In my view, the Dot-com bust was probably caused by bad metrics. In 2000, Erick Schonfeld, then at Fortune Magazine, wrote, ”In Webspeak, you see, eyeballs mean customers.” In an effort to convice themselves of the hype, investors made a leap of faith that eyeballs meant customers and the economy paid for it.
Today, the tech community has made improvements beyond the “eyeballs” of Web 1.0 and vanity metrics. Entrepreneurs and investors highlight engagement and actionable metrics like funnels, conversions, and cohorts. Vanity metrics from the Dot-com era are typically washed to the side with insightful due diligence. Despite the improvement, the tech community still relies upon eyeballs for what I call “engagement” valuations.