What can the 2000 dot-com crash teach us about the 2022 tech downturn? • TechCrunch

In recent times Twitter space, M13 Partner Anna Barber and I looked back at the dot-com crash looking for lessons that operators could use to avoid the mistakes the founders made during past downturns.

In our chat, Barber talked about how founders can better align with investors and employees while managing uncertainty, the risk of growing too fast, and the impact economic, social and emotional created when many companies close at the same time.

I was part of the first wave of tech workers that flooded San Francisco in the dot-com era.

So many companies flocked to the Bay Area where rental vacancy rates were below 1% when I arrived. The apartment block my employer used to live in became my home for several years; A coworker moved cross-country to heal his cat because he and his pregnant mate couldn’t find pet-friendly hosts.

I know nothing about startups, finance, and venture capital, but I didn’t have to be an economist to realize that most of the companies I worked for lacked solid fundamentals. . The same startups that offer in-home massages, meal services, laundry services, and oil changes in parking lots are also buying Super Bowl ads and highway billboards as stock prices rise. their quarterly losses increased.

However, our team building exercises include cooking classes, go-kart races and trips to local driving ranges. A black-tie work party I attended sent several tuxedo rental shops in the area racing. When my company’s softball team played against Yahoo! (which states that everyone uses an exclamation point), you should see the faces of other players when we announce replacement players Barry and Bobby Bond.

‘Macro-markets are just noise’

“Upstream” is not a new vibe. Like The dot-com bubble on Wikipedia The page aptly explains, the Nasdaq composite grew 400% from 1995 to 2000, and all the important people were acting as if the party would never end. The economic conditions that created the current recession are not the same as those that burst the bubble, but many of the lessons learned are relevant to today’s startup founders and workers, most of whom haven’t yet. never went through the skinny period.

I have crates from Webvan, a grocery delivery service that failed so spectacularly that MBA candidates still use it as a case study. Like,, eToys, and other companies that deliver packaged goods to consumers, Webvan raked in cash, earned a ton of enthusiastic press, and its backers readily available. ready to tackle everything until it leaves behind a crater. (And thousands of reusable plastic storage bins.)

Formerly Techstars CEO and founding partner at Fund LA, M13 Partner Anna Barber has been on the front lines of the pet food war: She’s VP of Product at Petstore. com when the company was sold off in a firefight.

“We fired one of our employees, with the exception of one, who stayed with the CEO to help launch the company and settle all of our creditors,” Barber said. . “That person is me.”

“The macroeconomic market is just noise that you have to cut out. Don’t believe your own press, right? ” Anna Barber

Although went live early and aired Super Bowl commercials, other cash-rich startups also took to the air to introduce themselves and attract new customers. Its founders raised $90 million, but without any effective means of targeting their ads, “we found ourselves in a bloodstain of this customer acquisition.” ,” she recalled.

The company initially set up shop in a small facility in Emeryville, California, just a short distance from Bay Bridge, but a year later demand forced it to expand to a 100,000-square-foot warehouse. Like a crowd of unprofitable startups, the founders of planned a public offering. Instead, the company ended up in the hands of, a competitor that had been shortlisted for an IPO before it closed.

“The market changed so quickly, we didn’t have the time or the space to figure it out,” Barber said. “The other thing that is different today is that a lot of people think the entire tech industry is going to disappear.” Inside hundreds of startups, this sudden reversal of fortune challenged the popular Silicon Valley narrative that these are the companies that changed the world.

“The macroeconomic market is just noise that you have to cut out,” Barber said. “Don’t believe your own press, do you?” Instead of going into instinctive survival mode, she says founders should ask themselves survival questions like, “Why did you start this business? What are the basic principles? Who are your customers? What problem are you solving? “

‘Trust is more important than ever’

Many first-time founders are encouraged to believe that good storytelling and social skills are enough to convince investors that everything is going according to plan, but they are wrong.

“At a time like this, trust is more important than ever,” Barber said, adding that she tells entrepreneurs to stay in close contact, “especially on bad news.” . Before problems arise and between regularly scheduled meetings, entrepreneurs should feel free to ask for help and advice.

“Tell them what you need. This is what we are here to: roll up our sleeves and help solve the problem for you. No one expects this to go smoothly.”

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