You can bring that tripe when the NASDAQ hits $5K again solely on the strength of tech stocks. What you’re saying is tantamount to financial fear-mongering. Sure, there’s not a lot of “real world” value to assets such as myspace, flicker, et al, but they are REAL, whereas a lot of what caused the first bubble-bursting was the vapor emitted by the technology industry at the time. Take it from the individuals who “survived” and thrived by providing real products and services throughout the era. No, no, my friend… this time it’s for real… I’ll check back in 4 years when we’re still on a continued steady rate of revenue streams to say told ya so…
I managed to stay employed (self) during that time because I made sure to have 3 “keystone” clients that I knew were NOT going away - sort of the same philosophy as an investment portfolio.
My client list included a couple of Fortune 500’s that I tried my best to keep happy, and it kept me employed for the 3 year interim. I kept my rate sane the whole time (which was low during the boom, high during the bust) and kept my trust level with them.
I am doing the exact same thing now as I know this market, like all markets, are liquid and will shift.
I don’t see this bubble bursting as being nearly as catastrophic as the last one. The average joe investor still doesn’t have a way to invest in web 2.0 (Unless he’s put money into a VC fund) so you don’t have hordes of uneducated investors throwing money into stocks only to pull out later when they find the stocks are worthless.
Because IPOs are a huge force in the market, this has forced most of the investing and buyout to happen at the large companies. These companies are far more likely to do research into the long term viability of their acquisitions and therefore make better decisions.
Also, the average person out there doesn’t even know what web 2.0 is. It’s not on the tip of every tongue the way the dotcoms were in '99.
Developers in the US are also more insulated this time as most of these companies are built on the premise of outsourced development.
In the long run I think if this “bubble” bursts, it will be a mere blip on the radar and is unlikely to have a major effect on the whole software industry. Sure Google may take a tumble, but there just aren’t enough large companies with similar business models for it take us all down like in 2000.
In fact, its wrong to answer on such a topic…but I could not resist.
I could have written a lot, but the following words seem more the enough:
Ignore this thread as mush as possible.
I believe this bubble to have pretty mild effects for the IT industry.
The most important reason for this is that the bubble is based on cheap lending which affects other markets like the housing market a lot more. There are and will still be fringe effects on IT, but I believe that the fundamentals is a lot better this time.
@Jan:
For an Internet economy (and generally any economy) to grow there must be a strong element first: The Product. You think that the product and especially Internet economy products are not dependent on the underlying technology?
The underlying technology is the phantom menace for this bubble i think.
Since Web 2.0 is nothing more than a single source trademark, I wager that this bubble will be worse. There’s even less there, there.
Been through the bubble, my company at the time, like most had no revenue stream clue, other than let’s pile more investor’s money’s in. Have the employee’s pay for company bill’s.
We had plenty of opportunities for making money, but refused to even consider it.
I can still remember the day, they told us all, that they didn’t have the money to pay for our paychecks. I couldn’t believe the utter stupidity of it all…
Now, I refuse to work for a financially unstable company, and I try hard to find good companies to work for.
I still think the job hunting process needs a major transformation, because I think it’s still a major mess.
But that’s another day I’ll comment on.
Not doing much different this time around. Just wanted to mention that this bubble seems to have a pronounced effect on India and Russia. Two areas that have off-shore teams I’ve worked with. Russia is now having almost as much trouble finding qualified developers as the US. Demand has really gone up. India is even more interesting since there are tons of people entering the workforce who are barely qualified to discern the difference between a method and sub. (In response to the lure of easy money). So the curve shown in the graph is almost a global phenomenon, not just a local one. Thats one aspect in which this bubble is different.
I plan to get into a bubble company early on, with a big signing bonus and pre-IPO stock grants. The trick is to extract as much money as possible before the burst. (I’m kidding, I swear. No, really!)
Craig M Rosenblum: Do I need to the comic featuring Bob the Angry Flower on apostrophes?
And two (more significant) problems for the 2.0 Bubble:
- since 2000, in the USofA, median income has fallen 5.5%
- since 2005, the number of households having Internet service has held nearly steady
The implication: Web 2.0 is chasing a much smaller, and not especially growing, market. If it’s only distinguishing factor is spewing more pixel dust because bandwidth is higher for its segment of users, not much of a business model. Caveat programmer.
Web 1.0 worked because it was a new way of doing things. Web 2.0 is not, so far as I’ve seen so far. It’s still buying stuff from a browser. How is Web 2.0 a different way of doing things? If DVD downloads suck up all the bandwidth (a la Cringely’s lament), what’s left? If Web 2.0 targets only those who can afford broadband (and the cost is more than just a DSL/cable line), and household income is skewing further toward fewer rich and more poor (see median income above), what kind of future can it have?
just asking.
Im 24 I have Ten Grand. I missed out on the last bubble by 10 years, this time Im going to be a millionaire!!!
I graduated in May '02, right as things were getting to their absolute worst (according to your little graph). I got into programming not because I saw dollar signs but because it was the natural career choice for me; I’d always been interested in computers, was a numbers person, and previous experience had shown me I had some aptitude for it.
At that point it didn’t matter. I spent nearly a year out of work after school because almost nobody was hiring. Anyone that was hiring had no reasons to hire a new grad because they would get a plethora of applications from experienced developers for even entry level positions.
Since I only got to see the worst of the last bubble I plan to enjoy the front side of this one as much as possible, and work hard enough to hope that if it bursts I’m not shown the door.
I don’t have any get-rich-quick ideas, but there is one thing I do like about our industry: A good software developer is one good idea, six to 12 months hard work, and some luck away from quitting his day job and selling his own product.
I think the biggest mistake that many companies in bubble 1.0 made was:
Absence of a business/roi model.
In other words: How do you earn money with it ?
The most common “business models” in those days were
- We will make money through advertisers on our site
- We will be bought from a big player for insane amounts of money
Sounds familiar ? Indeed.
In bubble 2.0 it’s the exact same mistakes again.People hoping on either cash in on Adsense or othe advertising but even more hope to be bought up by Google or some other player.The surprising thing is, global players unexpectedly do behave like there was no bubble 1.0 ever- think the purchase of Youtube, Myspace, etc etc.
VC’s all over the place again, startups with no business plan all over the place again, copycats everywhere you look.
I really hope most of these social networking “companies” with all their shortsighted “r” names and Photoshop logos go bancrupt as soon as possible so that some common sense will hopefully be en vogue again.
Let’s hope.
Life is a series of bubbles, sometimes overlapping bubbles. I don’t expect to treat Bubble 2.0 any differently than I did 1.0. I earned a decent living and paid the bills through 1.0. The same work ethic and motivators will take me through 2.0, 3.0, my youngest kid’s high school years, my next Harley/Sturgis Rally, remembering to .ToString(), etc. I enjoy looking ahead, using my experience to guess how certain situations will play out and adjusting my position accordingly.
(…)“but the signs are absolutely unmistakable now”(…)
I don’t agree. I don’t even think we’re in the beginning of a bubble, or that will ever be another one.
What planet are you people living on? I don’t have broadband and no one I know has broadband. If you don’t have a sky-high income or live in the center of a dense urban area, you’re priced right out of the broadband market. I’m on dialup and everyone I know is still on dialup. Getting broadband would cost more than my property taxes per year.
Get real. Wake up and smell the latte, broadband is a delusional pipe dream for most Americans, and will be until the sadistically greedy and incompetent cable company/phone company broadband duopoly gets broken up by antitrust action.
what will you do differently in this bubble?
First, not make a dumb mistake of jumping to another company just because they offer you more money. Seek a stable environment.
Second, don’t spend money foolishly like I did in bubble 1.0. Bubble 1.0 was the era of the leased weekend Porsche (which I was stuck with through the down times), bubble 2.0 is a purchased Honda.
Third, use the boom time to take advantage of benefits, learn new things, make new connections, so that when things get slow, you are ready.
Fourth, always be informed about what is going on, there were alot of warnings that people ignored. I see a great number of similarities between Bubble 1.0, and the current real estate market.
Crashes happen for a reason, they clean out the waste and excess in the market. In Bubble 1.0, everyone was a Barnes and Nobles educated programmer, now, everyone is a computer science grad.
oh man, i’m totally working for a bubble company. we have 100+ employees but no revenue stream. our burn rate is alledgedly millions a month. we have business models that could work, but probably won’t because the business people are legally retarded. we have a new direction with little to no specs. and they are paying me a really awesome salary right out of college. buckles seatbelt holds on