The Web's Paper Zillionaires

Correspondent Rita Braver's segment on the Internet will appear on the CBS News Sunday Morning site here on CBS.com, and on air, on Sunday, June 13. This is the latest in her series of columns updated weekly for CBS.com. An archive of The Braver Line is available.

Ah yes, the financial markets.

Using the Internet makes us want to grab a piece of the action. We all keep reading about fortunes made by those smart enough to get in early. Day traders brag about making hundreds of thousands of dollars and sometimes sheepishly admit to losing equal amounts on Internet stocks.

Former Surgeon General C. Everett Koop announces his new venture Drkoop.com and the initial public offering (IPO) raises more than $80 million on the first day. Millionaires-shmillionaires; some people are becoming Internet billionaires!

And yet, folks who toil on the Web don't seem to enjoy bragging about how rich they are. At least not to reporters. In Silicon Valley last week I spoke with David Peterschmidt, CEO of Inktomi, a company that provider servers that other companies can use for speedy information retrieval. The company is valued at about $5 billion. Peterschmidt is 51, a veteran of the Air Force and several software ventures. He owns about a million and a half shares of Inktomi. "That makes you a very rich fellow," I said. "It's all on paper," he replied.

Across the continent in New York's Silicon Alley, I spoke to the founders of theglobe.com, Stephan Paternot and Todd Krizelman, who are both 25 and veterans of late-night pizza sessions at Cornell University. Their company, billed as an Internet "community," is worth about half a billion dollars. "So, you're fairly rich fellows," I commented, ("fellow" being my preferred way to describe rich guys.) "On paper," Todd said. "Only on paper," Stephan chimed in. "Why is everyone so sensitive about this?" I persevered. Paternot answered, "Because it's almost like you have a half ticket to winning the lottery... If a company by some...misfortune went to zero, that huge wealth you thought you had is absolutely gone."

Neither Paternot nor Krizelman nor Peterschmidt think their companies have any risk of going to zero. But there must be vulnerable .coms out there, or at least companies whose stock are priced too high to make sense.

And how's a poor wannabe-Internet-investor to figure out what to do? Joe Fisher, president of a Staten Island investmenclub, says the club has stayed away from Internet stocks because their rule is to invest only in companies that have been making money for a few years. Still Joe says, "I feel like I missed the boat.... like I was on a bus stop and I watched it go by." Somehow I relate to that.

But Newsweek financial columnist Jane Bryant Quinn is skeptical about the long range worth of some of the flashier Internet stocks. "They simply cannot deliver on what people think they're going to deliver on," she explained. "Everybody thinks that they will be the person who gets out before the fall....and of course a lot of people will not get out before the fall."

Naturally I asked if she had any idea whether the end is near. That produced a gale of laughter. "Not a clue. You know a bubble will burst some day. But you never know when."

Yes, we may have Internet envy, but this new frontier is not for the faint-hearted. Quinn's advice is to think of speculating in the Internet market as you would consider betting on a horse race or going to Las Vegas. Don't borrow money to play. Be prepared to lose big.

Maybe I'll just go online and check the weather.