That makes sense--if I'm understanding you correctly, it was basically because there were so many of them, and most of them were advertising things that didn't really exist yet, or didn't have nearly the functionality that they were being advertised as having. That was coupled with the fact that these companies stocks were trading at many times their actual value. So the big crash was basically due to people going, "Hey! This company really isn't worth that much. In fact, most of these companies really aren't worth this much!" and then pulling out all their funding or rolling it over to different companies, with the end result being that the dot-coms lost pretty much all of their financial backing and couldn't sustain themselves without it because they didn't, in fact, have a strong product; their primary income was from people buying their stocks, and not their goods, so once that was gone they fell apart.
I have worked for 3 different startups so far. One was able to fight to the point it was profitable and I made money off the stock options I had. The other two failed, and it was sad.
You also had a lot of people going around forming companies with no other purpose than to "get bought or bust". On other words they never planned on turning a profit, but wanted to put a threat on one industry or the other and force other companies to buy them out. What kills so many good companies is when doing the "wrong thing for the health of the company" makes "them" so much money they can not help but pull in all that cash. In the end they are rich and the company is dead. This is one of the reasons to work for a startup, you need to be either A) in on the stock option game to make a lot of fast cash and be one of the people with the golden escape routes, or B) Have trust in the company/owners not to sell you out for a fast buck.
The other thing to keep in mind is most startups loss money hand over fist for up to the first 3 to 6 years even with a rocking product!. It just takes so much capital to start up a company and grow it. So even the companies that where doing good and on their 2 to 3 year (with the chance to turn a profit in the 4th year) all crashed and burned when the money was pulled out of the market.
The other term a lot of people use for the end of the dot-com days was the "popping of the bubble". It was a lot of hot air all contained in a small little bubble of wishful thinking. One pin prick and it all went away :)
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timeasmymeasure
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Date: 2005-12-29 12:27 pm (UTC)Is that about right?
no subject
Date: 2005-12-29 12:50 pm (UTC)I have worked for 3 different startups so far. One was able to fight to the point it was profitable and I made money off the stock options I had. The other two failed, and it was sad.
You also had a lot of people going around forming companies with no other purpose than to "get bought or bust". On other words they never planned on turning a profit, but wanted to put a threat on one industry or the other and force other companies to buy them out. What kills so many good companies is when doing the "wrong thing for the health of the company" makes "them" so much money they can not help but pull in all that cash. In the end they are rich and the company is dead. This is one of the reasons to work for a startup, you need to be either A) in on the stock option game to make a lot of fast cash and be one of the people with the golden escape routes, or B) Have trust in the company/owners not to sell you out for a fast buck.
The other thing to keep in mind is most startups loss money hand over fist for up to the first 3 to 6 years even with a rocking product!. It just takes so much capital to start up a company and grow it. So even the companies that where doing good and on their 2 to 3 year (with the chance to turn a profit in the 4th year) all crashed and burned when the money was pulled out of the market.
The other term a lot of people use for the end of the dot-com days was the "popping of the bubble". It was a lot of hot air all contained in a small little bubble of wishful thinking. One pin prick and it all went away :)