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.com era, part two and why you should care
Sunday, March 06, 2005

In the late 90s, some of us developers rode the .com wave until the end. I am a proud .commer. There was a time when brick and mortar companies preferred to actually hire .commers. You may recall job descriptions reading ".com experience an asset."

The reasons to hire .commers varied; however, it was clear that .commers were, among other things:
  1. Highly motivated
  2. Worked well under pressure
  3. Well accustomed to work under unrealistic deadlines
  4. Needed little supervision
  5. Worked well among groups
  6. And the most important one, I think, big dreamers: if you can imagine it, we, .commers, can and will build it

    Note, that I left out the most obvious one: unemployed :)
Anyway, it was the "best of times and the worst of times."

A great amount of money was spent funding half baked ideas, but a few of those ideas were made into very profitable businesses. Some .coms, you recall, did actually go IPO, which was the intent of creating and working for a .com company. The other major reason for starting your own company: create a cool app and wait to be bought by Microsoft or Yahoo - And most recently, google.

Why am I reminiscing about the good times?

I have been saying to anyone that asks me that those days of debauchery will come back.

How do I know? I didn't know for sure: it was more of a gut feel--call it instinct. But there is no magic to my gut feels. If you think about it for a bit, everything behaves in cycles. Investment money being poured into the economy also behaves in cycles: we had a peak in the late 90s, we went through the lows, and we are going to start to go up again.

Cringely is saying it better than I can and adds a few facts to his claim:
    In 1999-2000 -- at the very peak of the dot-com boom -- venture capital firms were not only taking companies public at a furious pace, they were just as furiously raising new venture funds -- funds that will shortly be coming to the end of their lives. Throughout the fixed lifespan of these funds venture capitalists are typically paid 1-2 percent of the total fund per year as a management fee. If a VC raises $100 million for a fund with a six-year life, they'll take $2 million every year as a management fee, whether the money is actually invested or not. Any money that remains uninvested at the end of the fund must be returned to the investors ALONG WITH THE ASSOCIATED MANAGEMENT FEE.

    Right now, there is in the U.S. venture capital community about $25 billion that remains uninvested from funds that will end their lifespans in the next 12-18 months. If the VCs return those funds to investors they'll also have to return $3 billion in already-spent management fees. Alternately, they can invest the money -- even if they invest it in bad deals -- and NOT have to cough-up that $3 billion. So the VCs have to find in the next few months places to throw that $25 billion. They waited this long in hopes that the economy would improve and that technical trends would become clear so they could do their typical lemming-like jump off the same investment cliff as all the other VCs. Well, we're at the edge of the cliff, so get ready for the most furious venture investing cycle in history.

Why does this guy sound so sure? Well, he's been writing and making predictions for around 20 years or so, i.e., he has experience and a well established ethos--if experience means anything, anyway. There is no comparison to my (almost) 10 years of Software Development experience + my gut feel. But I wouldn't dismiss his ranting or my gut.

If he is right, hold on to your hats. If it is anything like it was in the late 90s, it will be a hell of a ride. If he's wrong, well, nothing lost: just wait for the next upward movement.

Why is this important to us, developers? I'm sure you don't base your career moves on what crazy people say/write on the Internet; however, it never hurts to keep your options open and your mind inventing "half baked" ideas. You never know whose interest you will grab with your next new "new thing."

I, for one, have my party hat on, as we'll be partying like it's 1999 all over again (like Prince predicted) and a long list of, truly, half baked ideas.

BTW, I don't like Prince (or whatever his name is now a days), but his song will remain timeless, similar to the first .com era.

9:18 PM | 0 comment(s) |


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