Monday, February 26, 2001

Lies, damned lies, and Internet statistics. Boy did Mark Twain get that one right.

If there's one thing that you should learn from the dot-com meltdown, it's that most of what you see in print is a total lie. And I'm not just talking about fake press releases or even faker news stories, I'm talking about that 9th level of dot-com hell, the statistic.

Don't get me wrong, statistics can be very useful. Seldom, however, are they true. Take online advertising for example. Every couple of months, the Internet Advertising Bureau and AdKnowledge release glowing reports on the rapid growth of the online advertising market, and the steady advertising rates. Guess what? They're lying.

Take AdKnowledge, for example. They can go ahead and claim that rates are stabilizing, but as long as companies like 24/7 and Engage are teetering on the edge of bankruptcy, their claims have all the value of eToys stock options. But perhaps that's to be expected--after all, Engage *owns* AdKnowledge.

What's far more frightening is that the media accepts and publishes numbers from these house organs. And it's not just the online advertising companies (though they were probably the worst offenders). It's every industry.

As a raging capitalist, I still believe that caveat emptor applies: you should always treat statistics with an appropriate level of skepticism. The problem is that too many people don't. Why? Because it would be inconvenient. It would be inconvenient to have to find the answers to hard questions, to abandon existing business models, to close down a company that doesn't have a Snowball's chance in hell. Even the VCs, who are typically more cynical than a NYPD cop, had no problem tossing tens of millions of dollars at business plans that were based on the very statistics that they knew were a crock.

Guess what guys, no one's buying it anymore, no more than they're buying Dr. Koop stock. Mark Twain* would be proud.

*Of course, Mark Twain died in poverty, having gullibly squandered his money on foolish investments. No word on whether any of those investments promised to change the world.

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