Maybe The Dot Com Bubble Wasn't Such A Bubble After All
from the still-going... dept
We've definitely seen quite a few cases of dot com bubble-era startups coming back to life a decade later -- but a new study is suggesting that for all the talk about the dot com bubble and the resulting burst, there may not really have been a bubble at all. Instead, what the researchers found was that, in a random sample, nearly half of companies that received venture funding in 1999 are still in business today. To them, that suggests that there should have been even more companies funded during the dot com era, because not nearly enough have failed. Of course, you can raise all sorts of questions about this -- including questioning the methodology of the study, and whether or not "number of companies" is truly the important number to be focusing on. You can also question what the "appropriate" percentage should be for failed companies. However, when you hear stories about dot com stars getting more funding years after you figured they were long gone, it certainly suggests that the bursting of the bubble wasn't quite as dramatic as some would have you believe. Of course, if that's the case, it might make you wonder whether the good that comes out of bubbles is really as strong this time around as well.
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x times earnings
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It was psychological.
Suddenly, companies were being cautious where before they would have started sending fleets of dump truck loaded with cash. It wasn't as though VC ran away forever, they just became rational again.
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It was never carefully considered
The dot-com boom at its core was real, justified, and successful. Its just that half of it was a learning experience which needed to happen.
I get really pissed when armchair quarterbacks look back and say the dot-com boom was some massive failure of moronity - it nothing of the sort, it was a historically massive upgrade to our society, culture, and economy which had a settling effect just like radio did.
There are millions of us whose career, education, and standards of living were catapulted by our experience with the dot-com boom, and many of us are involved in quite successful internet ventures today - and thats because we surfed that big wave and are the better off for it.
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Stupid Stupid Stupid
Why even write otherwise?
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Funding failed
Referring to the crash of 2001 as the DotBomb era truly skews history and negatively labels too many top notch entrepreneurs.
It seems to me that the slump began at a very high level, slammed financial sources first, and struck only specific players. I pay attention to the era because I lost my retirement in less than six weeks. It bugs me when the reasons for the mini-crash of 2001 are blamed on so many hard working innovators.
In the first days of this economic shock, the funding sources crashed. Merchant bankers and investment houses suddenly withdrew their backing from sector investors - quickly and across the board.
Firms were shut without the time for analysis of their business plans. The valid and the invalid fell equally.
Certainly later historians and pundits found examples of silly pyramids built on excessive claims to justify the crash, but very few have looked at the reasons why institutional capital was so quickly pulled primarily from the tech sector.
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Spin meisters
That these authors are now claiming there was no bubble is typical of 21st century spin doctoring. Everything is whatever we say it is. Fortunately, we are all so inured to it, we just chuckle, write a comment, and move on.
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From my perspective in the valley during the late boom through today I saw some high profile of companies with poor business models, and lots of others with questionable (as in, maybe they can make money, we'll see), and some strong ones.
Not having much experience with industry growths outside the tech sector, I dont know how average these figures were. It was fun to talk about the truly silly ones, but that made it harder to judge how many of those there really were.
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Capital Starved, Not Rich
There should have been more, not less money in high tech.
One of the antagonists was Allen Greenspan -- he held interest rates way too high, which encouraged people to pull out of stock when they got dizzy.
NASDAQ will reach and exceed 5000, validating those original investments.
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how is 50% not a bust?
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it might been...
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Re: it might been...
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