I've heard stories of rich startup founders losing everything back then, but not much about what happened with the average devs. What was it like, living through those times? Did many people change careers? was there still a thriving industry in less risky tech companies? did salaries drop? I'm basically clueless about the whole thing.
He went further and said that several years before that, when there had been a recession, everyone at HP -- all the way up and down the ladder -- worked 9 days out of 10, and took a 10% salary cut, in order to ensure that there wouldn't be any layoffs.
People spoke about the company, and how it treated employees, with great pride, and the way that they treated workers during hard times was one major reason for that.
If nothing else, I learned from these stories that the boss/owner should be paid last, after all of the employees receive their salaries. I've done that whenever I've had employees, and I credit that lesson not just to general business ethics, but to a sense that business is about much more than just profit.
It's hard to imagine a modern company taking such steps to avoid layoffs, but the story continues to inspire me nearly 30 years later.
What followed was almost straight out of the Silicon Valley sitcom. Management know our existing product was a dead-end, but with 85% of the company laid off, our remaining VC funds gave us a decent runway, so they decided to pivot to ... something. That is, the entire company (about ~15 of us) would sit around in the boardroom and try to come up with new product ideas. Needless to say, that went precisely nowhere.
The CEO was pushed out fairly shortly after that and I had been brought in through his network. My layoff came about ~6 months later in the second round of layoffs which constituted only me. Thanks to the VP of engineering going to bat for me, I did get 3 months of severance. I spent 9 months looking for another job and finally found one in fintech in NYC which turned out the be, to this day, one of the best jobs of my career. I also met my now-wife and many of my best friends there. That time was both the most traumatic experience of my working career and the best thing to happen to me at the same time. I know it was much harder on many other people, but it turned out for the best for me.
I got on a plane to Japan immediately after graduation. It's been a fun and fulfilling 15 years, but I am reliably informed that there have, in fact, been engineers hired in the United States since then.
I was VP Tech at a high profile ad driven startup. We raised $50M (Softbank money in those days). Spent a lot of it scaling up on Sun hardware, ran TV ads, saw tremendous response, then a week later the bottom in the ads business model dropped out. Literally a week later. Amazing.
We went from close to 300 staff in March (60 of which reported to me) to 7 in October. The CEO handled the layoffs.
Most of the developers who reported to me took months to find new jobs.
Many of the non-tech people who had found unique jobs in our business were not able to find similar work again and went to business school or law school.
I had worked day and night to scale up, then worked day and night to scale down. I burned out. I moved, stopped working for pay, lived on savings, went to grad school (in CS) for a while, then finally got back on the horse in 2005.
Some advice- worrying about the next bubble bursting is a distraction, like following the shiny. It is good you are asking the question, but the right plan to be making- a career plan- is what is important, and whether there is a bubble or not is kind of irrelevant.
You might lose your job in the midst of major investment, or you might weather repeated rounds of layoffs. Random things will happen uniquely to YOU. They have to all of us.
The average story is helpful context but it is not your story. Protect and defend yourself. You are the only one who can.
Our office was insane. Exposed rafters with the trusses and everything painted black. Our walls were deep blue but had blue neon running the length of the room on all sides. No overhead lighting.
Our developer floor was elevated with sub-floor network cabling. We had a dev floor about 100 yards by 50 yards, the size of a football field, roughly. A little shy of that. Private offices had glass walls facing the dev floor. Our sound studio (these were the flash days) was a hollowed-out VW bus in a soundproofed room.
We had a fire pole from the bosses office down to the dev room, conference tables with in-layed TVs. It was pretty wild.
In my time there, I built ~400 replicated sites for Colliers realty, DuPont Registry's website, a bunch of websites for the Tampa Bay Buccaneers, the Tampa Bay Lightning's website among others. We were printing money.
The crash hit hard, and Hydrogen Media dwindled. Massive layoffs, and eventually it renamed to Bayshore Solutions and relocated to Tampa where they still do business to this day.
We were joking about the pets.com of the world - buying pet food, selling it at a loss, and trying to make up for it in volume. At least we had a business model that made money, a foosball table, and actual personal offices for each developer. When the stock market tanked... everything just shut down. People stopped buying or investing - and anything that assumed growth, for the most part, died. Starbucks with long, long queue lanes were empty.
As some companies died, there were opportunistic shops that were looking for solid talent. As they sold off our little shop of ten people, I ended up getting an offer and then being one of the folks left behind to turn the server room lights off. I had negotiated a start date a few months into the future, and very thankfully, they honored the offer. Things got worse. There were several more bits of belt tightening - we had a 25% round of layoffs later as the impacts of a bad economy really hit home. I did well/got lucky - but while the first round cleared out a lot of 'charlatans', I saw many solid people go on that black Friday
Salaries dropped - or at least stopped growing for most senior people. The rise of off-shore came and the realities of global economies eventually settled in. Large swaths of people turned their back on development... and here we are today, where it can be tricky to find solid folks again. The Wheel of Time turns, and Ages come and pass, leaving memories that become legend. Legend fades to myth, and even myth is long forgotten when the Age that gave it birth comes again.
Two years later, I took a US Army contracting job in Germany, and through a couple of twists and turns, have been in the IT department of a large German auto parts manufacturer for eight years now... where we just got our 40 hour contracts cut to 35. My husband (engineer) and I live about the same lifestyle that our neighbors who are secretaries and mechanics do, so finances will not be a problem unless we're both unemployed for over a year.
My advice: don't take on unnecessary expenses that you would have a hard time backing out of (big car note) or that would tie you to a place (mortgage on something that would be hard to sell for what you owe), and think hard about what are needs (eating healthy food, recreation) and what are wants and conveniences (having prepared food brought to you, expensive activities and exotic travel). Go ahead and enjoy your wants a bit while times are good, but be ready to cut them out when the punchbowl gets taken away.
I thankfully had my CAD/CAM background & contracting to fallback on while hunting for those 7 months, but it was enormously demotivating & disenfranchising. I was within a couple weeks of just abandoning a career in software entirely and going back to what I knew permanently.
I expect it all worked out in the end, as I'm now CEO of a startup doing a thing I'm really interested in and have successfully raised money to fund it along side our early revenue. But, it was still immensely crappy at the time and shocking to see just how extreme the pendulum can swing in terms of available jobs, pay scales, etc.
I weathered three rounds of layoffs and that was pretty harsh too. Every morning we'd check fuckedcompany.com and look for Ask in there. One morning it popped up with a 60% layoff in two days. It was almost exactly right; 16% of staff were laid off. Someone mis-heard the number.
I was in a smaller off-shoot office, so when people were cut they were called into the managers office, and while there security would pack their desk. When they came out of the office the box was just sitting on the floor, right outside the door. By the second round the manager just wouldn't come in that day, and the main office would send some stranger to do it.
At first I rationalized the people who were cut as people who weren't valuable, weren't adding to the bottom line. They were the less technical people, and their jobs were more nebulous, so it was easy to ease any mental pangs. It was a way of coping with something similar to survivor's guilt. Then when I was laid off, well, it was a tough time for me personally. I couldn't help applying the same rationale to myself. I wasn't valuable. I wasn't adding to the bottom line. The company is better off without me.
They gave me a pretty nice severance check. I convinced them to keep me on for another week to document my project. It was actually one of the only cash-positive projects at the company, due to contracts with Visa and Nike. That extra week pushed me into 2 years of tenure, which bumped my severance from two months pay to three.
I did not do anything mature with the money.
Generally the attitude I saw was to hunker down and try to weather the storm. Nobody interviewed because nobody could get recruiters to answer the phone. And nobody wanted their manager to think they were interviewing; that was a great way to be called in first during the next round. And lots of late nights working; gotta show you're still committed, despite everything crumbling around you.
What I saw and experienced was enterprise devs basically just kept doing what they did. Startup devs that could went into (or back in some cases) to enterprises. Enterprises used it as an opportunity to snag up good devs at a bit of a discount in many cases.
To be fair, true developers were not really negatively affected at least not more so than other professions. One nice side affect I thought was that the crash cleared out most of the people claiming they were developers but had no real experience or talent. Most of my friends and people I worked with were fine and at worst might have gone back to an enterprise gig or in many cases were already there and didn't really miss a beat.
IMHO, if we have a crash this time (versus just a softening market), it will be similar as the need for quality software devs won't disappear. It will take longer to find a position in general and there won't be as much money floating around but decent developers are not going to have a hard time putting food on the table or finding work. Remote work will suffer, pay will suffer and VC dollars will drop dramatically, but the average developer will be fine.
My company went from 1500 people to about 300 people in 1 year. Layoffs decimated the company, and eventually we were bought by a competitor. I have coworkers who were out of a job for 2+ years. One of my personal friends on H1B had to pump gas overnight, and transferred his balances between credit cards just to stay alive. Entire technology parks were abandoned wastelands.
Even worse was that the idea of "outsourcing" to India started up during this time. So not only we were losing our jobs, the thought was that we could possibly be losing our jobs forever, because why wouldn't the engineers in India be just as effective for 1/5 the price? The per-capita job loss in Silicon Valley was worse than Detroit in the 80s, and the job losses were so bad that the traffic on 101 was actually okay.
I honestly felt like my way of life was dead, I even went to the hospital for a panic attack. Take into considering that while the wages for software engineers were high, they weren't as high as they are now. I was making good money, almost 6 figures, and it felt like I might have to find a new job in less than 5 years. It felt like a very dire situation.
After a couple of years, things started to stabilize, and it didn't feel so dire. However, I think people who went through the bust like I did were naturally reticent about joining companies like Facebook, Google, Netflix, etc which were the next wave of companies that defined Silicon Valley so we missed out on a lot of upside.
Moonshots: I dropped out of school with only a year left to graduate because the Web development startup I launched with two of my friends was getting out of control. We were charging over $100/hr in the 90s and still having to turn down clients. We worked on amazing projects I can barely remember and made a pile of cash. But we were kids and couldn't get along so we split. I joined another startup that got bought out and put more cash in my pocket which led to me following leadership to yet another startup... that died pretty hard in the Fall of 2001.
Aftermath: Money, parties, travel, and then boom... it was over. Although I had been an irresponsible child with my earnings, I had the good fortune of having some saved some before I was laid off - and I could collect unemployment benefits.
Like everyone else, I couldn't find work anywhere. There was a flash cartoon back then called "Laid off: a day in the life". Good times, good times. I went back to school to finish earning my BS in CS. While in school I tried desperately to get a job in the service industry. I couldn't even land a job waiting tables. Managers told me that they had plenty of people that could work at any time and they didn't want to fuss with people who had school schedules. One manager told me he had over 1,500 applicants at his new restaurant. After having held a Director title in 2001, I ended up starting over again with a fresh degree and a job as a Jr Videogame Programmer in 2003. At least I was working on videogames instead of web! (spoiler, I'm back in web, but that's another story)
I still don't think I've fully come to terms with the unrealistic expectations I developed early in my career. I rose to success quickly because I had a head start in web tech just as the industry around it was taking off. After the crash I had to work hard for things like everyone else which means coming to terms with the realization that I am not as special as I thought I was.
Not all success is your own making. Often you are just riding a wave that takes you up but will also take you down if you are not careful.
I quit in May, the company died a painful death about a couple months after that. I heard it was pandemonium there. They simply could not raise any more money. Plain and simple. But of course, I had no severance and no unemployment.
But whatever. It was what it was. I basically got stoned and played video games for the next 5 months. I really needed that. Fortunately I had some money saved away because at that time I wasn't doing anything with stock trading. So there was that.
From October to February I looked for a job, and got hired at a pretty good place, but wow the sentiment was completely different.
This was the first, "learn to code," era that I recall, so there were a lot of not-necessarily computer savvy people in the industry, and they were getting hired. Once things started to slide, companies just stopped hiring as a sort-term strategy, many held layoffs too. Many people were pushed out of the industry for good. I was stuck as a contractor and in-between contracts out of blind luck. I was 4-5 years into a promising career and I couldn't find work for 6 months. I felt absolutely worthless.
Fortunately I knew a guy who was a partner at my previous contracting firm. He just pulled a CIO position in a city 2 hours away and they needed someone to take over their engine (software shop). I had to pick-up and move, but I got a job that paid a lot less than my previous ones.
I survived, partly because I worked hard, like I was scared to lose my job. I still work that way. People take notice and will call you when they switch companies and need to fill a position. Because of this, I haven't had to do a formal / cold interview since the dot bomb.
I was a front office developer analyst at leading buy-side finance company. One memory that really stuck was elsewhere in tech, if you were in an infrastructure related role, full time employees were receiving letters saying:
"The company is downsizing. Your position is one that is scheduled for strategic reassignment to an offshore consultancy (TCS). Following this transition, your position in the company will no longer be required. If you stay with the firm and help train your replacement, you will receive X months severance. Thank you for your cooperation."
The other tech teams had to work with offshore consultants while doing work that managers hadn't figured out how to outsource. IT management essentially had a mandate to outsource anything possible and lower costs. Creating value for business was secondary. Managerialism sucked all of the life out tech. Being a programmer wasn't enough. You had to solve business problems.
This turned out to be very useful advice. I saw all around me the consequences of not doing so. So, I learned programming during the day (mostly sql, relational db modeling, scripting and reporting) and unfamiliar finance and business concepts on my own during nights and weekends. This helped me advance myself into greater challenges and varied terrain.
I'm no longer in finance but got a lot out of the experience. I did the best I could with the resources available and without compromising my integrity just to survive at someone else's peril. I learned that managerialism can bring new product development and growth to a complete halt. Technology solutionism over promises and under delivers. Business cycles and availability of credit determine who gets their moment of power and influence. No role is guaranteed.
Keep hustling, people. Complacency and convenience may alleviate stress, but if you are not growing personally or professionally, you may struggle worse during hard times. Never stop developing yourself.
I spent the crash in the financial industry which was hit in its own way: one fire-sold company office, one closed satellite office with a job transfer to a consulting company maintaining the same codebase for the company who closed the sat office. That last was my worst job ever but paid rent. The day the final retention bonus/bribe to take the consulting gig hit my bank, 6 of us resigned to come over to our next early-mid-stage startup. My ex-colleagues from the original office seemed to have slower job searches but all found interesting and fruitful work. (The office was a D. E. Shaw & Co. office: fully staffed with higher than average caliber devs. All found work reasonably quickly.)
In the 2008 GFC, that was much less a tech bubble and more a general financial issue. Our company just grew more slowly as the world worked itself out of that crisis, so I have no meaningful insight about that one.
To the extent that this “bubble” feels much less severe than 1999, I suspect more than 3/4 of qualified devs will do just fine in any tech bubble burst. Terrible devs barely hanging onto their job now could easily be shaken out into another field. That might even be better for them overall.
When I went into college, they talked about all these great internship/co-op opportunities that everyone got. So each year I went to the career fairs seeking them out:
- Freshman year: Go away, we only want juniors
- Sophomore year: Go away, we only want juniors (though I got lucky and had a single hit that I did take up on)
- Junior year: Go away, the tech economy crashed. We only showed up because we didn't want people to forget we exist.
After college, I attempted some semblance of a grad school experience to bide my time, while looking for work on top of it. Unfortunately, I often felt like I was competing with all those people with the critical "4-5 years of experience" who were unemployed. Furthermore, everything I did find seemed to be crappy contract positions requiring tons of experience for very little pay.
Eventually I got a gov't job that needed my degree, but didn't use or develop my skills. I got quite depressed, as I felt like all my education and personal development was going to waste and was going to rapidly become worthless. When I finally escaped, it was to a worthless job at a different employer that actually had future grown opportunities. This ultimately allowed me to pivot into the kind of job I actually wanted, and the rest is history.
Of course the takeaway from this is that I was already 4-5 years post-graduation before I had the opportunity to take my career in the direction I was expecting to go immediately after leaving school.
Fast forward 1 year later, i started a PhD in a research lab working on sound hardware / software in the SV. The day i arrived i noticed something weird : the first floor of the pretty big building was completely empty. There were still computers and mugs on some desks, but other than that it looked like a weird epidemic killed everyone.
I learned later that half of the employees of the research center (including the local boss) had been fired two weeks before i arrived, and everybody had been moved to the second floor. I couldn't complete my PhD because they wouldn't finance new research anymore, so i went back to France and look for a job. After a few months trying to look for work in the audio field in vain, i finally ended up finding a job at a consulting firm, doing mundane backoffice development (database, web-based interface, in corporate environment).
So, basically it went from "we'll hire just anybody, even unqualified", to "PhD looking for a job" in just a year.
There are times when I miss it. Of all the jobs I've had over the years, it was the most meritocratic. If you did your job well and didn't cause too much rework, they loved you. I don't miss the hazardous/chemically toxic work environment, though. Those two years felt like a decade of wear on my body.
They were growing rapidly by offering support services to all the new dot com startups. Hours were long, the pay was decent and my head was being fried by having to juggle multiple tech platforms and languages thanks to the differing requirements of the clients.
Then came the bust. Within a matter of months we went from having 2000 support people on site to just 400. To survive the company started targeting non dot com clients. For the most part that meant providing CS support for companies like utilities and retail stores. Standards went downhill and ethics became something other companies thought about. We also lost our on-site subsidised canteen.
One of our post bust clients was Comet, the now defunct UK electrical store. We provided technical support for their extended warranty holders. One of the requirements that they insisted upon was requiring the customer to attempt a full re-install of Windows before agreeing to send out an engineer. I thought this was dodgy AF, especially since the support staff were so untrained. They were making customers reformat their drives because they didn't know how to change the keyboard layout from US to UK. Part of the support staffs training was to be told that the DOG debug tool could fix noisy hard drive and they would ask callers to use it to destroy and recreate the FAT. For an IT support company they knew very little. Their head of training, who had no formal IT training of his own, had some crazy ideas about to fix computers.
One day I got a phone call and the caller introduced herself as "Hi, I'm xxx xxxx and I'm a researcher from BBC Watchdog, just to let you know I'm recording this call and it may be broadcast". While I was trying frantically to flag down a manager, the caller was demanding that I answer questions about an 85 year old WWII veteran who spent 10 years scanning photos of his army friends only to lose all his work because someone told him to reinstall Windows. I didn't usually get phone calls seeing as I was an in-house dev, what happened that day was that the everyone else had been told not to answer the number Watchdog called from (there was previous) and the phone system bounced the call around until muggins here picked it up.
I left soon after that.
That isn't to say some programming geeks didn't get sacked, but they tended to land on their feet. Also, it was often the hard-negotiating salary-seekers who found themselves in the cross-hairs, and possibly facing a slight decrease in standard of living, because of the big price tags they'd put on themselves.
One reason my experience wasn't catastrophic was that I was at an infrastructure company, not a hype-driven one like Pets.com. If/when the current ad bubble bursts, average devs will fare best working at companies several steps removed from the hype. People may not want micro-targeted ads, but they'll still need software.
I knew a bit of coding and was scheduled for the Arsdigita boot camp [1] that would learn me up to be a real programmer. Instead I got laid off with 3 months severance. They had the decency to do it on December 2 so I had health care through Christmas.
I got a job with a local tech consultant about 3 months later, which paid the same as the dotcom job. I kept my dotcom stock option paperwork for a little while for nostalgia's sake... {sigh} I thought I was on my way to being rich the day I got those papers...
[1] https://philip.greenspun.com/teaching/boot-camp
(This will give you an idea of what a web programmer was expected to be able to do back then. Today what would you call someone who can install Unix on hardware, install and configure Oracle, install and configure a CMS, and code up an entire web site?)
Of course, with the down-turn, and given that we were effectively trying to position ourselves as CRM middleware, all bets were off. The business dried up, and our burn-rate was through the roof. Word got out the day before about the upcoming layoffs. The next day there were kegs of beer that sat out in the engineering pits.
IT had a helluva time, as a lot of people walked off with their laptops and company-issued phones. The dirty secret was that there was also a complete (still shrink-wrapped) palette of brand new 2U Dell servers in the loading bay that mysteriously went missing in the CO office that day.
Like a naive babe in the woods, I survived the first 2? maybe 3? RIFs. Even as I was building a website that listed all of our hardware and furniture for sale, and unracking and packing all the servers from the colo—I still didn't get it. Reality hit like a brick.
I was lucky enough to fall in with a good group of folks who continued to follow each other to other companies either as employees or as contract work for the next few years. There were maybe one or two scary months, but overall it was manageable. (Also lesson learned: your network is THE MOST IMPORTANT THING)
Then, after about 6 months, the company funding our company just pulled out. Left us with a few bucks in the bank.
I took another dot com job about 400 miles away and got out of there. Lots of people there had no jobs after that, but a few of the smarter crew went on to huge companies like Microsoft.
The next dot com I went to, I was there through 9/11. Something inside me changed after that and I actually quit to pursue a different type of work. That dot com also went bust, but it never had any hope anyway. The owner was self-funding it with money he made from investing in dot coms - but he cashed out at the right time, and he was basically making a clone of another service. It was pretty terrible.
It was certainly a strange time.
The funny thing is, I just got hired as a contractor to work for another dot com that reminds be of those ridiculous days. At least all my eggs aren't in that basket. I hope the best for them, but the similarities are scary.
In a matter of a few hours all new IT/IS project were cancelled and budgets for IT/IS were frozen to below the minimum in all companies. It took almost a year to recover a little.
I started my career during the summer 2001. I was hired in seconds without any technical test.
All (no exception) my friends who wanted to chill during the summer before finding their first job... ended jobless for 1 full year.
Next month we moved into a much bigger office, with a lovely view and lots of space for growth - then boom, the crash (gradually) struck: the three people who'd come in after me were let go, one at a time, and the rest of us were asked to work part time - volunteering how much part of the time was. We split the office and squashed into a small part.
I worked one day on / one day off for a couple of years (maybe a bit less) while our boss scrambled for sales. He was a great guy, was very open and helpful to us all, and did eventually get the company back on its feet and eventually sold it. The five founders did well, the boss retired three years later, and even I did OK (worked for the company that bought us for eight more years, then also retired.)
Business slowed, clients missed payments, people started watching f*d.com, the first round of layoffs came, the execs did a tour and promised all was ok, the second round of layoffs came. We spend a lot of time at Starbucks contemplating plan B.
One day I came in and the laptop wouldn't connect to the network. I stick my head in my friend's office, and say "My laptop won't connect, is there something I should know?" He gets that deer in the headlights look, rushes off to check with the management, and a meeting is convened where the third layoff happens, something I'm part of and he's not (Probable cause for me being out: I didn't play ball on a traveling assignment I didn't want, was OK with the outcome. My friend hung on to the bitter end, and we laugh about it now.) The hardest day was sending back the extra paycheck the company had accidentally sent.
I started looking for jobs, but I started getting calls from friends who heard I was available for a week here, a month there, a six-month thing, etc, etc. I wound up forming an LLC and staying self-employed until decided I needed a nice safe job just before the financial crisis.
The strange thing was how suddenly it happened. It felt like the majority of projects got defunded in a matter of weeks or months. Our funding disappeared as the VC firm collapsed together with its parent company. Our customers (telcos) stopped approving any new projects that weren't guaranteed to be profitable within the quarter as they were hit by a ruinous bidding war for frequency sprectrum at the same time.
The reason why I'm saying it can never happen again (in this particular industry) is that tech/internet was a tiny and isolated part of the economy back then (called "The New Economy"). Today's tech industry is huge and very diverse. It's part of everything now. The largest corporations on earth are now tech firms. Back then, there was nowhere to go for many employees in that sector (at least for a while).
I was fortunate enough to have saved a bit of money, partly because I had refused to take stock options in place of proper payment. So I was able to self-fund some projects that I was interested in with a goal of creating an organically growing company. I've been avoiding the whole high growth VC culture ever since, which may have been a mistake in purely financial terms.
Web development wasn't very mature: just knowing HTML could net you a nice paycheck. You could go even farther with basic spaghetti-code skills in languages like PHP, ColdFusion, and ASP. Frameworks really weren't a thing. Javascript wasn't used for much more than form validation, so you could go to your favorite "DHTML" website and find scripts to copy.
Couple this with the high pay, and there were a TON of "developers" who were one- or two-trick ponies. Someone who honestly was better suited for sales or management were writing code and making big bucks, and assumed this was their life path. For many, they turned into developers. Many didn't, and left.
In my experience, if you knew more than one backend language, and were happy working in boring fields (often in boring locations) like travel or healthcare or energy, you probably didn't go without work for long. (I was at Sabre at the time, working in their HR department, and 9/11 affected me more than the dot-com bubble)
And then the bubble burst and the sentiment was 180 degrees opposite. By then our company had already acquired some customers and was making some money, and was ready to expand and grab a significant piece of the market. However it didn't matter what we did or what business plan we made, it was just impossible to raise any kind of money whatsoever. So our startup continued living its zombie life until it was taken over by a competitor a few years later. In the end I was lucky because this way I could survive the years after a crash while still having a job. But it left me with mixed feelings about the so called angel investors. It didn't appear to me that they had any idea what they were doing.
It was hard to know if you (as an internet application developer) would ever make a nice salary againn.
I don't think anybody thought that skilled and experienced internet application developers were going to be out of work forever.
It seemed clear that the internet had definitely solidified itself as a part of everyday life. There was going to be an internet, and things to do and buy on there, and people were going to have to build those things.
I think my main concern was how lucrative it was going to be. I briefly made $100K in my early 20s in the early 2000s with just a few years experience. Even at the time that didn't really seem sustainable.
When the crash hit, I soon went back to making $40 or $50K. That was nice enough money but I didn't know how far things were going to fall. Would the market be flooded with programmers? Would I eventually be making $25K as an experienced developer? Would I make $100K again someday?
So I worried a little bit... not too much.
There were still jobs and they were OK enough.
My view has always been that during the dot com boom, companies were so short staffed that they would basically take anyone on, regardless of their technical skill, with the hopes of training them up to learn programming. Janitor, receptionist, your weird cousin Eddie who ate glue - all of them could get a tech job if they really wanted one.
When the bubble burst, lots of people lost jobs. Both skilled people and unskilled. This was a huge darwin moment for people who'd worked at startups. Lots of people went back to whatever they were doing pre-bubble. The better people typically found work, even if it took a little while to do so.
In my view, it really did serve as a healthy shake-out of talent in the long run. This very well may happen again soon...
Lesson: if you're making good money now, save (and if you then find yourself with nothing to do which pays, try to make the best of that time by doing interesting things that you would normally not have the time to do).
It has had nothing to do with choice of technology, industry, physical location, contacts, or luck (I think).
The only common denominator I can cite is finding out what people (customers or employers) really need, figuring out how to build it for them, consistently building it, and staying friendly and helpful throughout.
Do that and nothing else matters. Don't do that and keep worrying about it. It's that simple.
Question on exercising and such. I have all exercised options, but not all vested, been here about 2 years, so half vested. Didn't pay taxes at exercise because there was no difference between exercise price and market price.
What happens taxwise if my company goes under? Don't I only owe taxes if I sell vested options?
I got a reasonable package, 3 months salary, and 2 weeks later joined a new startup (which a few years later was acquired). I actually saw an increase in salary. Those two factors compensated somewhat for the layoff trauma.
People who had solid skills like C++ were fine, generally. It was those with only HTML who had made good money in the 90s and never upgraded to real programming that suffered the most.
The week before it had been a buzzing vibrant exciting place. They were using something “new” called XP, extreme programming where you put two programmers side by side for an hour or two and then keep switching the combinations throughout the day.
There were unlimited free snacks and a free wheeling fun atmosphere. A really exciting place.
That day when i turned up, the doors were locked and the building was empty.
I rang up my boss to say the client was shut today. We found out after that their funding had been withdrawn and they’d shut without notice.
That didn’t mean that people who were good didn’t also get hit, so there are two other points I’d consider: lots of the dotcom bubble workers spent money as quickly as they made it, often locking in fixed commitments like car payments or mortgages so they had only a short period of solvency if their income changed dramatically. Having reserves is a great peace of mind measure, as is knowing which expenses you could cut quickly if needed – especially if, say, you went from $$$ at a cool sexy company to $$ at a boring but stable job.
The other thing is considering correlated failures: if everyone around you works in the same industry, you’re going to be competing with them for jobs and unable to sell a house at a good price if the market sours broadly. That doesn't mean you should flee SV but you would want to be prepared to stay put for awhile with large reserves. Similarly, focusing your investments in the same field can end badly — here I’m thinking of a trend-following sales guy who got laid off and had to explain to his wife that he’d also put most of their savings into dotcom stocks which all tanked at the same time.
Perhaps I missed out on a few opportunities but I never really wanted to trade my freedom for the chance of money.
If you have a good network and do quality work, you will be in demand regardless of the market. There will never be a shortage of people that need good, quality work done and are willing to pay for it.
It's a simple question: if I had the value of my company stock in cold, hard ca$h today - would I dump it ALL into a brokerage account to buy said company stock?
People looking for new jobs might have had a little more trouble. And the dotcom boom brought a lot of devs with minimal skills, just because it was impossible to find good devs; some of those who hadn't leveled up in time for the crash got shaken out. But anyone who really could write code did fine, in my town.
Expect to be unemployed. If don't think there will be a stretch of time in your future where you won't be unemployed for a while, think again. Have a backup plan. Have savings. Move in with the parents and bus tables, try a different field you have a little experience in, keep in touch with people. It's a lot less scary if you're prepared than if you wait and see.
The majority of people around the web were either techies, or speculators who didn’t understand it and wanted to cash in.
Average devs were largely devs because they grew up with a passion for tech before it being a profession. The fact that it child be a profession was a bonus. Today some would say you find more devs who choose it as a profession first but not a childhood passion.
When the crash happened there were fewer tech jobs. For the speculation and hype based businesses. I switched to tech in the b2b space because it paid.. with a goal of to become as recession proof and crash proof with my skills because I believed in what software could accomplish that much.
After that there was Napster.. Friendster.. hi5 that built up to the next internet generation.. Around 2005 Facebook became the first thing that average people did online, followed by 2009 and the iPad arriving where there was a shift from people becoming primarily consumers instead of creators with tech.
This situation is easily avoided by filing your 83b and early exercising your options immediately, or at least before a subsequent funding round/term sheet valuation cycle.
None of the comments describing those outcomes mention this. For those reading and new to the startup game, read up on the 83b. When you're an early employee at a startup, the cost of early-exercising even a substantial number of shares is often not cost-prohibitive. And should you leave the company before it all vests, you get a check for the unvested remains. It's a NO-BRAINER when the exercise cost is small.
I never really felt the bubble burst. Maybe raises were slower for a while, but I don't remember it. Mostly a non-event.
We didn't have a TV at the cramped, jet exhaust stinking office at the airport. We listened to the radio but there was almost nothing of substance. We turned to news on web sites, most papers had a web presence, but it was only one in Sweden which held up to the pressure of so many suddenly looking for information. They did it but cutting out images and serving only text content on their front page.
A couple of months later (IIRC) I was laid off. It was hard finding a job. Since I was this hotshot newly hatched programmer on the market, I hadn't bothered paying "unemployment insurance" and I didn't have any savings either. All the big companies like Ericsson were in starve mode, and the ecosystem of consulting companies around the big industry were dying or laying off or both. I started a ltd liability company and found a gig through that for a year or so. I had to cut rates something fierce and move to another city but it was a living. A year later or so I found a "real" job and promptly decided running my own business was not for me. Been on the salary treadmill ever since. (But at various smaller and larger companies.)
Edit: insert all sorts of personal life shenanigans affected by all this, too.
When I was in school, the comp sci program was so full it was hard to get into classes, hard to find a computer free in a lab to do the assignments/projects. The same college a few years later didn't have that problem from people I talked to. I never looked up the numbers, but I would imagine the number of people going into it dropped quite a bit, at least if the anecdotal stories I heard are to be believed.
Where I worked had nothing to do with experimental tech or anything, we lived on selling somewhat specialized, expensive software and hardware. The problem was, no one wanted to spend money.
It was somewhat demoralizing, as the second round of layoffs really hurt and it wasn't a fun job anymore, but I couldn't do anything about that for awhile.
I also know people who invested poorly that had all of their savings evaporated. Some people were paid partially in stock that pretty much went to 0 very quickly. It wasn't the best time.
After a few months, I found a replacement job at a non-startup in South San Francisco. The pay was OK but work was a bit dull. After a couple of years I moved out and haven't been been back except to visit. Spent a total of 6 years living in SF and working around the area, from 1998 to 2004. While there, I saved very little money and also never made anything from stock options. When I left I had about about 30K in my 401K account and 20K in savings. Hopefully startup compensation is better today. I know the rents are still insane.
I'd say from a programmer perspective the 2000 bubble bursting was bad but not catastrophic. If we are now in a new bubble, I hope it won't be too bad if it bursts. But the industry employs way more people now and is much more fundamental to the overall economy. So there is cause for concern...if suddenly 10s of thousands of programmers are out looking for work, that ain't gonna be pretty.
Partially because of my location (Phoenix isn't exactly a hub of tech startups - while there is more activity now somewhat, back then it was much different), and partially because I stuck with my employer at the time and didn't participate outside of that.
I was working for a long established software company that developed an insurance claims management system using a variant of COBOL. I didn't participate in that side of things, though - I was involved on a different team for development of an internally used application which was written in VB6 with an Access DB backend MDB file (ugh).
I basically worked there for about 6 years doing that, and completely missed the whole "dot-com" thing. Might have been a bad career decision, but then again, maybe staying in Phoenix was also one. But the pay has been steady, it has kept a roof over my head and the electricity on.
Since then, I have moved on to other jobs and continued with my career. I haven't become rich, and at my age I don't expect to ever hit a unicorn and be on the bottom floor of a startup and retire early. I am expecting to work until I die, whatever form "work" takes. Currently, it is still coding as an SWE and hopefully that will remain the way it is for a while.
I'm mid 30s, I got my first job in a junior role in 2001 doing web graphics (before I became a proper programmer).
I was hired because our CEO knew he couldn't hire people who had it good in the boom because they expected too much money.
So they specifically looked for people who had skills but limited or no job history, and paid them close to minimum wage.
It worked out well for me in the end as it was a foot in the door when loads of people were looking for work.
Around 1999, I interviewed for my first proper tech job. I had no commercial experience. For the interview I had to drink vodka with the guy interviewing me and shoot some shit. The interview ended when he fell off the chair. I got the job: decent salary, stock options, really nice office.
Hardly anyone there knew what they were doing. That was good for me because I got to pick whatever tech I wanted (open source over the in-house Microsoft stuff). The software and our management processes were a mess. But that didn't matter, because the company was a dotcom darling. I think we charged one large client $1m to make an online store. It sold about 10 products, if I remember correctly. Most of our websites didn't really work very well, though they tended to look pretty nice.
There was plenty of daytime drinking, and drugs and parties. Not long before the crash, several thousand employees were flown to Vegas from all over the world. Lots of partying, cocktails in the pool, mixed in with some bizarre team-building workshops. For the finale, a specially-built circular auditorium with techno music pumping and spotlights whirling, into which the CEO himself drove on an electric scooter to the wild cheers of the crowd, pumping his fist and going round and round in circles.
I found it utterly demotivating to be involved in doing such a bad job of making such overpriced websites, all to the sound track of masturbatory, content-free self-promotion. I left shortly afterwards. It is interesting to me that a number of alumni have gone on to successfully make their millions in their own startups.
P.S. Before my stock options vested they were worth well over $100k. By the time they vested I got $7k.
Want someone who knows how to reliably and "securely" (by 2001 standards) host hundreds of ASP sites on Windows 2000? Only a few people know how to do that and I was part of the team who figured it out first. Want to turn a hundred freshly racked servers into Windows hosts in a couple hours? I'd just finished building a system to do that.
Nobody was hiring for those skills. For years. Web hosters were struggling to stay alive and automation wasn't on their radar. Enterprises were building servers as pets, not cattle. Virtualization hadn't really arrived yet.
I'd get interviews because my resume was interesting but in a buyer's market smart and gets shit done is less valuable than particular experience. It was two years before a local hoster was hiring for technical roles, and took another two to claw my way back to the type of work I enjoyed.
As the broader IT market started catching up to my specialty, I took a couple year detour into our IT department so I wouldn't risk being caught out again without more broadly-applicable experience. Better to be easily employable than maximize my earnings...
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Something I don't see mentioned in the comments here is that the 2000-2001 apocalypse launched the bootstrapped startup economy (and YC). Talented people couldn't land full-time W2 jobs, so many of them launched startups on a shoestring financed with their savings or by consulting. They'd gain some traction and become a "lifestyle business", or more, or be acquired by one of the big DotCom survivors.
I was newly graduated and working at Accenture, erm, Andersen Consulting at the time. They had an incredible deal in light of the recession, where you could take up to a year unpaid leave (I can't remember how benefits worked out, was too young to care) and be guaranteed a job upon your return. I took the entire year to travel.
There was always the worry that they'd go back on their word, but they didn't, for me or for anyone else I've heard from. And when I came back I was at my same client as prior (eBay) and had a few years of low rent and light traffic in San Jose, after which I bailed for less congested pastures. (Actually I don't remember rent going down too much. But traffic definitely got lighter.)
I don't know how to arrange things so that it works out that well in your favor, but maybe try planting some seeds in your manager's head if it looks like the next downturn might be temporary (they always are). And don't own too much stuff, so you can take off at will. (I literally packed all my belongings in the trunk of my Jetta and left it in storage).
In short: I grew, barely survived financially, and made excellent connections.
Around early 2001 I started at a new startup in Minneapolis. It lasted less than a year, but they let us know when they were running out of money a few months out, which I appreciated. No severance though (they were really _out_ of money, I believe).
I ended up doing contract work for them after I was let go (they stayed alive for another year or so with just 3 people, down from 12). I also had some other contract work I found through a friend I'd worked with at my first position.
Eventually I joined another startup in 2004, which also went nowhere but took several years to do it. I left before they sold for a pittance because it was deeply dysfunctional.
I never felt like the crash severely impacted me. I never had any major downtime and while I didn't do contract work 40 hours a week when I was doing it, that was as much my disinterest in work as it was the work being available.
I think I was lucky enough to have the right contacts and a good rep in the Perl community, which combined to let me find a reasonable amount of work to last out the crash time.
Also, I was living in Minneapolis the entire time, which was (and is) _way_ cheaper than the bay area or NYC or any other hot tech area. I think my wife and I paid something like $1,200 a month for half of a large 3 story house (the entire first floor with 3 rooms + 2 rooms upstairs) back in 2001. I think in SF that would've gotten us a closet, maybe two.
Apart from some technological touch stones, it's impressive how it still feels culturally current.
Everyone thought they were making tons of money, based on valuations that were only on paper. Kind of like losing $5B and still thinking it’s a valuable company.
I first noticed problems when we repeatedly had potential client me be dark when we showed up for meetings. They were just gone, and no one bothered to Let you know. They had other things to worry about.
We didn’t get to the point where we could exercise options, but some people were badly burned at time time. If you exercised a million dollars worth of options and hold them past the end of they year, you owed taxes. If the shares were now worth zero, you still owed the taxes. This bit the rank and file, who thought they were getting rich, and ended up poorer than before. (IIRC you could carry forward the loss, but that’s no good if that was the only stock you ever got)
We got bought, and had dead end jobs for a while, before they laid us off. Was not too hard to find a job again.
I recommend reading about tulip mania. It’s amazing how similar that was.
I spent the next 8 months trying to get a job, I applied to hundreds of jobs, maybe in that time I had 6 interviews. Mostly smaller shops without much money or interesting work.
Finally one day I got a phone interview with a company in New York, I was in Austin at the time. Shockingly they offered me a job after just that phone call, I think I lucked out with knowing some weird parts of c++.
I told myself i would never get fired or laid off again and worked my ass off. First in and last to leave, picked up extra projects. I was a rising star, until that company ran out of money. After surviving 3 rounds of layoffs an old friend called and asked if I wanted to move back to Austin making 30% less, I took it as they were at least not actively going out of business.
Since then my career has grown and I’ve been fine, but that long spell without a job or a future was scary as hell. I hope I never have to go through it again.
However, most of the devs I knew (including myself) were not, and that set of devs were no more affected by the bubble burst than society at large was.
Things were already going downhill, but then 9/11 came, we had a building evacuation etc. and then in the space of 3 months we had downsized to less than 100 people and a single floor, the other two floors where closed.
A lot of people were sent back to their home offices (Spain, Poland and all over Europe) and then laid off there, as major support contracts were not renewed.
The salaries back then and even before in the late '90s were actually about the same as they are now in 2019. The same goes for the consulting rates, they have remained largely unchanged in the past 20 years or so.
If you add up 20 years of inflation, you will see that back then being a software developer was a very interesting option and a job much in demand.
A lot of people went from development into testing, production support, sys admin, business analysis, etc.
So many things got cheaper in the Valley. Whole companies started just to sell off all the Aeron chairs and other leftovers.
Rent actually went down. Got a place for 40% less than the previous tenant in 2003. I remember our CEO renegotiating every major expense.
In 2001, seeing what was coming, I left a Linux distro startup and went back to a previous and seemingly secure IT job. I even had plans to take aircraft lessons...
Then, the owner sold the company. The buyers were actually "locusts" - people that offer to buy struggling businesses just to hollow out the assets and then hand the company back ("we saw too many problems, so we are no longer interested").
Back to a market that was fully depressed, had to take a project involving gambling machines (I think they are called "one-armed bandits" in English). It was a technically interesting project, but the people involved in this business are unbearable. After some months into it, I trembled every time the phone rang. After I finally quit, it took 6 years to fully recover from anxiety and depression.
Basically, if it didn't provide critical and provable value to a business, its money sources dried up, and it failed. Tons of people were laid off. They stopped paying devs stupid high salaries, and competition for jobs was _fierce_.
My advice, find your way to a company that saves other companies lots of money (and makes that clear to them), that makes something other companies can't live without, or is so tightly integrated with the functioning of its clients that they can't get rid of it even if they want to.
Also, live frugally, and save money for the coming storm because there's a good chance you'll get laid off. It doesn't matter how skilled you are or how invaluable you think you are.
For me, my salary doubled overnight, stress levels down, no bureaucracy, no horrid tools to use, much better place to work. Best decision ever! But boy was it a risk. Not everyone lost. There was a grand consolidation and if you were in the right place it was a win.
The people that got taken to the cleaners were the ones who made websites selling belly button rings for poodles and stuff like that. Everyone thought adding "on the internet!" was worth a hundred million dollars back then, and a lot of people wound up employed doing work that honestly didn't need to be done.
But if you were in one of those boring companies, doing banking or whatever, you were probably fine.
It was harder to switch jobs for a while, since there were a lot of people on the market and not as many jobs, but I never saw the Reduction in Force scythe swinging through my department.
We basically ran out of money as the bust happened. Alcatel had their eye on buying us.. what they did is wait till the company was running out of money and had laid everyone off in waves. Once the company was a skeleton they bought it for a song. They had to hire a few of the principal engineers back as consultants but not 24 year olds like me! There was some bad behavior along the way from management, they were hiding the true financial situation from the employees.
The other aspect of the bust I remember is a Morgan Stanley "financial adviser" trying to take me for everything I was worth when I was leaving Cisco. The Cisco stock was like $150/share or something when I was leaving. I didn't have enough money to buy the shares. Morgan Stanley had some kind of deal with Cisco where they assigned us financial advisers. The adviser was trying to get me to take out a near six-figures loan to buy options on margin. "You can just keep it for a year and then sell it and make a pretty penny after paying off the loan!" I declined and within a month or two of my leaving the bust hit and my shares would have been underwater by > $100 a share. It would have seriously messed up my financial future in a major way. That guy was such a crook.
The actual layoff in the bust wasn't that bad but it still set me back a bit. I was out of work for about 2 months, I lived with my parents for a bit but found a contract that I kept for 2 years. Taking the contracting work was pretty lucrative but not that smart in the long term. After that 2 year stint things were still pretty bad as that was the era of "outsourcing overseas is the future!" and I had another 2 years of sideways work that wasn't great for my career. Things started looking up in 2006 and were vastly better by 2010. The "great recession" had 0 effect on me.
I was totally delusional in my early to mid 20s about how easy it was going to be to work at a startup and be successful. It was also a super different era in terms of office and overall culture. You were a near social pariah as soon as anyone found out you were a software engineer, it was 100% not cool to be a tech worker. Women would immediately lose interest in you and practically run away as soon as they heard the word engineer. We were all still 100% considered nerds, not cool in any way. Also there were NO young people in the office. In my 20s there was almost no job I ever had were there was anyone else in the office under 20.
Other aspects I remember.. almost no perks in the office, way more crunch time, much longer hours at the startups. In the last 10 years I worked at 3 startups, one had the long hours like a 1990s-early 2000s startup, but the others are/were so incredibly cushy that it felt like no work was getting done. People yelled a lot more in the office. Stuff that was regularly done then would be considered abusive today and would generate lots of reports to HR.
AFAICT around 2010 when everyone started saying "Millenials" a lot things really, really changed in our industry. Mostly for the better.
In 2002 when I got layed off (Boston area) it was pretty grim. The war in Iraq had not started. So there was an absolute army of highly qualified highly experienced engineers that had been laid off by the defense contractors. Career fairs were scary scenes. Obviously they all went back to defense as soon as the Iraq war started... so the rest of us who weren't interested in the defense path didn't have to compete with them. But it was real scary going to career fairs.
A lot of job postings at that time in the bust had ridiculous/fake requirements. You'd see things like "10 years of experience in J2EE". J2EE was new and hot. But it was like 2-3 years old at that point! The postings were mostly about companies trying to fake that they were doing well... put up the fake job postings to make it look like you were growing when in actuality they were barely hanging on.
A lot of the american guys who left around 2003 got in real estate and house remodeling, setting themselves up for another burst. The immigrants went to take on boring jobs maintaining legacy code or installing Oracle solutions for a few years before things warmed up.
Companies you thought were doing well go out of business. Companies you had as a backup to maybe apply if you lose your job go out of business before yours. So many unemployed developers fighting for the few jobs out there. Hiring freeze in most places. Whatever job you have even if it's tethering on the edge becomes the most secure job.
Layoffs were brutal, I saw someone got laid off on their start date! Those that worked for 3 months before layoff were lucky.
What can you do about it? Nothing! It's like being in the middle of a war zone, you can only pray you don't get hit by shrapnel.
When the bubble burst, this created a bifurcation. Those who's options vested in the months pre-crash did become wealthy and didn't need to work ever again. Those that just missed that window even by just a month not only did not become multimillionaire, they even had lost years in normal capital buildup as the non-option wages had ofc not been that high.
This left a profound imprint on a generation. It was so abundantly clear that there was no relation between work and wealth. Two devs that had sat side by side working on the same code for years, one now had a Lambo in the drive on his mansion in the hills and spent the rest of his days playing ceo/cto/cio in ventures in which he bought a chair just for fun. The other looking for a job that paid money to buy rent and food for the month. The only difference between them that the former was hired one month earlier by the dotcom.
These devs were seldom born into money. Their parents had taught them that working hard paid. Those words rang very hollow in this new age of casino capitalism.
Around April 2002 my contract was not renewed and I spent four months unable to find one. The freelance contract market seemed to dry up.
I had to go work as a full time employee for less than half the pay in Montréal (I live in Toronto). I commuted five hours by train each weekend for a year.
Ironically, the crappy company that hired me referred to me as a 'consultant'.
My hours went towards implementing KYC regulation for a big American bank.
The upside is that I got to live and work in French among my people for a while (I am French Canadian).
It was nice getting free money with no strings attached for a few years while still doing a job I loved. Kinda sucked when the gravy train stopped, though.
Our lead investor was great. He told me again and again that we were in a bubble, and to focus on the core technology as a backstop in case the bubble burst.
After the crash, our $40 stock went down to $0.06. I went from being a multi-millionaire on paper to being broke-ass for real. The CEO and I had to fire 110 people, cutting the staff down to about 25. We jettisoned the content portal and refocused on the core IP.
In the end amazingly, the company survived and was eventually acquired by Google.
It was tough letting people go but the alternative was for the company to go bankrupt and everybody to lose everything.
It hit me hard, and there were so many people looking for programming jobs that I found it impossible to find a new job. I didn't handle things very well, and ended up doing jobs like washing-up and putting up marquees.
The story ends happily though, I found a good software job fairly soon, and those other jobs I did in between gave me a bit of experience of life, a bit of perspective.
i started my own company at that time and there were a ton of developers desperate for work.
Because of the huge internet companies that are voraciously hiring and that have huge warchests, I think it will be different next time around.
I can see IT at non tech companies getting laid off and having trouble finding work.
Took me six months to find something else. And that turned out to be an OK job with EDS, but at half what I was earning before. By 2004 when things had started to recover they seemed to get a fright because I suddenly got 3 raises in 4 months which almost tripled my salary. Was too late though, because during that time I was interviewing at Microsoft.
Crazy times.
When it happens again, I don't think it will be as bad. In addition to learning from the lessons of the past, remember that everyone had to buy hardware, servers, big-ass monitors, all that. Now personal laptops are cheaper plus everything's on AWS now, you scale up or down.
"...you are more of a client-server programmer. We are looking for more of a mainframe programmer..."
i cashed out, cut expenses, played golf during the day, coded at night. as the bubble burst, i was already chasing the next thing. never having to witness the layoffs and heartache was a blessing in disguise.
as the bubble burst, startup funding dried up. no one was funding 'an idea' yet it was also a great time to be working on the problems of tomorrow.
having cash on hand was important...it allowed me to relax when others where in a panic
finding work was not hard. having talent always matters.
fast forward to today. its been about a year since i exited a startup that was acquired. outside the bubble again, cash in hand, coding without a worry
i'm already 'dug in' and working on the next thing,
I was at one place through much of the boom, eventually they folded. I was the last employee, part of my job was winding down and archiving the assets. After that, jobs were a bit scarce.
I didn't mind the break, though it was a bit demoralizing. Much like today, if you can create a name for yourself, it's easier to get hired.
After some months on the beach because my company simply couldn't get the ludicrous rates they had previously been getting, I landed up joining the fledgling Shazam.
Sometimes the best time for a startup is in the teeth of a crash...
Free to view on YouTube: https://www.youtube.com/watch?v=ibuiUXOTE4M
The 'crash' was a very well needed market correction as few startups had figured out how to make money - and a lot of regular stocks were way overvalued.
It was a little rough for devs, but honestly, anyone with decent chops had a decent chance of securing 'something' - either in the Bay or elsewhere.
There was a huge drop off in marketing, biz dev etc. over the span of a few months it went form 'a lot of parties' to almost none!
It recovered somewhat after a few years - Google did an IPO that went really well. Then the Facebook craze started.
The 20008 crisis was much, much worse as it hit the entire American economy in a very powerful way - not just a stock/.com correction.
FYI the 'telecom bubble' was 5x bigger than the '.com' bubble, there were huge investments in optical switch companies you never heard about that went bust.
That said - the buzz since 2012 has been stronger than in .com. During .com all this zany stuff, startups etc. were completely new. So it was completely new math. By 2010-2012 - or say the real establishment of YC, a lot of the zanyiness had been normalised and it metastasised throughout the world in a way. The valuations these days are 10x-100x bigger and the game is significantly more global. In .com companies that did a $500M IPO were 'huge' or whatever. Nowadays, it's almost not going to make the news.
The correction that's coming eventually probably won't be as severe as there's no reason for a real crash. Something will give - probably China slowdown - which will pop a lot of other bubbles. To give you an example - WeWorks' valuation was not actually that crazy - as long as they could continue to raise (and it's not entirely irrational) then they could move ahead. The $50B->$10B drop is not some crazy mis-calculation so much as it is an example of the leverage being applied. A little bit of wind out of the sails and lack of momentum can kill something that might actually be working (and WeWork actually does have some workable metrics, just not at $50B).
So the coming adjustment will affect 'everyone' even if it is really only driven materially by a few things (i.e. China, trade etc.) though probably not severely.
If you do good job and have reasonable skills, I wouldn't worry too much.
The layoffs happened in two rounds - the first round the severance packages were rumored to be generous. The second round, my round, we got two weeks pay.
This was spring of 2001. People had trouble finding a job, but they were still out there. I got another one for summer of 2001 but they laid me off after three months, and then 9/11 happened ten days later.
After that it was brutal. Up here in Portland, no one was hiring at all. One time a job opening came up and all the applicants were taken to a large conference room where we all took a silent written exam together, with applicant names anonymized to protect against discrimination. I got that offer and rejected it, which completely freaked out the agency recruiter that was representing me. Nike and Intel would occasionally advertise programming contracts for $12/hour - php, perl - and they would be swarmed with applicants. I'd talk to agency recruiters but they kept getting laid off, so it'd be a different one every couple of weeks.
I was taking unemployment, I toyed with a business idea, and I eventually thought I'd try out contracting - I cold-called a prospective client that had a small company, and he brought me on for $25/hour, usually working at his condo with him and ordering pizza together. A few months later - Feb. of 2002 I believe, I got my first more official-ish contract for $55/hour, and I've been in business as a backend architectural contractor/consultant ever since.
Over that period of tim, I found that consulting is kind of a leading indicator of the economy. When times are bad, maybe you can get good gigs at employers that need help but are reluctant to commit to an employee. But if times are just starting to go bad, non-employees can be let go quicker.
Anyways, remember that the dotcom crash got mixed up with the post-9/11 chaos, so the next crash probably won't have the same impact. Also, remember that recessions are cyclical. It gets better by definition. I still believe that 2001 and 2007 were Weird in a way that recessions usually aren't. And a recession might even be good for the younger generation since they tend to clear away people that have jobs but shouldn't, leaving more future openings for the folks that are still hustling and learning.
[1] https://web.archive.org/web/20010302130953/http://www.sfgirl...
Now, I’m highly exposed to startup economy, older and spend more time managing than coding, so...... feeling a little shaky right now.
Salary raises were lower, and bonuses more modest but overall we continued as usual.
As someone who started his engineering career after the burst, is good to hear the experiences (good ones and bad ones) before the next one burst.
I moved my operations to a organic farm in the east bay. My wife and I were shoveling horse shit one afternoon with some community volunteers that just happened to be the Comcast Ethernet sales team. That is how we got the fiber.
I pulled a 40' "high cube" shipping container into one of the greenhouses I'm surrounded by homeless transients on 4 sides. My wife left me this year and she killed all the plants. I'm really happy because of the drugs, and sunshine. Y'all should get out more -- dig in the dirt, make food and write code in a non-toxic environment.
So which is is guys? Can we actually choose are own career paths or are we just pissing in the wind here?
https://www.shamusyoung.com/twentysidedtale/?p=35194
He's also explaining a lot of entrepreneur/technical details, since most of his usual audience is not familiar with those, unlike HN.
I was a software engineer through that time period, and for me it was a non event. If you’re working at a profitable business and not some negative billion dollar growth company, you’ll be fine. Software engineers are going to be in demand for a while yet.
The product we were making was quite solid and also quite generic, but the management/investors decided to concentrate on dotcom related markets which ultimately went bust later. Our core development team did not suffer that much, but around us there were so many layoffs I lost count. I personally survived at least five layoffs.
It was actually quite interesting time to live in Silicon Valley. My coworkers all still believed in dotcoms although those companies had lost much of their market value. I had just taken some introductory finance classes and knew that fundamentally all this was unsound -- and had some interesting chats explaining to coworkers that diversifying means more than investing in few different dotcom stocks.
I continued to work there as the work was interesting, pay was good and it was interesting to see Silicon Valley through the disillusionment phase as it is part of the history.
Since I was working only for one company I did not have very wide vision, but it seemed to me Silicon Valley was full of gold diggers at the time. It was quite something to see several minutes of job ads before movies, for example.
The company did very crazy decisions. Their goal was to get listed in NASDAQ, and for this all the graphs had to show exponential growth no matter whether it was unsustainable. This meant stupid hiring, offices in all continents etc.
By stupid hiring I mean that some people were clearly hired just for the head count, not to provide any real valuable service. But our core development was kind of inner ring that was protected and continued doing interesting work throughout all the craziness around.
I was once traveling with the CEO and he told me that he had just come off from meeting with the investors -- they had demanded that the expenses should be raised to $1M per month.
The company burned through the money in the three years I was there, basically on offices, stupid hiring and travel. After I traveled in economy class in overseas flights, I was told that everybody else was traveling business class. The chairman of the board insisted on traveling first class. There was actually one BOFH who insisted on first class travel too (he had to set up the infra for the offices), and I think they accepted it too.
In 2002 I had enough, so I relocated back where to I came from. One year later I quit the company. The constant layoffs impacted the mood of the company so much I did not want to work there anymore.
I took a sabbatical year, finished my second master's degree and spent three months doing volunteer work. After the sabbatical I joined the company where I had left before I went to work in Silicon Valley.
I was not unemployed (against my own will) for one single day throughout all this. I think what saved me was that I had saved so much that I could be independent for a year, that I worked with smart people who recognized my talents although I was still quite young developer. But mostly it was luck, I guess.
I would not trade away the experience.
I lived thru it, I did OK, a few of my friends left the industry some struggled most where ok if they had real software chops. The people that really took the hit where network / sys-admins / corp PC repair-support they where gutted as there was a glut of MCSE/A+/whatever get a cert in 4 weeks make 100k.
That being said, this time it is structurally different, in that period, we where trying to eat the world with software today software has eaten the world. Development has always been and always will be an understaffed profession as it competes for the top half of the intellect spectrum along with Doctors, Lawyers, Engineers etc.
It's easy to assume that you have to be at least smarter than half the population to write software. From there you have the slackers that take themselves out of the pool e.g guy could be Einstein but he would rather smoke pot and work at 7-11. Might not be a significant portion of the population but it takes a bite.
Then the person actually has to want, desire and be interested in being a developer over some other intellect based career. Then a portion of us just burn out and leave.
Anyways there are a lot of factors that lead to a serious shortage in available developers and as best as I can reason it is systemic and incurable until AI gets to the point where it can turn a persons thoughts into software.
I would armchair guess that the pool of potential good developers worldwide is 10% of the population. Those that actually pursue it and stay with it is certainly far less.
Tangential, but that is what I love about these younger companies and their age discrimination and asinine interview processes. They lack the experience to know that their perceived cool factor actually holds no currency and the real currency is in attracting and retaining good development talent. They build so many self defeating filters to them accomplishing that goal.
With 27 I feel like a fossil that will die alone and in poverty if it won't make manager or architect within a year.
Initially many thought it would be similar to the early 90s recession. I.E. A few layoffs with everyone getting hired back again two years later. It wasn't until 2002 that people realized that springtime wasn't coming back.
It wasn't just places like pets.com that crashed. You had every single non-tech company simultaneously scaling back IT initiatives. At the time there was still a large cohort of management types who considered the Internet more of a fad than a new paradigm. These types took full advantage of the shifting winds to cut deeply into anything tech related. This broad overcorrection did a massive amount of damage to the industry. It's not just that your project was dead, but no one would even be there to bury it.
The impact crater was still visible years later. Remember the big talent shortages during 2008-2012? That's because you no longer had a cohort of mid career professionals to draw from. Only the thin number of people who survived the collapse and a bunch of novices who were just getting started. Everyone was missing that valuable group of mid career 8-12 years of experience etc... Basically a generation of careers strangled. Which is why you'll often see no sympathy for the 'talent shortage' complaint. Five years after cutting everything and leaving people to starve you have the same cohort of managers demanding to know "where are all the people with five years of recent experience, and why don't they work for peanuts like they used to?"
The silver lining is that the bubble bursting shook off the con-artists and pretenders. The dotcom boom was driven mostly by piles of dumb money chasing anyone who could spell the word 'software'. There was a very specific feeling of dilution during the run up. Dealing with companies and teams that contained no competence of any kind. Just lots of people with grand plans. Remember that this was 5+ years before the 'fizz buzz' test became a thing.
During the boom, being a skilled professional felt like you were a hunted animal rather than a valued team member. Everyone had to get in on this 'internet thing' and they would desperately try to latch on. Imagine working in a company of 500, and only two or three actual programmers. Everyone else has 40hrs a week to hassle you for help with whatever their project is while kissing up to management. Think of a tech conference that is entirely shiny salesmen, business types and politics. Tons of fancy titles with no ability to execute. An impenetrable crowd of people trying to suck up time and gain influence. Those types disappeared first.
I worked at several floundering telecom companies out of college and it was all rainbows and unicorns, "We're going to change the world!" VC money was coming in like crazy, but I saw red flags everywhere.
Best example was at the last telecom I worked at. They had managed to get a specific contract with Qwest that gave them enterprise level rates on PBX lines for small companies. Basically the state had given sweetheart rates to the huge corporate players in my home state of MN. 3M, Honeywell, Mayo Clinic and others were paying next to nothing for their lines, but because of the volume, Qwest was still making a ton of money every month. One of the founders was an attorney and told Qwest there was a clause that stated they needed to give that rate to everybody, not just these huge corporations. They actually had public hearings and everybody was asleep at the wheel. The FCC allowed this company a five year contract for the same rates, the only catch was each entity who got the rates had to have a minimum of 10 lines. Then, after five years, the contract would expire and the loophole would be closed.
When I was hired, the CEO told me they wanted to have the highest paid sales staff. He laid out the salary and commission structure and red flags went up (see below). After I was hired, I found out the CEO bought season tickets for all the major sports teams in town (that included the Twins, the Timberwolves, The Wild and the Vikings), two of the teams (Vikings and Wild), he got a suite. The office we were in was already way too big. We had a staff of about a dozen, and it was big enough for a company of about triple that size. No matter, he spent a ton of money to completely remodel the whole office in his vision. They had around $3 million privately invested and he blew through that with his excessive spending and staff payroll in about 4 months.
It was then shit got really interesting (more on that in a bit)
Here was the salary+commission structure:
Salary was $45K/year
Commission structure looked like this:
You were paid per line with a commission structure that ramped up as the number of lines increased.
The math went like this:
- (Less than 20 lines was paid out at $60/line)
- 20 line minimum: $1,000
- 35 lines: $2,000
- 40 lines: $3,000
- 50+ lines: $4,000
Let's say you landed three clients in the same building and you got a 40 line deal. This means you got your base salary for the month which was around $3,700 plus you got commission on every level of your deal so you added another $5K on top of your salary. Once I started working there, I found out the company was only clearing $25/per line, per month in revenue. It doesn't take a genius to see that and start to panic.
If you sold a 40 line deal and the company was paying out $5K in commission, but was only making $25/line in revenue, it would literally take 16 years just to break even. I started asking around, since this wasn't making much sense. I started talking with the engineers, some of who were given stock options in the company. Most wouldn't talk to me, but I got in good with one and he said this whole thing was a scam. The idea was to grow the business rapidly, shed all the VC money and then once it was bought by a larger telecom company, everybody would cash out and start another company. Rinse and repeat as necessary. I suddenly realized I was in a very bad position, but it was already too late.
Once the CEO had torched through most of the money, a war started between the investors. There were six private investors. Apparently they had a meeting to discuss the dire straights of the company. Three of the investors wanted to put in more money and keep it going until the company could grow enough where they could still sell it for a healthy profit. The other three wanted out. One half sued the other half. The other half counter sued. Two days later, I came to the office and a security guard greeted me and told me I wasn't going to work. The doors were locked by way of court order and the company was effectively shut down pending legal cases.
Less than a week later, the bottom fell out of the economy and the dot boom was suddenly the dot com bust
The lessons I learned (if even from the outside) from that experience really helped when I started several of my own companies. I have yet to take VC money. I've been able to bootstrap all of my companies on my own, with minimal investment. I run as close to bare steel as possible. No offices, no hardware, bare minimum for my overhead expenses. Try and do as much with as little as you need. Pick a niche market and address a specific problem and then own that niche. Try to stay away from larger players in already well established markets. And for fucks sake, never, ever, ever pay your employees a kings ransom to work for you.
Sorry for the long ramble, but I love telling this story. It has so many lessons in it for founders and other people in the startup world.
I'd moved back home to Dorset to do my project and thesis as our landlord had sold the flat we were renting in London, and it didn't feel like the best moment to be househunting.
I also had an offer in hand with a b2b eCommerce agency in London, along with a couple of other friends, so my plan had been to move back to the city in the autumn. However, over the summer we received an email from them asking us to defer our join dates by a couple of months, during which time they'd pay us a small weekly stipend.
This was nice because it felt like free money (I was being paid £150/week to do literally nothing), and in the meantime I made a contact through a friend with a guy running a tiny software company in a village a few miles from where I lived and started contracting for him on a telecoms switching system. Together, these pushed my income to about £470/week which, at the time, felt like a ton. In fact it was more than the starting salary I'd been offered with the firm in London.
The guy I was contracting for liked my work and started pushing me to work for him as a full time employee. He dangled matching my London salary in front of me, which obviously would go quite a bit further in sleepy Dorset.
Eventually I caved and gave notice to the company in London. The downside is that I had to give them the stipend back, but I'd been judicious in setting it aside just in case this happened. Still, that £1500 would have come in handy, and I still kick myself for the way this turned out because I should have seen it coming: a few days after I'd given notice and sent them a cheque they let all new starters go. The reason I kick myself is that had they let me go I could have kept the stipend.
On balance I was much luckier than everybody else though: I still had a job with the company in Dorset, and I was now a salaried employee, so way luckier than everybody who was cut. The worst I had to deal with was emergency tax for months (which I eventually got back) because the company in London couldn't get their act together to give me a P45: I still remember the email they sent telling me it "wasn't a business priority". Well, maybe, I mean when the place is disintegrating around you, but I still need it.
In many ways that first job wasn't great, but it did have some strong upsides: working on lots of different and interesting projects, client contact, 20 minute commute, good salary (for the area), great scenery. It also ranks as the only time in my career when I had my own office: the upper floor of an old thatched cottage.
On the downside there weren't really any other devs in the company: a couple of guys did sysadmin work on the ISP side of the business, and built the odd website in PHP, but nothing full on. My boss was a programmer, and whilst we had some good technical discussions, he could be a bit old skool in the way he did things. I needed more people around who I could learn from. Related to this I learned that I don't really enjoy working substantially alone.
My boss wasn't a bad guy, but our relationship could be fractious, and I could be pretty immature/something of a diva, which didn't really help.
I actually handed in my notice after less than a year because the stress was getting to me, but my boss persuaded me to stay and gave me a 20% salary increase. Like I say, he was a decent guy. I'm also really glad he did that because I probably would have been ed by my naivety otherwise (had no new job lined up).
Still, there was more to my issues with the job than money, so it didn't take long to realise I still wanted to leave.
I began applying for jobs but the problem was there just wasn't much around for people with a year's experience. Plenty if you had 4 years, and obviously there were graduate roles (but these would have been a substantial pay cut and, by this time, I had car payments to make - buying a car on finance as soon as I got my first job definitely not my finest piece of decision-making ever). But I was really struggling. I'd make sure I ticked every box for every requirement when I applied for jobs, and I'd hear nothing back.
Eventually I heard back from a company in Cambridge that I'd applied to months before - never heard back from anyone else. Things were pretty grim at work (the atmosphere was tense and funereal and it went way beyond any issues between the boss and I) so when I walk into this shiny, new refurbished office in Cambridge, with all these friendly people I pretty much instantly decided that regardless of what happened I wanted this job. Fortunately I got it, along with a modest salary increase and relocation expenses - started in June 2002.
Good thing too because the company I was working for in Dorset substantially imploded a few months later leaving only the boss and his wife behind, and the other three employees let go. A sad end really. It could have been awesome, it should have been awesome, but it just wasn't. It was still limping along a decade later but I think is now gone completely.
Ironically I'd picked another company, in the bioinformatics sector, who weren't exactly having a great time. They'd IPO'd, with much brouhaha, in 2000 or 2001 and had raised something like 160M euro, with a share price trading about 100 euro. By the time I arrived the shares were trading at around 3 euros and they'd burned a ton of the cash on a bunch of questionable acquisitions.
There were layoffs before I'd joined, and more whilst I was there, although these left the Cambridge office substantially untouched, I think mostly because we were working on a product that was making sales.
One immediate and massive improvement is that I got on well with my boss, and there were a bunch of great people around. I got to see other peoples' code, and be involved in some design sessions with other devs, which was all new. We also used source control - hurrah! I did lose the direct customer contact, and the variety of work, which I missed a lot from my previous job. There also seemed to be just an unbelievable (to me, at the time) amount of politicking - thinking back that's not really surprising given the state of the company. Sadly, I realised pretty soon (a month or two in) that I needed to find another job, but I had to wait out the first year so I wouldn't have to pay back relocation expenses.
My next job was a contract. I'd seen it advertised and it was paying literally twice what I was on, and it was the only job I'd seen in months that I seemed qualified for. I nailed all the requirements except one: I wasn't Java certified. I phoned up the recruiter anyway and told them I was going to be taking my Java certification within the next month, then I booked the exam, then I spent every evening devouring the certification manuals. Another guy had gone for the position but decided he didn't like one of the people there so, once I had the certification, I went for interview and got the contract (August 2003). I don't know what the people issue was with the other guy but I had a great 9 months there: absolutely loved it, and loved working with a great group of devs.
I mean, of course, the company wasn't in the best shape, and they sold off part of the business - the part I was involved with - to raise some cash. I had the option of following the work to Loughborough, but chose not to. It was good while it lasted but I'd already spoken with Redgate by this point, and they offered me a software engineering role starting in July 2004.
This was one of only two pay cuts in my career (both of which have been contract -> permie transitions), but I liked them and what they were doing, so I took the job, and I stayed there nearly 10 years (that was never the plan, I might add - I'd only intended to stay for 2 or 3).
And that's how I rode out the dotcom crash: overall I'd say I was incredibly fortunate. It set me back, but it didn't floor me. Financially things were quite hard at times, particularly when I first moved to Cambridge, and particularly when I bought my first house a few years after that. I was lucky enough that for the most part my salary went up, but it was never like I was earning outrageous money, and certainly not compared to what I would have had I graduated in, say, 1997, and found work in the City before the crash when everybody was just desperate for developers (which I could have done had I made different choices - long, boring story).
Still, I've always been in work, except when I've chosen not to be myself, which is a very privileged position to be in.
- Hubris blow-back: Non-managers with access to HR data within my own organization would query payroll data, and publicly say developers are overpaid. This was a US public firm, not a start-up, and our pay wasn't market leading.
- Domestic hiring froze. Existing offers were rescinded. No new offers made.
- Foreign hiring or visa workers started: The internet wasn't fast enough for outsourcing at first, so new developers were brought to the US Visa from India, getting paid quite a bit less, and living 5-6 guys to an apartment in the woods of New England.
- Terminations/layoffs: The first was a shock, then came the drain of twice a year, every year, eventually becoming the norm. At first, the less technically apt were release (those who learned to program because it was hiring.) Then some really good people, with good ideas and great degrees gone because they couldn't put in the hours or work in the environment, or because they couldn't set aside their pet project.
- Cost management, control, and reduction, everywhere. Need email? billed to your department. Need storage? billed by the MB. Need licensed software? Assemble a business case for a VP, and expect to have 4 tiers of reviews before that. Need a monitor or memory? Buy it yourself, that will never get approved. Have a shadow-IT lab where all your work gets done? Expect auditors to shut it down and claim the assets for the CIO. The correct department expense number is $0.
- Project control: strict waterfall, with systems engineering of everything. Regular metrics reporting with remediation plans to executives. This requires...
- Personnel tracking: hours worked per week were introduced, starting at 1900/year, then ratcheting up. 40 per week became 44, and then it was a whisper. Managers knew, plan your top people at 50-65/week or you would blow your budget. Those top-billers brought in revenue.
- Technical advancement evaporated. Development was for the outsourced teams; if you want to move up, learn how to manage lots of outsourced developers as a "project manager."
- Projects shifted. Latitude to explore new technologies and possibilities went away. Remaining client projects were purely driven by what was needed to keep businesses moving forward, like legal/regulatory requirements.
- Governance. To make sure there's consistency, and no shadow projects, control them through review boards for everything.
Consequences?
It became a grind. The long hours worked during the dot-com era exploring the possible and creating an internet that never existed before became long hours to meet project targets, billable targets, and client deadlines.....
Marriages suffered. People skipped family events for work. People skipped exams or even dropped out of advanced degrees, for work. You could see who was burned out, or was having trouble with depression, or was self medicating in other ways.
Professional lives suffered.
Not a good time.
I finally took a job with a company whose flagship product was a browser front end over a 30 year old Pick database. They hired almost anyone off the street and gave them a two week training course before turning them loose in client code (customizations to the flagship application). They were literally training new hires to program, and I was kind of at a disadvantage because I knew what I was doing and got things done quickly, which is a liability when you bill by the hour.
The twenty year old company re-branded to a dot com and was planning an IPO. We got new business cards and letterhead with the new name and everything. Then the owners saw the writing on the wall. They silently dropped their IPO plans and we got new business cards with the same new name except no ".com" at the end.
With only an associate's degree and with my only professional experience being an outdated database system + programming language, all recruiters wanted to talk to me about was roles with this same outdated system that was apparently running in places all over the world. If I wanted to hitch my wagon to a dying platform, I had a place in France begging for someone like me to one work on site for a couple months.
Even those calls stopped when the bubble burst. I took another job on that outdated platform that paid better and kept sending out resumes. Things eventually got better, but I still couldn't find a role outside Pick systems.
It wasn't until I spent my own cash on a Java certification AND the market improved that I started getting calls again. But then I faced a different challenge, because my Java experience was the wrong KIND. I had worked with Oracle Application Server and their suite, not Websphere or Weblogic. I understand now that a lot of that strict filtering was to prove that nobody local had the skills that offshore developers had. Yep, the early 2000s was all about offshoring!
It's my opinion that starting my career in that time and place set my career back at least five years. That experience is irrelevant now, thankfully, and I'm in a pretty good spot these days managing a devops team.
I don't want to be all "you kids don't know how easy you have it", but it's so easy today to spin up a web application, host it for practically free, and maybe make a business out of it. I would have to fax over code samples, and now you have recruiters and hiring managers cruising GitHub profiles looking for coders to reach out to.
I do worry about the possibility of another bubble. I'd probably be fine, even if I had to do something outside tech for a while. But for young folks outside SV things could get pretty hairy again.
I out of college I started a company with some friends from high-school, worked that for 6 months, but wasn't making any money, so I got a job at Microsoft in Redmond, WA. I worked there for over a year, but hated suburbia (back then Seattle didn't have many people who lived downtown, and pre-restaurant scene, etc, so I left for a good consulting job on the east coast and proceeded to spend the next 1.5 years traveling a lot, mostly to Chicago, but some NY. It was a fun lifestyle for a young hot-shot C++ guy. Then one of my co-workers quit to start a Startup and I was employee number 4 or so. Back then the stock market was starting to go wild. We competed against (and valued our company) like one called Vertical Net [1], we were exuberant and cocky. My friends were at companies like SilkNet, which got acquired Kana, all my social circle (25 to 26 year oldish) were involved with high-flying startups and we thought we were all going to be so rich. We even started playing the options market, one of our favorites was Nokia and Yahoo options trades. One of my co-workers made so much trading options in a week, that he cashed out and went and bought an Audi S4. We were all making fun of him (but the joke was on those of us who continued to play).
Anyway, after a year at that startup, I moved to another high-flying one across the river in Cambridge, MA. I only a contractor at this one, but the money was insane (it's actually taken me about 15 years to get back to the same money I was making there). Anyway, I think it was November 2000, we suddenly had some lay-offs announced. They didn't get rid of us right away, though, they kept the contractors o until the end of the year. But no biggie, I found another job immediately for a company called ATG. I was going to start at ATG [2] in February 2001 as a sales engineer. So, in the meantime, I took off for Europe for six weeks. And proceeded to have the time of my life, looking forward to my next job. At one point in Paris, I almost bought a Picasso "sketching" for like 10K US, but instead settled for a more modest $700 artist by a Japanese etcher that I liked way more. The next part of the trip, I blew out my ACL skiing in Chamonoix, and then headed back to the US to await starting my new job.
So, about two days before I was supposed to start the job, I got a call from ATG that they're having lay-offs and that I'm not to show up for work on the following Monday. Crap. No, biggie, I've always found tons of work. So, I put my feeler's out, and even contacted places that had made me offers in December 2000, but no go. Hiring freezes everywhere.
In June, I finally found some contract work at Staples.Com where I worked for about 6 months. 9/11 happened in September, and by December I was no longer at Staples.Com.
I couldn't find work for about 8 months after that. And then I ended up working for the State of MA in the Department of Revenue working on software for collecting child support in the Fall of 2002. I had gone from a high-flying C++ coder making $90/hour+ down to making $33/hour (working with Visual Basic and ASP). Then about two months into the DOR job, the recruiting company called and said they could only pay me $22/hour.
I didn't really get back on my feet fully until I started another job in January 2004 at another consulting company (now as a Java/C# engineer), and it was still for about half of what I made during the dot-com boom. And then from there I slowly crawled my career back.
In the meantime, most of my friends went back to school, because attorneys, eye-doctors (New England College of Optometry), one became a psychologist, the ones who stayed in tech moved into sales-side. There's only two of us who are still practicing engineers (and I'm 90% on the management side this days).
It was a long road back for me, but I always loved technology. Part of that road back was writing and publishing with Wiley a tech book, doing some more consulting, starting a couple businesses, failing a couple businesses, going through a nasty acquisition, and then finding a dream job again.
If you've read this far, I'll sum it with a couple of fun antidotes: remember that company I started with friends out of college? They sold a couple years later to Amazon for about $30M. Remember the guy who bought the Audi S4 with the options profits? The rest of us eventually pissed all our profits away in poor trades as the market was collapsing. He at least got an S4 out of it :). I still have some regrets about leaving Microsoft, I was working on an awesome team there, and financially (if I could have survived the moral of the Balmer days), I'd have been way better off (and I doubt I would be been cut during the grim times). But I've had a lot of good times with my travels and seen a lot more of the world because I left that job.
[1] https://en.wikipedia.org/wiki/VerticalNet [2] https://en.wikipedia.org/wiki/Art_Technology_Group
As devs we had a really easy compared to now; expectations were low and getting anything working was enough to satisfy their investors. We knocked out things fast with a small team but a large difference before and after at that time was that before actually no-one tested or even looked at everything; they were happy spending the money. Salaries for devs were high and we were rockstars no matter the quality or performance.
When the crash came, most projects for startups instantly halted. Sometimes literally from 1 day to another we got letters from lawyers that their clients were filing for bankruptcy. Meaning a lot of ongoing work was unpaid (not a lot; our CEO did not tolerate late payment, but payment comes after the work, per month, so their were gaps).
The owner of our office (we had 2 floors, they had the rest) went bankrupt a few weeks in so we had to move. All offices around us became empty over the next weeks to months; almost every building was for hire the next year.
I had a lot of dev friends who lost their jobs at startups overnight and who all (I cannot think of any who did not) moved to big corps (not necessarily tech) and have not moved since.
We luckily, because of the worldwide components sales, had attracted some large clients (insurers, banks, unions, political parties) so we were not hit so hard; we had one of our best years 1 year after. We now had the opportunity to pick up very good devs and we did.
The fallout was that we did not acquire new clients for a few years and lived on the current clients (risky but better than the alternative of no clients).
Another thing we really noticed was that people after were really counting money and so they started to really push for performance and quality which put strain on us devs until we figured out how to cope with that (we never had to before).
A lot of devs I know could not find jobs until a couple of years later; companies hired way too many people. The big consultancy outfits at the end of the 90s started hiring and training non-stem grads as devs for instance. They hired whoever wanted to program to satisfy demand; the layoffs were massive. After the crash they noticed they did better work with vastly less people as well; the low focus on quality before the crash made many people kind of perform minimally.
There is some economic downturn coming soonish which always has consequences for jobs etc, but I cannot see it going the same way as it did then. Devs are already ‘applied optimally’ (worked to death) in many places so after the crash they cannot work harder as we were forced to then (financials went down, quality demands went up) but I do think, now that so many people are devs and companies are hiring whatever they can get, globally, that will cause a massive amount of layoffs and probably lower salaries for a while. Good, all round devs with communication skills won’t have issues, nor will talented beginners, but a lot of others will probably be axed.
The 2001 crash did do little in the long run; companies are still invested stupid amounts (far larger than at the time) into for bad/infeasible ideas and companies are again hiring whoever and training them. So mid to longterm (5 years) there is nothing to fear, short-term, depending on what and where you work and how good (and lucky etc) you are, you might get a few years off.
I found though that right after both crashes (2001,2008), it was a good time to create a startup; resources are cheap (people, offices, 2nd hand hardware (we bought a lot of servers and laptops of bankruptcy auctions for next to nothing) etc) so there is silver lining no matter what happens. Make sure to save money though.
The biggest issues were with friends who recently picked up ‘html programming’ and who worked in a (bad) startup and recently had a (too high; money was forever in the boom!) mortgage and kids right before the crash and suddenly everything collapsed. Luckily in my country you won’t die, but they usually had to sell.
In 2000, I had just hired five people to work for me, as I expanded my Web consulting agency. For about a year, we had lots of work, from clients all over the world. The phone was ringing off the hook. We were making money. I was learning how to sell work done by other people, not just by myself.
And then the bottom dropped out.
It was very difficult, since I had to pay salaries, office rent, and the like. I was scared. I was upset. I even worried that the debts would force my family to lose our house. (We didn't actually come close to that, but I did worry about it.)
I mean, when I started my own business, I figured that if things didn't work out, I could always get a "real" job, at a real company. But now I was on the hook for other people's salaries.
I ended up firing everyone, and taking no salary for several months. I had enough work for myself, most of the time, and much of that money went toward paying back the bank's line of credit, as well as (to some degree) paying my own salary.
As a result, I promised myself (and my wife) never to have full-time employees again. I did have a bunch of employees whom I hired on an hourly basis, giving them a generous proportion of whatever money they brought in . (Too generous, my accountant consistently told me.) This meant that in bad times, I wasn't on the hook for their salaries. I should note that this arrangement wasn't for everyone -- but I was very straight about it with potential hires, and also told them that it was completely OK for them to be doing other jobs while working for me.
So yeah, this recession really hurt. And it made me much more cautious. There were months when I had literally no work, but that was pretty rare -- again, I was generally able to get enough work for myself to get by. But I was putting out feelers everywhere, looking for whatever development projects I could find.
Fast forward a few years, to recession #2. We were living in Chicago, where I was finishing the coursework and initial research for my PhD. I would walk with my eldest child to her kindergarten, and we would see a growing number of homes for sale. Moreover, we saw that they were for sale for a long time. We had a very clear view of the US housing market turning sour, but it wasn't clear at that point that things were going to be as bad as they were.
We moved back to Israel in the summer of 2008, and it was immediately clear that things were bad, and getting worse. Lots of high-tech companies were laying people off. I was worried that I would get swept up in this, and not be able to find work. And indeed, it was hard (but not impossible) to find projects.
The good news was that I had enough of an established reputation by this point that I managed to find projects. Again, I wasn't filling my calendar 100%, but it was about 75% full, which was much better than other people. I also got into training more heavily, and that turned out not only to fill my calendar pretty consistently, but also showed me how much I enjoyed training and could/should specialize in it.
One of my worries was that lots of people would get laid off, and then start their own consulting businesses, competing with me. My accountant laughed when I said this, telling me that most people who have full-time jobs done then want to go into business for themselves. And he was right.
I do expect a recession -- or if nothing else, a slowdown -- in the coming year, and I'm starting to prepare myself for it. I'm now doing training in Python and data science, and constantly reach out to companies to find out if they're interested in such things. But I also have a large (14k subscriber) free, weekly newsletter about Python that gets my name out. And I'm selling a growing number of online courses to individuals, which will (I expect) cushion any problems I might have with my in-person corporate training.
But each recession is different, and teaches us different lessons -- so I'm hoping that my previous experience will be helpful, but I'm sure that I'll discover all sorts of new problems as the coming year unfolds.