How Three Web Titans Survived the Bust

Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com. He's also a regular contributor to RealMoney, TheStreet.com's subscription site. If you'd like to see all of Jon Markman's RealMoney.com commentary, click here for information about a free trial.

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Anyone nostalgic for the ill-fated tech-stock mania of five years ago need only fire up their favorite search engine and type in the word "Google"GOOG. That ruinously over-hyped company shows many of the unfortunate signs of firms that began to crash to earth in March 2000 -- and just a few of the positive marks of ones that survived.

When technology company shares peaked five years ago this month, after all, their future looked brighter than ever. Prices soared to highs because investors and traders, a great many of them new to the game, figured that the earnings potential of dot-com companies in the next year to five years would be even greater than they had been over the prior five years.

For most companies, an extrapolation of recent history to the far horizon turned out to be nonsense. But for a few, the hopefulness of March 2000 was not really so misplaced, as they had already shown they could be survivors amid cataclysmic change.

What separated the survivors from the shell-shocked? And why is Google likely to end up more like the late, lamented Exodus Communications than like eBayEBAY? And, sticking with the Es, why did a public utility like ExelonEXC turn out to be a better five-year investment than virtually all of the tech stocks?

The answers lie in at least two places.

First, companies that best survived the bursting of the tech-stock bubble were already, or on track to be, the most profitable -- signifying that their managers understood their role in the great capitalist value-creation chain. Technology futurist and newsletter publisher Mark Anderson explained his own skepticism of the many money-losing ventures back then by reminding readers that profits were nature's way of saying a company was a useful part of the ecosystem. At a time when business success for many pretenders was being measured in "clicks" and "eyeballs" rather than cold, hard cash, the comment seemed to some observers as hopelessly archaic. But in the end, Anderson was right: Companies that lasted were the ones that provided valuable, unique services that induced customers to pay a premium over competitors' services.