[HN Gopher] When the Dotcom Bubble Burst
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When the Dotcom Bubble Burst
Author : rbanffy
Score : 61 points
Date : 2025-03-16 17:02 UTC (5 hours ago)
(HTM) web link (dfarq.homeip.net)
(TXT) w3m dump (dfarq.homeip.net)
| nixpulvis wrote:
| "The aftermath of the dotcom bubble didn't just turn dotcoms into
| acquisition targets. Established tech companies became
| acquisition targets themselves. In some cases, they even sought
| out acquisition as a matter of survival."
|
| Sounds like a lot of startups.
| rboyd wrote:
| and there was no more traffic on the 101
| esafak wrote:
| COVID did that too. It was eerie.
| eastdakota wrote:
| Had the dotcom bubble not burst I'd likely be an attorney. I'd
| accepted an offer at a law firm in San Francisco to work in their
| Securities practice, largely taking companies public or doing
| M&A.
|
| In March of 2000, the firm called and said: "Good news bad news.
| Good news: you still have a job [unlike a lot of my law school
| classmates]. Bad news: we don't need any more Securities lawyers,
| but we have lots of room in our Bankruptcy practice."
|
| Being a Bankruptcy lawyer didn't sound like fun. A law
| professor's brother was starting a B2B startup. He offered me a
| job. The startup was a colossal failure, but I was hooked on the
| idea of a group of people starting something from nothing.
|
| Next ~8 years were painful with lots of ideas that went no where,
| but it all worked out. So, in the end, always remember that but
| for the dotcom bubble bursting, I'd be keeping track of my time
| in six minute increments.
| pinkmuffinere wrote:
| Always remember that without the dotcom bubble, eastdakota
| would be counting in 6 minute increments :P
|
| Sincerely, can you say more about the 8 years of pain? I'm
| curious how you navigated that, especially with/without
| relationships, family obligations, "runway" restrictions, etc
|
| Edit: looking at the profile, eastdakota is CEO and cofounder
| of CloudFlare. There are probably interviews and Wikipedia
| pages that address my questions.
| ljf wrote:
| I love how humble his origin story was, and how he didn't
| need to drop in where he is/who he is as part of it.
|
| Amazing who you /meet/ here.
| pinkmuffinere wrote:
| Definitely. I think this is true of the internet in
| general, we have an amazing ability to communicate with
| almost anyone, even busy experts in niche fields, if we
| just make/ask something that interests them. I don't think
| I appreciate that enough.
| gedy wrote:
| I got my nice Herman Miller chair that I'm sitting on now, which
| was wheeled out into the parking lot by the facilities guy saying
| "take it all..."
| antirez wrote:
| This Ballard style stuff is the things I love.
| ghaff wrote:
| I agree with all that. Dot-bomb was a nuclear winter like nothing
| tech has seen since--certainly including today. I was lucky
| enough to almost immediately land something through someone I
| knew and, if it didn't pay a lot of money, it was a decent (and
| mostly enjoyable) living for a number of years. But a lot of
| people I knew basically dropped out of tech and some probably
| never again had solid jobs.
|
| And, yes, it also crashed any tech-heavy investments that took
| _years_ to recover to their peak levels assuming they recovered
| at all. A stock I owned through options at one former employer
| were a source of tax write-offs for years. Probably led me to be
| a bit _too_ conservative with such things. Eventually they got
| acquired through various complicated transactions and I did "OK"
| after something like 15 years.
| kortilla wrote:
| You're lucky to even have done OK. Not only did a lot of people
| get wiped to zero, but some people ended up in huge debt to the
| govt.
|
| I know multiple people who went through:
|
| - Exercise an option and "realize a gain". Have to pay taxes
| for that year on the realized gains.
|
| - stock crashes to zero or near zero before they had a chance
| to sell (either because of blackout periods or not being public
| yet)
|
| - tax burden from year N-1 is still due for hundreds of
| thousands. Capital loss offset only helps for returns in the
| following years
|
| Sell to cover if you can
| ghaff wrote:
| I don't remember the details. I had bought a (modest) vehicle
| with exercised gains (and maybe employee stock purchase).
| Don't remember the residual tax impacts being a big factor in
| general--may have been timing of some sort. But a $100 stock
| went to about $4. Went back up a bit and then only became
| somewhat OK through various subsequent acquisitions and spin-
| offs. But, yeah, a lot of people got clobbered when they took
| profits and then held onto the stock--and other scenarios
| like you say.
|
| When I left not long before dot-bomb, I'm glad I didn't go
| for all the stock options they were offering me but I had
| already made the decision to leave. The company I went to
| cratered but, as I wrote, someone I knew picked me up.
|
| But, yeah, making it through dot-bomb was incredibly lucky.
| The situation in tech broadly may not be great today but it's
| not like 2001.
| trgn wrote:
| Also the story of midcap saas going public around 2020.
| elorant wrote:
| That one hit me hard. I had just quit my job from a prestigious
| company the previous year to pursue my dream with two friends of
| building an internet related company and just a few months after
| we launched the market tanked. And it tanked so hard that we
| practically went out of business a year later. The problem was
| that the web back then was so fragile as a business case that
| once the bubble burst a lot of companies lost interest in
| investing in it.
| bboygravity wrote:
| Nice timing, although the market crash that is just about
| starting right now is more due to lack of functional US market
| regulation (similar to 2008, but worse).
| dalyons wrote:
| How so? Feels like the crash starting now is very squarely due
| to the chaotic anti-investment actions of the current
| administration.
| xbmcuser wrote:
| No the crash was coming this administration just accelerated
| it. Trillions of $ of government debt and private debt is up
| for financing at 3-4 times the interest rate.
| pclmulqdq wrote:
| I was honestly shocked that both the Biden admin and
| corporations were able to hold this off in 2023-2024 given
| the huge debt loads held by everything.
| bobthepanda wrote:
| Banks love to extend and pretend big loans because loans
| going belly up is also bad for them. Small fry like
| homeowners rarely get such grace.
| dalyons wrote:
| Maybe - i've been reading that sort of permabear "the
| economy is about to crash because of obvious reason X" for
| at least 15 years now. I listened for a time sadly - it
| cost me a lot of missed investment growth. Eventually
| they'll be right, but haven't been very predictive.
|
| However, the deliberate economic self-destruction being
| unleashed by trump and friends feels like a very different
| flavor of cause.
| robinhouston wrote:
| To me the most sobering cautionary tale from the dotcom bubble is
| the story of Cisco. Cisco manufactured, in a very real sense, the
| physical infrastructure of the internet: the routers, switches,
| modems, etc. that directed the IP packets to their destinations.
| (To a significant extent they still do, though nowadays they have
| more competition in that area.)
|
| Savvy investors piled in to the stock, reasoning that, while
| internet startups might come and go, the internet itself was
| surely here to stay. It was popular to observe that, in the
| California gold rush of the mid-1800s, the purveyors of mining
| equipment made it rich more reliably than the prospectors for
| gold.
|
| Anyway the Cisco stock price peaked in March 2000, and to this
| day it still has not reached that level again. The savvy
| investors were of course correct in their belief that the
| internet would continue to be important, and that Cisco would
| continue to be an important manufacturer of internet networking
| equipment. But they lost money anyway, because once the euphoria
| had worn off the market consensus was that the stock just wasn't
| worth as much as the price it had been selling for at the height
| of the mania.
|
| Any parallels to hot contemporary stocks are left as an exercise
| for the reader -- and I do not mean to suggest that history must
| always repeat exactly.
| smallmancontrov wrote:
| Obviously you don't mean NVIDIA, because 80% margins on matrix
| multiplication will last foreverrrrr.
| dehrmann wrote:
| And I can't name several customers with very deep pockets
| working on their own chips to squeeze/compete with NVDA.
| ghaff wrote:
| You see different versions of the four horsemen of the internet
| but the one I remember (and I can find lots of references to on
| the internet) is: Cisco, Sun, EMC, and Oracle. And, indeed,
| Oracle is the only one continuing to perform whether you like
| them or not and whether startups use them at this point.
|
| With respect to Cisco specifically (and Intel) there was also a
| huge optical networking bubble.
| phyzix5761 wrote:
| I don't know any investor who puts 100% of their money into a
| single stock, nor any who lack recurring cash flow to buy more
| of what they already own. While their 2000 purchase may not
| have realized any gains, they're likely ahead thanks to dollar
| cost averaging and dividend payouts.
| jeffbee wrote:
| You can pick better examples. I would go with JDSU.
| billybuckwheat wrote:
| I was somewhat early in my career when this happened. I was
| working at a small telecommunications company when the crash hit.
| Just about everyone got laid off, though with decent severance.
| Managed to make that last until I got another tech job almost
| three months to the day after my previous employer went belly up.
|
| It was a strange, scary time. Not just companies pretty much
| vanishing overnight but also a lot of people losing their jobs.
| Not all of them were as lucky as I (and a few others I
| knew/worked with) was; they couldn't find anything in the
| industry for a long while. Some abandoned tech. Others stuck it
| out.
|
| Never want to go through anything like that again!
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