Dot.com to Dot.bomb

The 90's were a decade of rapid expansion in the dot com world. It was a time of high risk and high reward. Investors scrambled to get in on the next big thing, often trusting inflated company valuations and believing bills of good sold to them by anyone company with a ".com" at the end of it. It was on this humongous wave of confidence in the future of computing power that Andrew Fry cut his financial teeth. He had worked for Microsoft for a number of ears, but working there made him realize he wanted to start his own company with his own standards.

Fry's company set up DealerNet in March of 1994 for Marty the Car Dealer. A premier site for buying and selling cars, it was a hit, and gave Fry the working capital for other projects. This decade was about speed; who was first to market, who could quickly win over the public, and who could negotiate the best deals behind closed doors. It was necessary to be skilled in all three areas.

There were many casualties as the boom became bomb. The end of the decade and the Millenium saw the end of major companies, and the end of major dreams. A few continued to prosper, such as Amazon and eBay. Some survived, but came to a more realistic company valuation. Others such as Netscape were eaten up. Compuserve had been first to market as the first major commercial online service. They would not be able to hold their position and eventually got eaten up by America Online. “The VP of Compuserve was a dumbass”. Still others just disappeared. Investors, including large retirement funds, watched their portfolios decline by 75% or more seemingly overnight. The bust was the market adjusting itself from inflated values, similar to the housing bust of a few years back. The market isn't dead. On the contrary, it's a healthier, slower growth with much of the dross discarded.

The pendulum now swings closer to the center, neither boom nor bust. For those of us in the Northwest, it rests slightly on the boom side, though the market will (hopefully) never again suffer from the naivete that allowed the artificial inflation of values in the 90's. California tax laws and other lifestyle considerations have Silicon Valley companies looking north to Washington and east to Texas. That means better economic opportunity for those of us here.

My takeaway was that risk and reward often go hand in hand. The risks can be mitigated through research, but rare is the low-risk option that pays out high rewards. When you're able to more easily pick yourself up from a temporary failure is the best time to take on those higher-risk ventures.