10 years ago, in March 2000, it seems the dot-com bubble burst.
I say "it seems" because, even though I saw the effects, at the time we were in the middle of raising investment funds. And two months after the bubble popped in May 2000, we raised 3 million dollars! ...In the USA, the epicenter of the dot-com bubble burst.
There's no denying there was a bubble. But for but those who weren't drinking champagne, the pill went down a little smoother than for the others.
What lessons should be learned from this period?
- Learn to recognize true entrepreneurs: A few "whipped cream makers" made a lot of money at the expense of those that bought their "virtual companies" during this period (I won't name any names...I'd make too many enemies. But try to find the company names of the serial entrepreneurs on the Web). The real entrepreneurs, those that built themselves up little by little, are the ones that have my respect.
Again, try to find the companies created before 2000 that still exist today. Those are the ones that survived the bubble. There aren't that many. Amazon.com and eBay are a couple names that made it through the turmoil.
- Never enter a market where a high roller with deep pockets is ignoring all fundamentals and acting erratically: I don't play poker. But I'm sure that those of you who do wouldn't sit down at a table where another player with a huge stack of chips was acting crazy and playing erratically.
But there are tons of cases where that happens. For example, look for first round fund raising in 2009 greater than 7-8M$ in the UK!
Of course, there are exceptions. But in general, to justify such investment, these entrepreneurs create delusional expectations from their investors, who are logically less inclined to accept even the tiniest deviation (sic) from the business plan.
In the United States, when we raised 3M$ (which was a huge sum of money 10 years ago!), one of our competitors, BigStep.com, raised 80M$ in the first round, if I remember correctly.
It's one of the biggest first fund raising rounds in history. They went from 0 to 400 employees in less than a year, their business was based on a cost free model … they got their wings and were the first to fly straight into the wall… as fast at 80M$ lets you go in a few months!
Needless to say, those of us that were next to the wall seriously felt the tremor! So, be wary of euphoric markets.
So what do you need to do today to tackle the Web?
At the risk of repeating myself: Be persistent, never say die! This doesn't mean that you shouldn't adapt, but that you should believe in your idea and develop it with determination, following your road map.
The advantage of doing things with very little resources is that it's practically impossible to make enormous mistakes with grave consequences. The advantage of doing things with large resources is that you can rapidly achieve great things.
It's best is to go through both of these stages (not at the same time, of course). This gives your business time to grow, but slowly enough at the start to learn and stay in the domain of acceptable errors. Moving on to stage two, you will be able to grow fast enough to deliver with larger resources that allow you to save time and create value.
To finish up, a question I ask myself often: Can we save ourselves from these crises?
I'm not sure. The Web is still too young to have gone through numerous crises. But real estate specialists will tell you that good times and times of crisis alternate to the benefit and delight of the strongest and most organized.
It will probably be the same on the Web. The companies that figured out the best ways to position themselves, raise money, manage their growth and development towards perfection will probably be the ones who prop up the more careless and less efficient.
Good luck to all of you who have a good idea and believe in it! Take control and persevere!
Marc
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