What Silicon Valley Was Like Right After The Dotcom Crash: An Insider Perspective

Next Story

For His Blog: Man Has Been Taking Pictures Of Same Vending Machine For 5 Years

If you generally dislike Quora or hate the fact that we occasionally publish stuff here on TechCrunch based on something interesting we’ve read on Quora, go take a look at this cute puppy picture instead of continuing.

Ok? Ok. Below is an excerpt from a super interesting answer on the question “What was it like in Silicon Valley after the bubble burst in the early 2000′s?” (posted by business lawyer and executive Antone Johnson).

Coincidentally, although I’ve been writing for TechCrunch almost every day for the past 27 months, I don’t live or work in Silicon Valley and have absolutely no intention of ever leaving my home country, if only for the beer here.

Still, I obviously have a lot of interest in what happens over there, and I also happen to think one can learn much from occasionally reading about past times, preferably from people with excellent insider knowledge – who know how to express themselves eloquently to boot.

Here goes (for the full answer, here’s a link to the thread):

When the capital markets clamped down in early 2000, and VCs started getting cold feet as they saw signs of delayed exits and lower valuations, the flimsiest of the dot-coms with no revenue and crazy burn rates started going under. Their ad buys shriveled up along with them, driving CPMs way down as the amount of available ad inventory kept growing while demand was shrinking.

For a while, the online advertising market essentially imploded. This explains in large part why Yahoo!’s stock price went from nearly $100 when I interviewed there (early 2000) to under $10 a year later.

The dominos fell pretty quickly. Progressively larger dot-coms went under, each one casting a bigger shadow on markets for labor, commercial real estate, equipment, advertising, and all kinds of professional services. Equipment makers, infrastructure providers and landlords soon started getting hammered as failed startups liquidated everything, dumping tons of barely-used equipment on the market (famously Herman Miller Aeron Chairs, as well as the expected PCs, servers and network equipment).

Large corporations started downsizing as well, reacting to poor macro conditions, meaning they dumped millions of square feet of vacant office space on the market for sublease just as demand evaporated.

Great read.

blog comments powered by Disqus