ELI5 style; basically there were a number of hype-driven valuations that were way too high, and when the resulting IPO happened, a lot of people lost a lot of m

ELI5 style; basically there were a number of hype-driven valuations that were way too high, and when the resulting IPO happened, a lot of people lost a lot of money. When this happened enough times, investors got scared of technology and swung the other way. Pets.com [1] is a great example of this. They spent 11.3 million on marketing despite having a half-million in sales for their first year. Then they IPO'ed way too early, and their initial stock at $11 dollars fell to 50 cents six months later. We collectively didn't really understand how a lot of internet business models were supposed to work, and that caused a lot of non-viable businesses to float on hype. When the hype went away, all these businesses got culled, and only a few survived (like Amazon). Some of them were just too early for their time, and modern iterations of the same business models were able to take advantage of key differences like the prevalence of mobile devices. In a sense, its a natural human response to new paradigms and technologies. Internet business valuations from mid-1990's to today follows almost perfectly the hype curve [2] model. [1]: https://en.wikipedia.org/wiki/Pets.com https://en.wikipedia.org/wiki/Pets.com [2]: https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Hype_cycle