Today, thanks to the dotcom boom that has seen housing prices soar and created six-month and longer waiting lists for high-priced BMWs, Porsches and other luxury cars, that number is about US$10 million.
Even with the sudden bear market in dotcom stocks, the new wealth is everywhere. According to Edward Wolff, professor of economics at New York University, the number of US households with a net worth of US$10 million jumped from 42,000 in 1992 to 233,000 in 1998.
While the new money is certainly changing demographics, it is still unclear how and whether the new millionaire middle class will change society as a whole.
One thing the new rich folk who owe their wealth to the Net aren't doing much of is giving their money away. Aside from some high-profile philanthropy by Microsoft Chairman Bill Gates and a few others, most charities are still holding their hats out to the wealthy tech crowd. They're likely to be waiting for a while.
"They don't really come along with a history of giving back to the world, it's not a priority," said Shannon Leskin, publisher of the Philanthropy News Network.
Such is the perspective of youth. "You're talking about people between 25 and 35 years old," Leskin said. "[Giving] is not on their radar screens because they haven't lived long enough."
But not every dotcom millionaire fits the stereotype of selfish profligacy that so often shadows the wealthy. Here's a look at four people who struck gold on the Internet, modestly amassing enough to push them into the Internet middle class.
One has shifted into overdrive, starting her own Net businesses.
Another wants to write rock-and-roll songs.
A third is devoted to a cause: changing child-custody laws.
And the fourth has kept on being a "conduit" for Web information, just as before.
The accidental millionaire
While some dotcom millionaires take their initial public offering winnings and ride off into the sunset, Jagemann not only continued to work at her day job as longtime executive assistant to then UUnet Technologies Chief Executive John Sidgmore -- who's now chairman of UUnet and vice chairman of MCI WorldCom -- she also continued her five-year quest to earn a college diploma in economics while attending night school. That personal quest made Jagemann, an Iranian native, the first of her siblings to earn a college degree, and made her mother, who raised her and her three brothers as a single parent, proud.
As if that weren't enough, Jagemann -- who earned notoriety when her shares in UUnet were valued at US$2.5 million when the company went public in 1995 -- decided to launch an online office supplies discount retailer in her spare time. After a discussion with her brother-in-law, who worked in the office supplies industry, Jagemann said she was curious enough to take a look at the market. It turned out to be a big one: Jagemann recalls that only 5 percent of the US$200 billion office supplies business was being transacted online then, leaving plenty of room for a virtual player who could undersell established brick-and-mortar chains such as Office Depot and Staples.
So, in August 1998, while continuing to work as Sidgmore's assistant, Jagemann invested US$500,000 of her earnings to launch Online Office Supplies, a division of eCommerce Industries, a holding company of which Jagemann is president and CEO and Sidgmore is chairman.
Jagemann's rags-to-riches story is now frequently retold as part of the Internet's gold rush lore. An administrative assistant, she followed Sidgmore from Telephone Industry Consultants to UUnet -- taking a 60 percent pay cut and doubling her commute time -- in order to have a chance at moving beyond her secretarial role. She got that chance, working as manager of investor relations when UUnet went public, making her a millionaire at age 28.
The initial US$2.5 million bankroll has grown into "eight digits" thanks in part to her financial advisers at The Goldman Sachs Group. Though the market has been volatile for many of the high-tech stocks in her portfolio, Jagemann said she hasn't "lost any commas or zeros yet. You can't expect the boom to last. My advice is diversify, diversify, diversify."
Though she drives a luxury car -- a BMW -- and admitted to owning a toy -- a Porsche Boxster -- her advice to other members of the Internet nouveau riche is to remember what's important. Jagemann, who said her mother often worked two jobs to support her family, said the first thing she did after striking it rich was pay off her mother's mortgage and hand over US$25,000 to a contractor so he could fix up her mum's house in New Jersey. She also started college funds for her 10 nieces and nephews "so they wouldn't have to go through the hell of working while trying to earn a college degree."
She insisted that success hasn't really changed her. "I guess the real test is that we haven't lost one friend since this has happened," Jagemann said. "The jewellery gets nicer, the vacations get nicer. But the day-to-day stuff stays the same. Even if we lost everything today, it would still be the most amazing thing. The best I thought I would do growing up in New Jersey would be to one day make US$30,000 [per year]."
Singing a different tune
Alan Taffel retired early last year after a five-year stint as vice president of marketing at UUnet. It was an eventful tenure that saw the small Internet backbone company grow from US$12 million in revenue and 100 employees in 1994 to US$3 billion in revenue and 7,000 workers in 1999.
It didn't hurt that during that timeframe the Internet access market went nuts, or that UUnet was purchased and merged three times to become a central strategic leg of telecom behemoth MCI WorldCom. Suddenly, the bundle of stock options that Taffel took lightly at the beginning of his employment were worth millions of dollars.
"The stock options weren't that big a factor [in choosing to take the job]," said Taffel, who's around 40 years old, looking back. "I was attracted to the opportunity to start with a clean slate and build an organisation unfettered by bureaucracy."
The job was alluring enough for Taffel to accept a slight pay cut and fewer perks than he enjoyed at his former job at Sprint. It was clearly the smartest move he ever made, though at the time he briefly mourned the loss of a US$700-per-month car allowance from his former employer.
By early 1999, it was clear to Taffel that everything had changed. Not only could he buy any automobile his heart desired, he didn't have to work ever again.
Retiring came easy. After 20 years in the high-tech marketing business, he wanted to start a family and work on his true passion: songwriting. He's also a longstanding member of the Grammy-winning Washington Chorus, which performs at the Kennedy Centre.
"It really took a while for retirement to sink in. I didn't go to matinee movies [because I never had been able to]," said Taffel, who got dotcom chief-executive job offers daily. He turned them all down.
Unlike others who take their first big cash out and work to spin it into further success and fortune, Taffel was content to leave the high-tech, high-stress world largely behind. But old habits die hard. "I missed the buzz for a while," the Maryland native admitted.
So he started his own marketing consultancy, Taffel Communications, to keep his hand in the game. Taffel also sits on several Internet company boards, including those of Avici Systems and Brix, and said he's having "a lot of fun."
But Taffel made it clear that he wants to spend the next 20 years of his life on creative pursuits, and will pick and choose very carefully the Internet-related work he takes on. The rest of the time he plans to sing, write rock-and-roll songs and travel with his wife and infant daughter.
The activist
When he was an Internet-service-provider owner, Karl Denninger was never afraid to shoot off his mouth. Now he's even less so.
He sold his Chicago-based company, Macro Computer Solutions, to Winstar Communications for an undisclosed sum in 1998 and hasn't looked back once.
"When I stopped loving [running an ISP], I stopped doing it," said Denninger, who now spends most of his time raising his 3-year-old daughter and working for children's and fathers' rights. "My daughter gets first dibs. What's left goes to the cause."
What cause? Ever the epicentre of controversy, Denninger's Children's Justice Web site advocates a revamping of child custody laws, which he sees as badly biased toward mothers. The position is clearly born of life experience.
Denninger wrote on the Web site: "If you're a man, then you're at risk under the current system to have your rights wantonly violated, unless you have literally over US$100,000 in available funds should you decide to pursue a custody case against the wishes of a woman who bears a child you fathered -- in or out of wedlock. The author personally spent US$300,000 on attorney fees and costs and two years of his life (successfully) protecting his right to be a parent to his daughter."
And that's not the only thing Denninger feels strongly about. Though the Internet made him a millionaire -- his stake in MCS was rumoured to be worth US$12 million at the time of the company's sale -- the feisty Midwesterner has nothing but scorn for the industry overall.
"I refused to take any stake in the acquiring firm. The shell game being played by these corporations is astounding," he said.
Denninger has also steadfastly avoided investing any of his personal fortune in the Internet: "I refuse to have anything to do with the Nasdaq 100. There will be a shake-out, and when it comes, it will be ugly and it will happen fast."
He might as well have been speaking of Black Week, April 10 through April 14, when the Nasdaq crashed.
The volatility of Net stocks in the past few weeks makes Denninger seem prescient, but his dislike for the unseemly marriage of breathless hype and dubious business plans is visceral.
"Amazon.com has proven there is a race to zero in margins. It should be a US$2 stock," he said.
On a more philosophical note, Denninger said that wealth, while freeing, shouldn't be an end in itself.
"It's a question of how much is enough. There are people who want to be Bill Gates. I respect that, but I don't agree. At what point does the pursuit of wealth overshadow who you are?"
E-mail thrillseeker
Chris Pirillo will tell anyone who'll listen how he's become a member of the Internet millionaire class by being funky and irreverent.
Visitors to Lockergnome, his ad-supported e-mail publishing service, don't have to look too far to see he's telling the truth -- at least about the funky and irreverent part.
Take this April 13 press release, distributed during a week in which investors once again questioned the valuations of what he said are dotcoms "with nothing behind them":
"In a move that has sent shockwaves throughout the industry, Lockergnome received a full US$20 in first-round funding today. These funds were transferred by hand earlier this afternoon, when Pirillo's mother reached into her purse and pulled out a crisp bill," the release read.
"This all started out with my wanting to have fun," said 26-year-old Pirillo, a hyperactive speaker who said he has a face for radio, takes coffee to calm down and is a "media slut" who loves the attention he and Lockergnome -- it's a high school nickname, he explained -- have been getting since the site's launch four years ago.
Since then, more than 200,000 subscribers have signed up to receive Pirillo's daily and weekly e-mailed spin on the latest Windows freeware, games, multimedia, fonts, Web sites, tips and tricks, updates, drivers and computer industry news.
Pirillo got the idea of being an e-mail publisher after becoming fascinated with the publishing potential of e-mail. "I'm not a business guy. I'm a geek looking for cool stuff. For every geek, there's something that trips their trigger. For some, it's an operating system. For me, it's e-mail. The highlight of my day is to check my e-mail. It's a thrill that keeps me going."
He's been able to turn that thrill into a successful online business, he said, because he has no hidden agenda. Pirillo said he's simply interested in scouring the Web for the best news on behalf of other Windows users. "I'm making a career out of being a conduit," said the self-described "multimillionaire."
Not only is Lockergnome a hit with subscribers, but also with advertisers and sponsors that like the fact that their messages are being seen by a targeted demographic of Windows enthusiasts. Intel said it generated almost 9,000 site registrations in one week after advertising in Lockergnome.
His success prompted Pirillo to author a book for other would-be e-mail publishers, called Poor Richard's E-mail Publishing. But it hasn't prompted him to sell out to the companies he claimed are bidding for the site. "The day that money is in my sights is the day I quit," Pirillo said. "As long as I can support my family -- my wife, Gretchen, and my dog Sprocket -- I'm going to keep delivering content."
