Dot-Com Life Cycle and Managerial Control Structures

During the time period in question, 1996-2001 in the United States, modern myths concerning the earning of millions of dollars by technical wizards through breakthrough innovative, entrepreneurial behavior became ubiquitous. The stock market was thought of as unstoppable; venture capitalists funded anyone with a good idea, good ideas founded companies, and some dot coms became so wealthy that their names appeared on immense stadiums. News of wildly successful individuals became the rags to riches stories of the day on the evening news and in the national papers. New heroes were born in the IT sector daily. These myths were born during a time of “Gold Rush”-like behavior on a national scale.

I assert that during this time of gold-rush like behaviors modern myths were propagated that led the average tech worker to believe that they could get rich quick. These tech workers abandoned the traditional paths to employment and wealth, such as legitimate education and entry-level jobs in large companies. These tech workers assumed that managing a new company was a simple task, easily accomplished by someone with technical skills. These tech workers believed that they were short-term employees because the company they worked for would either get bought by another company, and make a lot of money, or would have an Initial Public Offering (IPO), in which they also would make a lot of money. It is clear that these ideas came from the wider American culture through the internet, television, paper media, and colleagues.

This research began as a larger study in which three small software development companies were examined at various points during their life cycle. The goals of the larger study were to understand the organizational culture and structure of the small software development company and its relationship to technology during the dot-com bubble. I chose to focus on small software development companies during the dot-com bubble because of the rapid boom to bust cycle in which they existed. These types of transitions are excellent phenomena to study the relationships among organizational culture, structure and IT.

The research was conducted by a small research team which included myself, as the Principal Investigator, and four advanced undergraduate students. Three IT companies who fit the description of a dot-com were examined at various points during their life cycles. Three independent case studies were conducted for this research effort including:,, and (all pseudonyms). Each was selected based on the following criteria: small, less than 500 employees; new, established after 1996; fast growing, at least tripled initial size in first year of existence; products were purely electronic, software, customization, web pages, and databases. They were also selected to not overlap in the services they offered and to be somewhat representative of the internet businesses of the time period. The goals of the study were to understand the organizational culture and structure of the dot-com and its relationship to technology. In this paper I present data from these three cases.


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