Where were you on 10 March 2000?
Silicon Valley 10 years ago today hit a historic landmark. It was the day the Nasdaq topped out at 5,132.52 and the day the dotcom bubble burst - taking the hopes and dreams of countless members of the digerati with it.
I had just landed in the Valley a few months before that peak. Nothing had prepared me for the roller-coaster journey so many people seemed to be on. I was working as a stringer for the BBC and a number of newspapers.
It was an exciting time to be here. The very air seemed to crackle with possibility. You could not help but be swept up by the enthusiasm and the energy. It seems crazy to look back and not see why nobody was warning that the "end was nigh".
People simply thought the good times would last forever, or at least until nearly everyone got rich, very rich.
I had friends flip-flopping from start-up to start-up every six months or so in order to push themselves up the money/equity tree. Each time they moved they demanded more equity, more money, more perks, and more health benefits. And they got them.
I foolishly asked one friend how her interview for a new job went and if she had heard whether or not she got it. She kindly informed me that "they don't interview me, I interview them to see if I want to go and work there".
That was the way it was for many. There were so many opportunities around that the joke was that anyone who could type their name could get a job.
I even gave it a try.
I posted an advert on Craigslist and was inundated with offers. One company I went to see asked me what kind of package I wanted. I thought I would try out the $100,000 figure to see what it felt like to say out loud. They didn't flinch. I knew then, I had sold myself too cheaply!
Another friend moved out here from the East Coast to help set up a business doing something with brain-mapping, I think. It didn't really seem to matter as long as it had ".com" at the end.
She decided to set up some roots out here, so went shopping for a winery. Then she fancied a horse ranch. She couldn't make up her mind, so thought she would buy one of each.
Within weeks her company turned to dust, as did her paper wealth. She went to work for excite@home and when her boss got laid off a few weeks after she started, she waited for the hand of destiny to tap her on the shoulder. It didn't.
Because she had no boss, she had nothing to do in the office. In the end, she went flying every day and left a post-it note on her desk with her cellphone number. Six months later, she got laid off. In that time she managed to retrain as a realtor. And we all know how that has gone!
The Valley 10 years ago was flush with money, jobs, opportunities and thrusting 20- and 30-somethings who slept under their desks and parked their posteriors on the swankiest Herman Miller chairs.
Jobs may have been plentiful, but accommodation wasn't. I remember one story I did with a letting agency who said that prospective renters offered everything from shares to more money as well as the offer to walk his dog and bake him a cake every Friday!
The lines of people outside available rentals rivalled those at the dressing rooms of headlining rock stars.
But as the dream went up in smoke, the digerati cleared out and headed back to their parents' homes. Offices emptied out and certain areas of the city seemed abandoned.
New businesses cropped up selling off what they could of the failed dotcoms. I went to many an auction that was piled high with expensive designer furniture and state-of-the-art computers that had hardly been touched. Everything was for sale.
But even though the end was sobering, the enthusiasm and the optimism remained. Sure, it was more tempered. But riding the dotcom wave is now a badge of honour.
Anyone who lived through those times learned many a life lesson and are valued for having had that experience, not tarnished as failures as they might be in other parts of the world.
© 2012~RS~q~RS~~RS~z~RS~19~RS~)
Comments
The dot com bubble is still sited, but not named, as to why the removal of the pension tax dividend had NO effect on the values of persional pensions!
Oddlky enough the stats used to show its effect run from 97 to 2000! ie while the bubble was inflating!
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I was still at Marconi which would be affected by the Telecomms bubble bursting a few years later. The thing is the stock market has always had bubbles and the gold rush mentality and that leads to the sort of VC culture that funds any idea with the <insert hot new thing> label on it in the hopes of a quick exit and cash bonanza.
The thing is the investors were right, the Internet would change the world. And the companies that survived the dotcom bubble became stronger as a result. Even if their buisness plans weren't clear at the time they also didn't spend the investors money like water and concentrated on building brands and products that endured.
One has to wonder what would have happened to Amazon if the investors had gotten their way and sacrificed slow steady growth for dotcom margins? Amazon didn't make their first profit until Q4 2001 but look at them now.
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I'd just taken up a project to put a UK energy supplier online that was backed by a big US corporate giant, working alongside Microsoft, KPMG and Compaq. Now what was it's name ... oh, yeah Enron.
Still, all the money was fantastic fun whilst it lasted.
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I was with a UK software company providing an Internet B2B trading platform. Company name: can't say, to protect the innocent . Share price in 1999: about 50p. Share price after a spotty scribbler at Lehman wrote that it was a brilliantly-led business - jumped to 40 POUNDS. At one point, its valuation of approx 1.9Billion Sterling was equal to about one third of the entire value of the Alternative market, AIM. Its turnover at the time: about 700k Sterling; losses: HUGE.
The MD was a useless failure culled by Microsoft; the Marketing Director used to be a part-time telesales operator for a company I used to work for in Cheltenham (also destroyed by its founder). All made a fortune out of the stock options. The Marketing Director arrived one day in a new Porsche Boxter. When asked how she bought it, said "oh, with my quarterly performance bonus". Her performance amounted to creating 3 very costly media adverts which produced zero responses. it didn't last long. A few years later, its shell, worth about 30M Sterling, was the subject of a very nasty fraud case and a custodial sentence for the perp.
There were hundreds of bubbles just like this one.- Remember BOO.Com? Squandered $188M in just 6 months. It was flying secretaries by Concorde to New York just to take notes at management meetings. Went bust very quickly.
Anyway, then jumped ship, and landed in a US Telco based in Putney. It soon imploded.
Farcical times; farcical "experts". Read on: http://en.wikipedia.org/wiki/Dot-com_bubble
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BT/Gameplay/Wireplay online gaming turned realy big and when it hit £12 a share blew up and was sold for £1 dot com fun all round.
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Sorry for being pedantic but I can't help myself, I need to point out to the first poster icewombat that it's cited - not sited.
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It's amazing how stupidity and fear can drive the markets. The fear of missing the next big thing just drives common sense away.
Sad thing is it still happens today with some companies and in particular tech companies.
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@Mark_MWFC: what drives such markets - and was certainly the case back in 2000 - is collusion between the NASDAQ share pushers and the megabuck market makers on Wall Street. Remember also that NASDAQ is very lightly regulated (its listing costs are far far lower than the NYSE or LSE) and as a result, it is difficult to know who the genuine shareholders are are who are not - and every NASDAQ share (I am talking back then, as a victim of a Brit company called Select Software Tools) had what we now call a BLOG associated with it. And the contributors could write whatever they liked - slander, lies, deception, etc. And unbelievably, shares could rise or fall on the basis of these rumours. And there were many prosecutions of blatant share pushers - the American SEC takes a much more robust attitude toward this behaviour than the gutless, spineless and grotesquely overpaid penpushers at the FSA, so fearlessly led by Mr Sants, who recently did a runner, I understand, to pastures new. Wonder why?
But anyway, it is also called INSIDER TRADING, a form of financial whoring which is as old as whoring itself, and like whoring, impossible to eradicate between consenting adults......
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Look turandot2 you need to be consistent - you can't have him for "sited" and let him get away with "persional" - do you ever get out by the way?
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I don't remember where I was in March 2010, but I do remember where I was in September 2009, when George Soros sold all his investment fund's equity in dot.com companies.
He was the subject of instant derision.
10 years later, we can only criticize him for his timing.
Success in investment is governed by the same 'caveat emptor' that governs any other business.
He went back to the fundamentals, looked at the real figures, estimated how much profits these companies were really likely to produce and concluded that they were over valued.
I am myself on the wrong end of the current economic crisis, but economic history will show that we are in the same boat today, labour and property is overvalued. The credit crisis made people wake up and see this, and then prices started tumbling, and tumble they will continue.
Many firms are replacing people who leave with new hires working for a significantly lower wage. (up to half) I know of one organization which normally has a hierarchy designed to develop their leadership from within. They are advertising for 20 senior management positions. Why? Because they can get them cheaper from outside.
I believe that many organizations will deliberately start making life difficult for their existing employees so that they will leave and can be replaced with cheaper labour.
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I remember exactly where I was!
Having started a small web development company a couple of years earlier I was quite cynical about what I saw as a bubble. But then my ex-girlfriend had ended up working for one of London's dotcoms, and needed some contract web development done and I was happy to oblige despite the prospect of working with my ex. She kept telling me that her boss said that her share options would be worth "at least £600,000". That seemed a lot of reward for someone taking no risk (her salary was good) with average skills and experience.
The dotcom company was advertising widely on radio at the time, but making very little money, whilst having a growing staff of around 60 people. Some days I'd turn up and they'd pay me to sit outside sunbathing as they weren't organised enough to have my work instructions ready. There was no desk for me so when I could work I got plonked at the end of the boardrooom table in the open plan office.
And there I sat when on 10 March 2000 as the directors showed up for a board meeting, where the main question they discussed was "is this it, and if so, what do we do now?". They knew as well as me that this was a bubble, and that the aim was to get out with an IPO before it imploded. They didn't make it in time - I can only guess how many millions the venture capitalists lost.
It was rather exciting though to witness the meltdown at the boardroom table of a classic dotcom, and I have to confess I couldn't help but feel a little Schadenfreude, after all the hubris I'd witnessed.
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I was curled up in a college of further education, hired as webmaster and supposed to be working on the college's website - still in the stage of 'Yes we have a website, it shows where we are'... but dreaming of and building an intranet for actually supporting and enhancing learning and teaching. It was a massive success, and did my subsequent career no harm either!
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I had just started at Bookham Technology in engineering as a new graduate (one of the UK darlings of the tech boom) who were still hiring 20 - 30 people a week. The first thing I found was the old timers wandering around browsing luxury yacht magazines and specifying sports cars to nth degree. Our options though were priced at £35 which soon became meaningless as the value started plummeting. I found myself laid off from that job and the next in the first 18 months of my working life. Quite exciting but certainly not pretty with constant rounds of redundancy and probably a bit of a softer landing than with Marconi, Nortel, JDSU and the like.
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A friend and colleague and I had been building websites and pushing the concept of 'online marketing', and trying to awaken companies large and small to the online world since 1994. There were meetings in oak-panelled rooms at major high street banks, where the execs would say 'this is all a bit modern and racy for us - let's see what the other banks do'!
Where were we in March 2000? Exhausted. We were literally living on rice and water in Oxford and London, and watching loads of people who, dare I say, had less experience, competence, skill and imagination than us 'earn' vanloads of money. But am I bitter? Nah...
Well...
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I was working with one dot com compamy and also carrying out technical appraisals on the remnants of two other dot coms, both of which were about to fail. I left the company I was working for ahead of its failure and decided I would wait a while before starting a business, which I did 3 years later.
What I remember most of this era was the unbelievable ideas and ficticious business plans that investors were lining up to throw their money at. No ammount of persuasion would bring them to their senses, they would frequently ask one consultant if an idea would work and if the answer was no they would simply find another consultant and another until they got the answer they were looking for.
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I was pointing out the Mars/Saturn conjunction in the evening sky to my astrology students, and explaining its historic relationship to stock market falls, and how the approaching once-in-20-year Jupiter/Saturn conjunction in Taurus, 90 degrees from Uranus in Aquarius, symbolised the conflict between technological inventiveness and the Internet (Uranus) and true value/material wealth (Taurus) - a conflict that had it's subsequent climax in the autumn of 2008, nearly halfway through the 20-year cycle.
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