Woke up each morning, checked fuckedcompany.com for the latest news, then went over to Yahoo! Finance to watch my holdings get ground into dust. Lather, rinse, repeat for a year or so.
FC and Slashdot. There was a lot less traffic in the Bay Area in 2002 than 2000, and it was easier to find parking in downtown Palo Alto, but the eBay parking lot on Hamilton Place in San Jose still looked like a supercar showroom of the PayPal mafia. (Probably because eBay was used to liquidate the detritus of speculative economy like :CueCats and Webvan promotional materials.) Silicon Valley (San Jose - Santa Clara - Sunnyvale) commercial real estate vacancy rates hit around 25%. I opted to return to finish my EE/CS undergrad and do security research and IT consulting in .edu to pay for university.
The problem when a new field opens up is that there's a huge land rush as everyone dashes in to stake a claim. We all know very few plots contain gold, but if you land on one that does, it can pay well. Very well.
So the degree to which you are affected depends on your risk/return equation. There are always "get rich" opportunities (which are usually balanced by "high risk" aka "get poor" results.)
The later the stage, the closer you are to the bubble bursting. This is happening -all the time-. (Think dot com, mobile, great recession, crypto (web3), and (to come) AI.
Don't misunderstand me. There -are- winners. Even in dot com. There are winners in every bubble. Lots of companies came through dot com just fine. Some grew mega rich (think Amazon).
Some companies will make coin on AI. Ultimately every business will end up using it in some form or another. Right now the miners are grabbing shovels and staking their claims. Most will go home empty handed. Some will create generational wealth.
What was it like in the aftermath of dot com? A lot of miners hanging around with nothing to do, waiting for the next field to open up. Me? I'm not a miner. I sell shovels and jeans.
I wasn’t affected by the dot com bubble luckily. I worked for a consulting firm in Atlanta during that time, and we had an office in an incubator called TechNest. My boss lent us out to various people there. I worked with a guy that ran a company called Dot Com Graveyard. Basically helped him with the backend for his site that let people buy all the stuff like Herman Miller chairs and other dot com stuff he got from the failed companies. Also helped a few guys that got the remains of real estate.com get hooked up with Fannie Mae and Freddy Mac using Biz Talk Server as that is what they got with the deal of salvaging realestate.com. It was a decent time for consultants to help clean up the pieces from what I remember.
I graduated high school in 2002 and started college to get a degree in computer science and engineering. Everybody thought I was an idiot. Everybody except my parents who were very supportive luckily.
I was finishing up engineering school around this time. I just remember handing out my resume at various career fairs and not getting any interest. Most of my friends and I took very low paying jobs that were not directly related to our chosen fields and scraped by for a few years. By 2004 or so things picked up and I was so excited to get my first programming job.
A lot of people liquidated their retirements and thought they'd never recover, they were right, they never invested after that and were pretty SOL.
Or they invested heavily in flipping houses and they got destroyed. One thing that is not talked about much is that a lot of those people that got crashed in the Great Recession had good jobs and great credit, so of course it made sense to them to own six or more houses as investments.
I’d moved to Silicon Valley hoping to make the leap from web dev to working in a startup. Unemployment in web dev hit 35%, startups weren’t hiring, it was very rough.
A couple lessons:
- most of the ideas funded were predictive of the future, many were a decade early so those companies did not survive. Mark Roberge of Stage 2 Capital/Hubspot suggested recently that virtually none of the current AI startups will survive, but join one anyway so you can get into the next wave that will.
- those that survived in any form went on to some great IPOs/exits. Being early suuuuucks, but having a 2-3 year head start on a trend pays off when the market returns. Most of the winners in GenAI today for this pattern. If you can be adjacent to a big winner (which in hindsight were pretty obvious: Google, Amazon, Facebook) you do well.
- general sentiment on tech/internet was super negative, it was better not to talk about it because “fad/fraud” was the general response
- if you could find any revenue generating opportunity, you were better off than everyone who raised capital
By all appearances, we’re trending towards an AI apocalypse/tech down-turn. Much like in 2000, it took a new generation of college grads getting jobs and eventually making into management before buyer behavior started changing.
We forget that tech doesn’t change markets, the buyers of tech do.
One good strategy in a downturn is to go pure play PLG to SMBs and buckle in for 3-5 years.
FC.com example snapshot:
https://webarchive.loc.gov/legacy/20020909235327/http://www....