Lessons From Dot.Com Crash

Everyone learned to treat the future as fundamentally indefinite and dismiss as an extremist anyone with plans big enough to be measured in years instead of quarters. Globalization replaced technology as the hope for the future. Since the ’90s migration “from bricks to clicks” didn’t work as hoped, investors went back to bricks (housing) and BRICs (globalization). The result was another bubble, this time in real estate.

The entrepreneurs who stuck with Silicon Valley learned four big lessons from the dot.com crash that still guide business thinking today:

1. Make incremental advances

Grand visions inflated the bubble, so they should not be indulged. Anyone who claims to do something great is suspect, and anyone who wants to change the world should be more humble. Small, incremental steps are the only safe path forward.

2. Stay lean and flexible

Stay lean and flexible

All companies must be “lean,” which is code for “unplanned.” You should not know what your business will do; planning is arrogant and inflexible. Instead, you should try things out, ‘iterate,” and treat entrepreneurship as agnostic experimentation,

3. Improve on the competition

Don’t try to create a new market prematurely. The only way to know you have a real business is to start with an already existing customer, so you should build your company by improving on recognizable products already offered by successful competitors.

4. Focus on product, not sales

If your product requires advertising or salespeople to sell it, it’s not good enough: technology is primarily about product development, not distribution. Bubble advertising was wasteful, so the only sustainable growth is viral.

These lessons have become dogma in the startup world; those who would ignore them are presumed to invite the justified doom visited upon technology in the great crash of 2000. And yet the opposite principles are probably more correct:

  • 1. It is better to risk boldness than triviality.
  • 2. an evil plan is better than no plan.
  • 3. Competitive markets destroy profits.
  • 4. Sales matters just as much as a product.
Sales matters just as much as a product

There was indeed a bubble in technology. The late ’90s was a time of hubris: people believed in going from 0 to 1. Too few startups were getting there, and many never went beyond talking about it. But people understood that we had no choice but to find ways to do more with less. The market high of March 2000 was a peak of insanity; less obvious but more important; it was also a peak of clarity. People looked far into the future, saw how much valuable new technology we would need to get there safely, and judged themselves capable of creating it.

We still need new technology, and we may even require some 1999-style hubris and exuberance to get it. To build the next generation of companies, we must abandon the dogmas created after the crash. That doesn’t mean the opposite ideas are automatically correct: you can’t escape the madness of crowds by dogmatically rejecting them. Instead, ask yourself: how much of what you know about business is shaped by mistaken reactions to past mistakes? The most contrarian thing of all is not to oppose the crowd but to think for yourself.

Starting a business can be risky and challenging, but armed with the proper tools and information, you can put yourself on the path to entrepreneurship. I have always emphasized on the importance of having a good website for your company and I am going to continue doing so! For more information on creating an effective marketing plan for your business, contact HyperEffects. We help enhance your customer service while building a sense of community, by getting a customer forum added to your company’s website. We also help companies get extravagant and enticing videos that could attract potential clients.

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