narrative. And just as the story of the dot-com boom carries clear and disturbing implications about the most recent financial crisis and its after- effects, so the findings of Harris's experiments tell us rather more than we want to know about what the internet is doing to us, and will continue to do.

Harris saw how the internet could rob us of our ability to empathise, to make a cutting remark more easily, through the chatroom feedback he and his girlfriend received. Before the experiment he said: "Everything I'm doing will be considered commonplace […] 10 years from now. It'll be no more unusual than listening to a stereo or watching TV." Under the constant stare of the watchers, Josh and his girlfriend began to lose their minds. Now a recent paper in the British Journal of Psychiatry describes patients who have "a variety of delusions … that they were being filmed and the films were being broadcast; that the doctors and patients in the hospital were actors and the environment was fake; that they were on a reality television show".

And how terrifying is the conclusion Harris drew - not that machines will evolve beyond us, but that we evolve into each other, so our personalities and sense of self merge through permanent connection; that poorly wired places will become destinations for the adventurous.

Yet this isn't a depressing book: Smith offers us several lights at the end of the tunnel. Again, to reveal them would spoil the meticulous way in which his particular tale is constructed. And this story, still for the moment owned by an author and available printed on tangible pieces of paper, is one of redemption. And it may be about a series of events that happened years ago, but it's the first great analysis of the Internet Age.

Alan White's work has appeared in The Observer, The Times, Private Eye and TLS.

Updated: October 6, 2012 04:00 AM