The lunch plates were cleared long ago, and the waitress gazes vacantly out over an otherwise empty dining room. But George Gilder, his legs propped on a nearby chair, seems rooted in place, not quite ready to leave. We're lingering at a restaurant down the street from his office in Great Barrington, a hamlet set along a rural highway that winds through the southern tip of the Berkshires in western Massachusetts. Here, one of the tech world's more famous — and controversial — prophets is contemplating how he could have been so right over the past half—dozen years and yet seen everything turn out so terribly wrong. A look of anguish clouds his face.
"I knew that it was going to crash, I really did," Gilder says, looking out a window on to Main Street. Since 1996, he has published the Gilder Technology Report, a monthly newsletter that in its heyday was arguably the most influential tout sheet on Wall Street. He glances my way and notices my arched eyebrows. I had plowed through several years' worth of issues, and while I read page after page of praise for a lengthy list of seemingly promising telecommunications companies, I saw nary a hint of warning in anticipation of the Nasdaq's March 2000 tumble and the financial tumult that followed. He adds quickly, "I told people in early 2000 they should sell half their shares in these companies." Then he says, in a tone of self—rebuke: "I didn't say it often. I didn't put it in a newsletter."
He made the recommendation to sell, he admits, only within the limited confines of the Telecosm Lounge, his online salon for newsletter subscribers. He fumbles for words, starting one sentence, then another, before growing uncharacteristically silent and staring off into the distance.
For a moment, he seems to be imagining what might have been if things had turned out differently. Gilder, 62, is the author of a dozen books; he has been shouted down by feminists on The Dick Cavett Show in the 1970s, faced off with Dan Rather over trickle—down economics on 60 Minutes in the 1980s, and debated the future of technology with the likes of Andy Grove and Bob Metcalfe in the 1990s. Now many of his partisans are calling for the tar and feathers. He starts another sentence, and again cuts himself off. Suddenly he squares his body, turns to me, and expels a slight, disbelieving laugh. "When you're up there surfing," he says, "the beach looks beautiful. You never think about what the sand in your face might feel like until after you've crashed.
For a short stretch during the late 1990s, Gilder's newsletter made him a very wealthy man. Anyone taking a cursory look at it might wonder why. Every issue is densely freighted with talk of lambdas, petahertz, and erbium—doped fiber amplifiers. The eighth and final page, however, explains how so geeky a publication attained, at its zenith, an annual subscription base of $20 million. It's on the back page that Gilder lists the stocks he has dubbed "telecosmic" — companies that have most faithfully and fully embraced the "ascendant" telecom technologies in which he believes so wholly and deeply. "For a few years in row there, I was the best stock picker in the world," Gilder says ruefully. "But last year you could say" — here, for emphasis, he repeats each word as a sentence unto itself — "I. Was. The. Worst." Most of the companies listed have lost at least 90 percent of their value over the past two years, if they're even in business anymore.
None exemplifies Gilder's rise and fall more than Global Crossing, which filed for bankruptcy — the fourth—largest ever — in January. Even in a portfolio of flops, the scope and depth of this particular debacle stands out. "It will change the world economy," Gilder wrote a few years ago about the company. After reading its master plan, which called for the laying of fiber—optic cables across the world's oceans and between its great cities, Gilder proclaimed that for 10 years he had been searching for a business this audacious and awe—inspiring. He declared Global Crossing his favorite stock, and staked his financial future on it. While he avoided investing in practically every company he wrote about because of the potential for charges of conflict of interest, this was a notable exception. "Global Crossing going bankrupt?" Gilder asks, a look of disbelief on his face. "I would've been willing to bet my house against it." In effect he did. Just a few years ago, he was the toast of Wall Street and commanded as much as $100,000 per speech. Now, he confesses, he's broke and has a lien against his home.
During a period when blind optimism got the better of so many, no one was more blithely optimistic about our wired future than Gilder. Beginning in the mid—'90s, he advanced the argument that the businesses which most aggressively embrace fiber optics, wireless communication, and other telecommunications breakthroughs would soar in the meteoric fashion of an Intel. It was Gilder, as much as anyone, who helped trigger the hundreds of billions of dollars invested to create competing fiber networks. Then everything imploded, and company after company went under. The telecom sector proved to be an even greater financial debacle than the dotcoms. Yet he's still convinced he was dead—on right in most of his prognostications.
And the damn of it may be that Gilder has a point.
In addition to being famously optimistic, Gilder is also a contrarian. In the mid—1990s —†while the rest of the world was grousing about the slowness with which images and large packets moved over the network, and some very smart people fretted that the Internet would collapse under its own weight — Gilder was already talking about the coming age of network abundance. And being Gilder, he didn't stop there. He vividly imagined a "new epoch of spirit and faith" in which all of us would live in the "majestic cumulative power, truth, and transcendence of contemporary science and wealth." He also coined the termtelecosm to describe the merging of newer technologies, especially fiber optics, with existing telecommunications systems.
Gilder first spied the revolutionary potential of fiber optics at the start of the 1990s, when he shared a conference podium with Will Hicks, one of the field's luminaries. Hicks had predicted that fiber—optic cable, if it were made thin enough, could transmit bolts of light like photons shooting out of a ray gun. Gilder recalls the moment as one of the rare times he encountered someone even more Panglossian than himself. "I had always taken it for granted," he would later write, "that in any assemblage of pundits, I would be the most cornucopian — the most hyperbolically assured that silicon could save the world."
The predictions Gilder has made in the intervening decade suggest that he vowed to never again permit anyone else to convey a vision of the world more exuberant than his own. In 1996 he foresaw that, because of broadband's potential to deliver online learning, within five years "the most deprived ghetto child in the most benighted project will gain educational opportunities exceeding those of today's suburban preppy." It was a preposterous assertion, and hardly the only one that seems absurd in the harsh fluorescent light of the morning. He also claimed that the Web would soon bring on the quick death of both the US Postal Service and television. But none of this rendered Gilder's optimism any less contagious given the light—headed exhilaration of the times.
Yet to dismiss Gilder as just another poster boy for the reckless optimism of the late '90s would be a mistake, for the technical analysis undergirding even his more utopian flights of fancy was prescient. Forget terms like megabits,gigabits, or even terabits when describing the flow of data over the Internet. Soon enough, we'll be measuring things in petabits, or 1 quadrillion (1,000 trillion) bits, because of fiber optics — information traveling via photons flying over strands of glass fiber. The only question is whether we'll see this day as quickly as Gilder imagines. He asserts that by 2004, networks of glass superhighways will deliver 8 petabits per second over optical cables. "I listen very closely to what George says, and then automatically add five years," says Google CEO Eric Schmidt, who first encountered Gilder in the early 1990s when Schmidt was Sun's CTO.
The potential of fiber optics is indeed staggering, though not entirely without precedent, and therein lies Gilder's greatest contribution to the field. He opened minds to the technology by drawing on his understanding of past innovation; Moore's law accurately anticipated that the density of transistors on a computer chip would double every 18 months. Gilder decided to make a prediction of his own, and in 1998 he unveiled an axiom he dubbed the law of the telecosm: The world's total supply of bandwidth will double roughly every four months — or more than four times faster than the rate of advances in computer horsepower.
Has it panned out? Yes and no. By mid—2000, Gilder had already recalculated his theorem (and immodestly renamed it in his honor): Bandwidth would double every six months. Gilder notes that several years passed before Moore's law revved up to its mind—bending pace. Then he shifts into deep geek mode, rattling off arcana from a recent newsletter in which he compares a fiber—based telecommunications system available in 1995 with one the Columbia, Maryland—based Corvis is selling today. Corvis now offers a 280—wavelength system, compared with a 4—wavelength version available in 1995. Whereas seven years ago each wavelength could transmit data at a rate of 620 megabits per second, each can now transmit 10 gigabits of information per second, which means today's system is 16 times faster. There's been a sixfold increase in the number of fibers that can be jacketed in each cable, and today an impulse needs to be regenerated only every 2,000 miles, compared with every 300 miles back in 1995. By Gilder's calculations, that represents an 11,000—fold advance in just over six years — which indeed works out to a doubling roughly every six months or so.
Eric Schmidt calculates that bandwidth has been doubling more like every 12 months (an estimate confirmed by Probe Research, which has been studying Internet traffic since 1997). But to him, that hardly detracts from Gilder's overall point. "As far as I know, George was the first to see that infinite bandwidth was going to have a similar kind of impact on our world as the microprocessor," he says. "And on that fundamental point, he's been proven absolutely right."
Time has also proven Gilder fundamentally correct about other, less—sweeping technological prophecies. Throughout the last decade, Gilder has been associated most closely with two highly technical debates. One concerns wave—division multiplexing, a means of increasing bandwidth over a fiber—optic network by transmitting multiple signals simultaneously. If not for WDM, Gilder argues, it would cost the telecom industry trillions more dollars in capital expenditures on less—efficient equipment to accommodate Internet traffic. For years, the telco establishment resisted WDM, but eventually even the most bottom line—minded firms embraced it.
Gilder has also been a proponent of code division multiple access, which he maintains is a more efficient and elegant way to split the wireless spectrum. "Gilder has won that argument," says Probe's Hilary Mine, an analyst specializing in telecommunications. CDMA is now a core technology in one—third of US cell phones.
"I think the guy has been a real visionary," says CNET founder Halsey Minor, who has been reading Gilder since the early 1990s. "He, more than anybody else, woke us up to this coming explosion in telecom. He wasn't right about everything, but he was right about a lot."
"My miscalculations were the commercial effect of this revolution, especially as I chose particular companies that were spearheads," Gilder says. "The companies did function as spears, but spears often break." The technologies, he says, lived up to their promise even as the market for them collapsed. "The investment part didn't pan out entirely, particularly for the infrastructure players, but the expansion of traffic is real, and the contribution of optics to enable the expansion of traffic is real," he contends. He knows he shouldn't utter the next line, but the congenitally candid Gilder seems incapable of biting his tongue. "My subscribers hate when I say things like this, but I think we'll look back on the current period as a fairly trivial event."
To buttress his point, Gilder draws a parallel to the tech collapse of the mid—1980s, which compelled some to proclaim the death of the PC era. "We've seen this kind of thing happen over and over again through the history of enterprise," he says. "It's enormously disappointing for the visionaries, yet it's not the visionaries but the people who inherit the infrastructure they've built who typically prosper from it."
It's that final line, of course, that is likely to infuriate the habitués of the Telecosm Lounge. One can anticipate the postings of these people, some of whom have lost millions by following Gilder's investment advice. The only question is whether it will be Networkbull, Optionbob, or someone else who writes, "Nice of you tell us that now, George!"
Gilder is a son of the Berkshires who lives in the red farmhouse in which he grew up. A true New England WASP, he has the vocabulary of an Oxford scholar and the carriage of an aristocrat. There's a jaunty, patrician manner in the way he walks, shoulders high and back, chin thrust forward as if he learned to hold his head by watching clips of FDR. He has bright blue eyes and a broad smile that sits slightly off—kilter on his face, and his hair hovers crazily, as if trapped in an electromagnetic experiment. He generally exudes an aura of unkempt disarray; in our two days together he wore the same outfit and seemed oblivious to the penny—sized splotch of whiskers on his chin.
One of Gilder's great—grandfathers was Louis Comfort Tiffany, the glassmaker; another was the editor of Century magazine and a friend of Theodore Roosevelt's. As Gilder describes it, he grew up "shabby gentry." Today, friends describe him as singularly uninterested in earthly possessions. One colleague jokingly says that Gilder is so true to his hills Yankee roots "he has furniture in his living room that even Goodwill wouldn't take."
His father, Richard Gilder, a writer, was killed during World War II; however, Richard's college roommate, David Rockefeller, made sure that George secured spots at Exeter Academy and Harvard. Gilder was expelled from the latter during his freshman year for poor grades but readmitted after a short stint in the Marines, and he graduated in 1962 with a BA in government.
Through most of his twenties and thirties, Gilder toiled as a freelance writer, reasonably successful but constantly broke. His first two books, Sexual Suicide and Naked Nomads, might best be described as antigay, antiwelfare, antifeminist screeds in which he argues that equal pay between the sexes is in fact antifamily. They won him notoriety among feminists but little in the way of royalties.
Gilder's breakthrough proved to be his fifth book, Wealth and Poverty, published in 1981. Released shortly into Ronald Reagan's tenure, it hailed the entrepreneurial spirit as the most effective cure for poverty, thereby securing Gilder's place as one of the new president's supply—side gurus. The volume sold more than 1 million copies, and the 41—year—old Gilder found himself suddenly rich and famous. Yet it was precisely at that point, despite having a wife and two kids (they'd eventually have four) and no background in the hard sciences, that he decided to chuck his career as a political gadfly and teach himself physics. How does he explain a choice that seems at once preposterous and prescient? Peering into the future, he imagined a restless life tilling the same tired soil yet never quite matching the success of Wealth and Poverty. Another factor, of course, was that he could suddenly afford the folly of a whim.
Gilder's decision didn't arrive entirely from out of the blue. He'd devoted a whole chapter of Wealth and Poverty to the semiconductor industry(though he now confesses that his views were based almost solely on an article he had read in Time). The parsimonious Gilder seemed enchanted by the fact that silicon was really nothing but sand, so readily abundant a raw material. He was friends with National Semiconductor board chair Peter Sprague, who had mentioned to Gilder that they soon would "put scores of transistors not on the head but the point of a pin." Above his bed at home, Gilder has a famous Blake quotation about seeing all the world in a single grain of sand. "I loved the idea that the computer was a world in a grain of sand," he says.
Over the next five years, he split time between coasts, studying at Caltech under the eminent physicist Carver Mead, who became his mentor and sage. Gilder took classes when possible but mainly studied on his own. He hired a tutor to teach him calculus so that he could better understand physics. In all, he figures he read "hundreds of books," most of them textbooks, to learn the sciences of the microprocessor.
The years of self—banishment served him well. His resulting work, Microcosm, published in 1989, influenced a generation of people, including former FCC chair Reed Hundt. "Microcosm is a great visionary document," Hundt says. "It helped change my thinking." If anything, Gilder's next book, Life After Television, published in 1990, proved even more prophetic. A strong anti—TV bias prompted Gilder to predict its imminent demise at the hands of the PC — but he also spotted the potential for convergence between the tube and the microchip and, before Tim Berners—Lee had conceived of the World Wide Web, wrote about "a crystalline web of glass and light."
"Listen to the technology," Carver Mead had counseled his disciple. And fiber optics seemed the perfect subject matter for the fervently ascetic Gilder. Photons and light waves, of course, are weightless and ephemeral, the very embodiment of a nonmaterial world. There's a cosmic perfection in a technology that can move libraries' worth of information around the globe at the speed of light.
"Listen to the technology" — it had proved an invaluable mantra as Gilder delved more deeply into the science of light and electromagnetic particles. By the mid—1990s, however, it was hard not to listen also to the sound of money.
The Gilder Technology Report wasn't Gilder's idea so much as it was a notion planted in his head by two money managers overseeing some of his financial planning. Late in 1995, Chuck Frank and David Minor proposed that the three go into business together. By that point Gilder was writing regularly for Forbes and its technology supplement, Forbes ASAP. (He also did occasional pieces for this magazine and is still a contributing writer.) Frank and Minor proposed that Gilder's writing be repackaged as research, which they in turn would sell to investment banks, but that idea proved a bust when almost no banks expressed interest. As an alternative, Gilder suggested a monthly newsletter. He contacted his friend Steve Forbes, and a deal was struck between Forbes Publishing and the newly formed Gilder Technology Group: Gilder would write the report; Forbes would handle the publishing, marketing, and distribution; and the two companies would split the proceeds.
The newsletter was launched in mid—1996 with an initial run of 8,000. The primary audience was networking techies drawn to its data—rich charts and, of course, to Gilder's unique and passionate take on new technologies. In the fall of 1997, about 350 people paid $4,000 apiece to attend his first Telecosm conference, a two—day affair at the Ritz—Carlton near Palm Springs, California. For Gilder that would've been enough. Even with a modest circulation of 10,000, the newsletter, which cost subscribers $295 a year, was netting millions of dollars in revenue, and the conference contributed hundreds of thousands more to the company coffers. He was also taking in around $50,000 per speech, a few times a month. He had more than enough to keep himself busy: columns, articles, and another book that was several years overdue. A modestly successful business, however, wasn't good enough, especially given the overheated times and the ambitions of at least one of his partners.
Inside Gilder's circle, people refer to it simply as "the list" — the companies Gilder has singled out as worthy of an investor's interest. Gilder says he can't recall exactly how it was decided that they'd include fewer charts so the list could run on the report's final page, but the impact of that decision is plain to him. "Ultimately, I was now publishing an investment newsletter," he says. In 1997, Rich Karlgaard, then the publisher of Forbes ASAP, wrote the first of several columns praising Gilder for his stock—picking prowess. "Nobody ... can spot a gigadollar sure thing in a queue of photons" like Gilder, wrote Karlgaard, who is now the publisher of Forbes. He included a toll—free number for potential subscribers but failed to reveal the magazine's stake in the enterprise he was touting.
Gilder hardly played the hapless bystander. He began slipping stock tips into his articles. In one for Forbes in 1999, for instance, he advised those wanting to "make a killing over the next five years" to buy shares in either Globalstar ("a supreme telecosmic play") or the Loral Corp. (Globalstar declared bankruptcy this past February, and shares in Loral are down 88 percent since Gilder's recommendation.) In another piece, published in 1997, Gilder suggested that readers short Microsoft. (An investor who took Gilder's advice and shorted $10,000 of Microsoft stock would have lost as much as $25,000, depending on when he or she decided to sell.) Gilder also gushed over the stock market potential of a litany of companies that have either gone bankrupt or are trading at a fraction of their 1999 share price.
Gilder's list performed well in 1998, but his portfolio's 1999 performance was unreal. "I had six of the top nine stocks on the S&P, and four of the top eight on the Nasdaq," he boasts. A Karlgaard column, written just as the Nasdaq was in the early paroxysms of its great fall, noted that Gilder's basket of stock picks had racked up ("Is your blood pressure in check?") a 247 percent return in the prior 10 months. "Grow rich on the coming technology revolution," blared the promotional materials Forbes Publishing mailed out soliciting subscriptions to Gilder's newsletter. At its apogee, at the end of 2000, it had more than 70,000 paying subscribers, representing $20 million in revenue.
The Gilder Technology Report represented only one, albeit large, piece of the growing empire. Gilder started hiring people to write additional newsletters on niche topics such as online storage, and the annual Telecosm conference gave birth to several regional Telecosms. The company also added a series of investment conferences to the calendar — six in 2000. Each brought in another million dollars, according to Gilder. He moved his burgeoning company into an 8,000—square—foot office in Great Barrington that had taken the better part of a year to refurbish in order to accommodate a staff of two dozen.
Meanwhile, Gilder's partners were anything but satisfied. When Frank proposed a hedge fund, Gilder said no, despite the enormous fees such an enterprise would have earned investing money on behalf of rich individuals; he felt it would ensnare them in too many conflicts of interest. Similarly, he said no to a Telecosm venture fund and other lucrative—sounding schemes. "Because the company was started with the expectations of doing these things, my repulsion was seen, understandably, as a betrayal," says Gilder. (Minor generally confirmed Gilder's recollections; Frank did not respond to several messages left on his cell phone.)
So in March of 2000, at the market's peak, he bought out his partners and started over as Gilder Publishing LLC. "I thought we'd go public," he says. "Merrill Lynch and Hambrecht were competing to be underwriters. There was talk of a $200 million valuation. I thought we were rich. What was $8.5 million for me to buy out my partners?" At around that time, he also decided to spend $2.5 million on The American Spectator, a money—losing conservative political journal. "Effectively we let $11 million walk out the door at precisely the worst time, just as we were about to go off a cliff."
All the while, Gilder was feeling haunted by the immense responsibility. "In retrospect, it's obvious that I should've subtly said, 'Hey, things have gotten out of hand at JDS Uniphase, and it's not worth what you'd have to pay for it,'" he says. Each month, he thought about providing a warning to his subscribers, and he decided against it every time. He had witnessed firsthand what others had dubbed the "Gilder effect": the steep spike in a stock after he added that company to his list. It wasn't unheard of for the price of a stock to jump by more than 50 percent within an hour of a newsletter's release.
"If I had said, 'Hey, this is a top, you should all sell,' it would've been a cataclysmic event," he says. "I'd think about telling people that they should sell half their holdings, and each time I'd conclude that my subscribers would be enraged. I also wondered what I'd precipitate if I did it." Fully 50 percent of his readers had signed up for the report at what Gilder now calls the "hysterical peak" of the market. "Half of my subscribers would have been eternally grateful [for a warning], but the other half —†the new ones — would've been enraged because they had just come in," he says.
"It was quite terrifying. I really didn't know what to do."
In the end he did nothing. And soon enough, he had an entirely new set of distractions to fret over. "In the past, we'd sell out our investor conferences within two weeks," Gilder says. "But in 2001, we sent out the same literature and the same invitations, and five or seven people signed up." He lost the deposits that were placed to reserve hotel space for the gatherings. Newsletter renewal rates plummeted. A huge tax bill came due. By spring 2002, he'd laid off nearly half of his staff.
"You can be just fabulously flush one moment, and then the next, you can't make that last million—dollar payment to your partners, and there's suddenly a lien on your house," he says. Gilder, who had always cast the entrepreneur in the most flattering of light, had been granted a far more intimate, less appealing glimpse of life inside a startup.
Any analysis of where Gilder went wrong has to begin with his near—evangelical faith in J—curves and the perfectibility of humankind. The notion of a new economy that created its own set of rules represented no great leap for this man who was inclined to see history as the determined march from savage to enlightened being. Likewise, the rocketing success on Wall Street of companies staking their future on a transcendent technology such as fiber optics confirmed everything he had come to believe in over his lifetime. "The bull market fit George's broad vision quite nicely," says Spencer Reiss, editor of The American Spectator (and a longtime Wired contributor). For years Gilder had been perceived as a wild—eyed prophet yelling into the wind. Suddenly he was endorsed by the masses. "For George this wasn't about money, but ultimately a vindication of his thinking," Reiss adds.
Gilder embraces new technologies with the fervor of a missionary. Rather than declare Java an interesting new programming language worthy of adoption, he trumpeted it in 1995 as if it were the Second Coming — and now admits that he greatly overestimated its short—term impact. It wasn't enough that he spied the remarkable impact of fiber optics before anyone else, nor was he satisfied predicting that bandwidth would replace computing power as the driving force of technological innovation. Gilder dedicates the last several chapters of Telecosm to celebrating the "transfiguration" of society that will surely follow once we cast off the "copper cages" of existing technologies. In Gilder's broadband utopia, we will no longer be bothered by telemarketers, time—wasting advertisements, or onerous government forms. We'll overthrow the tyranny of mass media, advance world peace, and generally find ourselves enjoying an era marked by an abundance of leisure time.
"If there was no George Gilder, the venture capitalists and investment bankers would've invented one," says Fred Hickey, editor of a newsletter called the High—Tech Strategist. "They needed some kind of pied piper to put the words on paper to justify the insanity of paying any price for anything that offered any kind of technical promise."
To Gilder's critics, he ignores the real workings of the telecosm. Indeed, despite a past steeped in economic policy issues, Gilder consistently downplayed the enormous impact of regulation. "There's no way you do telecom work without factoring in the regulatory piece," says Gary Arlen, president of Arlen Communications and a telecom analyst who has been following the industry for 20 years. "He was either naive or just refused to factor that into the mix."
Gilder had taken economics courses at Harvard, but they hardly taught him the gimlet—eyed analytics or understanding of business fundamentals that are crucial to success as a stock picker. One of Gilder's bedrock beliefs is that we have left behind the era of the microcosm — a time marked by an abundance of transistors and a scarcity of bandwidth — and entered the era of the telecosm, in which bandwidth is abundant and transistors scarce, given a migration to ever—smaller devices. "That argument is generally true," says Google's Schmidt. "The error George made is to assume that the economics of surplus are positive for investors, when in fact surplus means cutthroat price competition, over—provisioning, and all the things we're seeing happen in the telecom sector."
"The realities of business play only a cameo role in George's theories," says Howard Anderson, founder of the Yankee Group and a part—time professor at MIT, who has observed the telecom industry for more than three decades. "His thought was 'Build it and they will come.'" When Global Crossing floated billions of dollars' worth of junk bonds to build out its worldwide fiber network, Gilder celebrated the decision as bold and visionary. He blames Global Crossing's bankruptcy, and the bankruptcies suffered by more than a dozen large telecom companies, on both a "deflationary environment hugely hostile to debtors" and Alan Greenspan's boom—time "obsession" with raising interest rates to tamp down the stock market. Gilder refuses to acknowledge that the company's main problem was a lack of demand, and when pressed on the point tends to provide a history lesson about the heroic role junk bonds played in the success of companies such as MCI and McCaw Cellular Communications.
"In a different environment, these companies would have survived and thrived," Gilder insists. "With no advance warning, the financial climate suddenly became very, very hostile to debtors."
Still, he allows, "I led a whole bunch of credulous people to finance this huge buildout of fiber." And ultimately he blames himself for all those hundreds of millions of dollars investors lost based on his predictions. "I accepted the laurels when they were being offered," Gilder says. "Now I really have to eat crow and not skulk off to the corner and claim 'I'm just a technologist.'"
Gilder was in Silicon Valley when the news came, at the end of January, that Global Crossing had filed for bankruptcy protection. In the Telecosm Lounge, people were in shock. Gilder had stuck by the company even as share prices fell; if anything, he supported the stock more fervently. "Your current qualms will seem insignificant," he had declared midway through 2001, in response to frightened investors. Upon hearing the official news that their shares in Global Crossing were indeed worthless, some posters were philosophical. A few were angry, like the man who asked Gilder, "Are you a villain or just naive?" But mainly people seemed annoyed that for days their high priest remained silent despite their suffering. One loyalist even sought investment advice: "All I ask is for you to give us one stock right now which will offer the greatest upside potential with the least amount of risk to make up for Global Crossing," wrote a poster named Phil.
A different kind of man, feeling chastened after a disaster of such magnitude, would have declined. By then a full 50 percent of his subscribers had fled the Gilder Technology Report, and there had been similar circulation drops at his four other newsletters. His list of telecosmic stocks had lost 75 percent of their value since the start of 2000. He'd lost his own fortune. Yet, incredibly, when Gilder finally appeared in the Telecosm Lounge nine days later, he had an answer for Phil: "I would buy National Semiconductor."
So what has Gilder learned from his flirtation with imponderable riches? Everything and nothing. He expresses relief that he can return to what he knows best, studying the inner workings of cutting—edge technology. He expresses deep regret for the role he played in the telecom crash.
But Gilder is first and foremost a man of faith. He continues to add new companies to his list, and he still tries to predict the future. "My view is that all this stuff is going to come back very rapidly," he says, citing the wisdom that results from "being old enough to have lived through many cycles." Science can now place 280 wavelengths on a single fiber and transmit data at a rate of 10 gigabits per second. Soon we'll be measuring the flow in petabits. All of the world's knowledge is near—instantly available. Ghetto kids will have access to the same information as rich preppies. Government can't help but come to its senses. A recovery — nay, the next boom! — is just around the corner.
That, at least, is what the technology is telling him.